Comparing actuals vs forecast – is your business going to plan? Probably not exactly! Forecasts are there to inform your decisions and goals but they are rarely ever 100% right.
There will always be at least some differences, hopefully small but some could be significant. Perhaps in a good way but perhaps not. Keeping track of them is key to understanding your progress towards your long term business goals.
If you’re looking for more information on financial forecasting, we have a collection of resources in our Forecasting Fundamentals series:
- What is Financial Forecasting?
- How Long Should a Financial Forecast Be?
- Are Financial Forecasts Accurate?
- Financial Forecasting Methods | Top-Down vs Bottom-Up
- Do I Need a Budget or a Forecast? | Budget vs Forecast
- The Top 4 Advantages of Financial Forecasting
- What’s the right tool for creating a financial model?
- How to create a financial model
- Financial Planning And Analysis (FP&A) | A Brief Overview
Analysing your real world performance in Brixx
Up until now you’ve been able to create detailed and clear forecasts in Brixx. Tracking and comparing this to your real world performance either involves replacing your forecast as you go or exporting to Excel and spending additional time building your own comparison spreadsheet (who has time for that?).
We’ve had many people ask us to implement an actuals vs forecast system directly in Brixx to improve this experience and we are really happy to say this is finally here and will be part of our next large update!
So, what is this feature all about, how will it help me run my business and what do I have to do? Let’s dive in and take a look in this preview.
Actuals vs forecast – What is it and why should I be doing it?
Tracking how your business performs is a critical process to growing a business. It forces you to take your head out of the day to day grind, look up and check where you’re going. Is it all going to plan? Is your strategy still the right one?
It’s a discipline that helps you identify if you are meeting your original aims and highlights where changes are needed. Doing this early and often will allow you to make course corrections before it’s too late. Perhaps you are going in the right direction but not as quickly as your original projections suggested. You need to know that information as soon as possible so you can judge the potential ramifications on your long term cash flow and perhaps even funding requirements.
Staying on track
Measuring, testing and implementing improvements is essential for any company looking to achieve high growth. It will help you:
- Track progress toward your goals
- Stay in budget
- Double-down on activities that are working well
- Change activities that aren’t working well
- Make better forecasts
The last point might be easy to overlook. Forecasts are built on assumptions. Assumptions about number of customers, conversion rates or product release dates (for example). Comparing your actual results with your forecast will put your original assumptions to the test and help you identify where they were wrong and, crucially, why they were wrong.
Understanding this will help you make more realistic assumptions and create more accurate forecasts going forward. Ultimately, this ensures you make the better decisions based on more accurate information.
Introducing actuals in Brixx – make better decisions with real data
We’ve built an extensive update to help your business with this process and ultimately help your achieve your goals! We’ve been keen to deliver real value that allows you to achieve a planning process that will aid your success.
Adopt a best practice planning process that drives business growth
- Create forecasts based on assumptions
- As real data comes in, compare this to your forecast
- Adjust your assumptions and implement necessary changes to your business
You’ll soon be able to execute these activities all within Brixx, saving you time and improving your decision making process.
Adding your real data to Brixx
We’ve introduced a new area, available from the top menu called ‘Actuals’ (imaginatively).
The forecast you’ve built in Brixx becomes the template for your actuals. Each month, you’ll be able to assign your actual results against all the activities in you forecast, at the most detailed level. It’s critical that it’s at this detailed level and not just the top account since this is how’ll you’ll get meaningful results you can make decisions from.
The new actuals area
This new area is broken down by the 3 key financial reports – Cash flow, Profit & Loss and Balance sheet statements.
They are further split out by report headings and consist of editable rows that are dynamically created to match your forecast. You can see your forecast in the background of each cell before you enter your real figures to help identify what you’re looking at. It’s pretty helpful. This is where the app does the heavy lifting, taking away the need to build your own spreadsheets.
You can quickly copy and paste figures in from any source of data. Or, if you have a number of fixed costs, you can double click a cell and it will pre-fill with your forecast value. Pressing ‘Enter’ will confirm and move down a row, pre-filling the next cell with your forecast. If you have a number of actuals that stay the same each month they can be filled in seconds.
Updating your actuals each month will take a few minutes of your time and will provide the information you need to stay on track and grow your business.
Once you’ve updated each month, you can analyse the results in the variance reports that are automatically generated for you.
Automatic variance reports
A variance report is a fancy name for analysing the difference between your actuals and forecast. On the normal Cash flow, Profit & Loss and Balance sheet reports you can now tick the ‘Show actuals’ option to begin comparing results
When you first land on an actuals vs forecast report, you’ll see the top level report lines as per normal. You’ll also see your actual results and the percentage difference between the two values. However, like any Brixx report, you can drill into these lines to reveal several different levels of detail and unpack the top account line to find out what it’s made up from.
Seeing the insights
If you’ve organised your income sources by department, channel, category etc you’ll be able to compare how each have performed. This applies across the entire set of reports meaning you can delve into any area of your business to see the detail.
You’ll see the actual value and variance at any level you choose. It’s really powerful because you can truly dig into your results to find out what’s working and what isn’t.
The cash flow chart on the dashboard will also update giving you a comparison of your cash position each month.
Presenting your business performance
The power to drill into any number and see the variance at any level will help you explain to investors and colleagues where your success is coming from or quickly identify problems.
If you haven’t explored the Brixx sharing features you can share these reports to anyone who has a free Brixx account. You can even make live updates for others to see in real-time.
Actuals are entered at the monthly level but when it comes to the variance reports, you’ll be able to roll them all up into quarterly and yearly views – again, calculating your totals and comparing them at any level you choose. This gives you the flexibility to conduct monthly, quarterly or annual reviews with your team.
Actuals vs forecast will available for our Business and Pro subscribers soon
We are adding Actuals vs forecast to Business & Pro level subscriptions. If you are on the free Basic version or a Startup subscription you can upgrade at any time to Business or Pro to access this new feature.
We’re in the final stages of polishing and clearing the last bugs and we’ll have more details on an exact release soon.
If you’re an accountant, business coach or anyone looking to manage multiple clients in tandem, take a look at our article Financial Forecasting For Accountants – The Brixx Partner Program where we outline the benefits of becoming a Brixx Partner.