What is the difference between forecast and plan

Planful also enables you to easily forecast, project, and evaluate estimates of different financial outcomes before they happen so you can make better decisions and, ultimately, achieve your desired goals and objectives. Subscribe to get a weekly digest of our latest posts. We respect your Privacy. Learn 4 steps to reduce the pain of the planning and forecasting of your budgeting process in this webinar recap.

In a recent webinar sponsored by Planful, a panel of experts highlighted 4 steps to successfully implementing rolling forecasts What is a Rolling Forecast? Subscribe to get a weekly digest of our latest posts Thank You for Subscribing. Popular Posts All Posts 2 minute read. Read More. Reporting 3 minute read.

Key account strategy…accounts you are targeting for growth and those you may walk away from. You should have a baseline conservative projection in line with your business plan strategy, and then a second line that accounts for risk and opportunity.

This is important to determine what investments you NEED , and which ones may be necessary. It is easier to get funding for non-budgeted investments if they are based on exceptional growth. There is no science here…if you can explain blips and dips in the previous year, you can project or eliminate them in future years.

Your forecast should not look like a hockey stick…conservative first year then dramatic growth the following years. By having a realistic story and a separate story for risk and opportunity, you can create a real document that your company can use. Once the sales forecast is complete, the operations group evaluates the sales volumes, determines any investments that need to be made to meet volumes or new products.

They determine directional estimates on raw materials, and workforce requirements. Once complete the accounting team takes this information and builds the forecast model, determining projected profits and losses. Consider the following assumptions:. What inventory levels will be necessary for the plan, are they different than previous years?

Is more space required, less space? Be realistic in your assumptions, not too conservative on costs. Your objective is to reduce overall costs and improve efficiencies. If they remain the same over time you should be prepared to explain the assumptions that raw materials are going up but your programs are maintaining cost levels…what are those programs and what time periods will they be impacting the plan.

Be sure to incorporate any marketing plans into your cost structure. Will there be new packaging, new services, etc.

A budget is a micro level analysis of the upcoming year. You typically finalize the budget by November if you are planning a calendar year budget Jan-Dec. In comparison to the product line level forecast, a budget breaks the numbers down to the customer and product SKU level.

Your budget should mirror year one of your forecast. If something changes during this process and the totals differ…take the time and update your forecast while the information and rational is fresh in your mind. Otherwise you run the risk of starting over again next year.

Everything should be linked, and changes should be made consistently. Here are some things to consider for your budget process:. Whether your are leading an organization, managing a department, or providing an individual contribution to the planning, forecasting or budgeting process…you should have an understanding of the big picture and how things relate to one another. DO use old information to plan for the future. DON'T forget to account for dips and peaks in the past… make a decision to either incorporate them or not into future planning.

DO tell as story with your data. You should add comments to your spreadsheets. DON'T forget why you put figures into your planning, or where they came from. DON'T hide this information in your figures, put it a separate line that is visible. If you are leading the exercise, create an environment where people can be honest with you. DON'T create a useless document that brings no value to the business besides looking good during a presentation….

DO create and include a tactical plan into your figures that is linked with the business plan mission. What are you doing to achieve the mission on time? DON'T separate the business plan from the forecast or the budget. Always revisit, revise and learn. DO communicate, communicate, communicate, the plans and the results, as well as the story of what the company is learning from the process.

DON'T create documents that get put away until they are reinvented the next year. It really does help to take a full picture view of planning, have a well rounded understanding of your business and the needs of each functional area. Create a personalised content profile.

Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights. Measure content performance. Develop and improve products. List of Partners vendors. A financial forecast is an estimation, or projection, of likely future income or revenue and expenses, while a financial plan lays out the necessary steps to generate future income and cover future expenses.

Alternatively, a financial plan can be looked at as what an individual or company plans to do with income or revenue received. While both processes orient financial activity toward the future, a financial plan is a road-map drafted now that can be followed over time and a financial forecast is a projection or estimate of future outcomes predicted today.

A financial plan is a process a company lays out, typically broken down into a step-by-step format, for utilizing its available capital and other assets to meet its goals for growth or profit based on a reasonable financial forecast.

A financial plan can be considered synonymous with a business plan in that it lays out what a company plans to do in terms of putting resources to work to generate maximum possible revenues. Individuals can also take advantage of a financial plan.

The plan covers every aspect of your financial life, from investing to taxes to your outlook for retirement. While your starting point in developing your plan may be different based on your age, income, debts, and assets , the most important components of an annual financial plan are the same.

Financial forecasting is critical for business success. To effectively manage working capital and cash flow , a company must have a reasonable idea of how much revenue it plans to receive over a given time period and what its necessary expenses will be over that same period of time.

Financial forecasts are commonly reviewed and revised annually as new information regarding assets and costs becomes available.