Business Unusual Series: #9 Undertake forward projections

The COVID-19 outbreak has forced many businesses to rapidly change their original cash flow projections. As a result, many have undertaken (or plan to undertake) reforecasting or budget flexing to more accurately reflect the evolving business conditions.

For some businesses there will be limited or no changes to budget. For many businesses, updates will be necessitated by the challenging market conditions.

Read more: Six winning tips for management reporting when it’s not business as usual

In both cases the forward projection trend charts and forward projection Profit & Loss statement (Income Statement) will be useful. Both of these combine actuals and rest of year budget to provide a projection of expected end of year financial results.

For example:

Cumulative projection charts (actual + budget)

Tip. When adding trend charts to your reports, you can project future performance either using a rolling average of past results or using your budget. In the chart above, the prior financial year’s revenue is also plotted for comparison.

Forward projection Profit & Loss

The projected end of year financial results are automatically updated at the end of month, when the budget is replaced with actual results for the recently completed month. By regularly monitoring the expected end of year financial results, management can make better decisions on where to invest, where to pull back, and what to prepare for.

Log in to Fathom and add forward projection trend charts and a forward projection Profit & Loss statement (Income Statement) to your report.

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