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Actual vs. forecast templates

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Last editedNov 20202 min read

When it comes to building a budget, there’s a certain amount of estimation involved. This is particularly true when it comes to start-up businesses that may not have a huge amount of data, as well as for periods of uncertainty and market fluctuation. An actual vs. forecast comparison helps you understand how well your business is performing in relation to your expectations and can help you adjust future budgets accordingly.

What is forecast cash flow?

A forecast cash flow is made up of your sales/turnover projections. This is usually calculated both at the business launch and at the beginning of a financial year although there may also be forecasts made periodically throughout the trading period. It’s important to review your forecasts when there are significant changes to your business – whether that comes from external factors such as market trends, the forced business closures of 2020, or internal factors, which might include changes in management, direction, or products. 

What is actual cash flow?

Actual cash flow refers to the amount of money that goes in and out of your business. Unlike with a forecast cash flow, this is a real-time/retrospective calculation that has the benefit of established figures rather than being based on estimations. Actual cash flow comprises both your income and your expenditures and so can give you an accurate picture of your business’s financial standing. This is typically calculated at the end of each financial year as well as the end of each financial quarter, although additional reviews can be done at any point during this period.

What are the benefits of an actual vs. forecast comparison?

Comparing your actual numbers to your forecast helps give you an idea of whether your company is on track to achieve its targets. It’s rare that a business’s actual numbers exactly match those forecasted, but a drastic difference between the two might indicate variables that weren’t accounted for when you made your forecast.

For example, you may find that the market has changed drastically or that general spending has taken a dip, while you may need to reassess your figures if your company has come under new management. These comparisons can help you budget your finances, take stock of your targets and goals, and reassess accordingly while highlighting areas for improvement or that may benefit from investment.

What should you include in an actual vs. forecast comparison?

The figures you choose to include in your actual vs. forecast comparison will depend on the metrics you want to measure. The most common numbers to include are costs and expenses or, more broadly, cash in and cash out. Things like stock turnover may also be useful to include if you want to get a clear picture of how many units you expected to need in comparison to the amount demanded by customers.

Creating a forecast vs. actual Excel template

One of the most popular programmes for creating your actual vs. forecast comparison is Microsoft Excel because it can do a lot of the heavy lifting for you. If you’re confident with your Microsoft skills, you may want to put together your own formulas, but there are also a lot of online resources that can help. You can find example forecast vs. actual Excel templates or you can pay for pre-set templates that have been created by agencies to meet your needs and can often be customised to your specifications.

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