Are you sure your Budget is correct?

14.06.23 08:36 PM By Caroline
Written by Johnny Kipps

No, not the input figures, our question relates to your outputs. 

Are you confident your budget outputs are correct?


In the model you use are all the working capital movements correct both as to value and timing? 

Or if you use any software, (Excel or other) for your modelling are you confident that there aren’t some errors hidden in formulae** which have messed with your outputs? 

Are you absolutely sure?

Whilst Forecast 5comes with a wide variety of very useful relationship factors that calculate on your input raw data, simplifying your budgeting, (eg costs as % of Sales, % of Wages, as %  of KPI’s, of Costs – plus many more) the question above relates to how you confirm that your budgeting model is correct and in balance all round?

When you prepare your budgets withForecast 5, you know it is a very robust self-balancing modelling system with a double entry type architecture and it is easy to confirm this – and reassure yourself.

The key to checking the integrity of Forecast 5’s outputs is the fourth of our key reports, the Funds Flow Statement. This forecast report, (analogous in IFRS or FRS102 terms to the “Section 7 - Statement of Cashflows”) opens with the forecast operating profit and closes with Net Cash. It is simple to tie this figure up with the Closing Net Cash per Forecast 5’s Cashflow statement as well as the movement between the opening and closing balance for the bank account on the forecast Balance Sheet. After confirming that the movement on the Retained Earnings on the Balance Sheet agrees with the opening figure on the Funds Flow statement and that the Balance Sheet does indeed balance (which often may not be the case if budgeting with Excel), you can sleep well at night, knowing the Forecast 5’s balances all round. And that your model’s integrity is beyond doubt.

You can never escape GIGO – however we don’t expect Forecast 5 users to put garbage data into their models, but if they do, garbage out will be the unfortunate result.

But with sound input data, you can relax with Forecast 5, the outputs will be robust, correct and verifiable.

If you’d like to try Forecast 5 for yourself, please download a 21 day trial here

** 9 out of 10 spreadsheets (88%) contain errors (Leung, 2014) and with a cell error rate of up to 1 in 20 cells (5%) (Panko, 1998), it is no wonder that your certainty on the figures presented is faltering!

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