At Forecast 5 we often hear: “We use spreadsheets to do our budgeting and forecasting.” Most companies switch once they trial Forecast 5 and see the benefits—but some hold on. Why? When an industry‑standard forecasting solution is available, why keep relying on spreadsheets?
⚠️ The Hidden Dangers of Spreadsheet Forecasting
The truth is most business failures are cashflow related. And you can’t get an accurate cashflow from spreadsheets as the subtlety of record-by-record cashflow is too complex to program in Spreadsheets, And you can’t validate the overall integrity of the model by balancing between the Balance Sheet and Funds Flow Statement.
Just consider these comments:
🔹Such forecasts are often prepared in spreadsheets – but spreadsheets are notoriously error-prone. ICAEW - (Institute of Chartered Accountants of England and Wales)
🔹A spreadsheet of any magnitude can be daunting to review, with perhaps thousands of formulas. ICAEW - (Institute of Chartered Accountants of England and Wales)
🔹Fifteen years of research studies have concluded unanimously that spreadsheet errors are both common and non-trivial.Cornell University, Professor Panko
🔹Despite strong evidence of widespread errors, spreadsheet developers rarely subject their spreadsheets to post-development testing to reduce errors. This may be because spreadsheet developers are overconfident in the accuracy of their spreadsheets. Cornell University, Professor Panko
🔹Microsoft's Excel Might Be The Most Dangerous Software On The Planet. Forbes.
And if any doubt the evidence listed above, a quick review of the Spreadsheets related horror stories listed by the European Spreadsheet Risks Interest Group should go a long way to propel them back to reality.
💡 How Forecast 5 Solves the Problem
Forecast, in contract, provides the following benefits that aren't available in spreadsheets. Compared to spreadsheets, Forecast 5 offers:
🔹A double‑entry architecture so Balance Sheet, Profit & Loss, Cashflow and Funds Flow statements all balance—giving you model integrity you can trust without chasing down thousands of corrupt formulae.
🔹Essentially, an audit trail for each year of the forecast between the Profit (or Loss) to the Balance Sheet and to the Funds Flow Statement, whilst the bottom line of the Funds Flow Statement proves the Cashflow and the bank movements on the Balance Sheet. (I have yet to see a spreadsheet based forecast that can provide such assurance!).
🔹Seamless integration with major accounting systems (Xero, Sage, SAP B1, Acumatica etc.), so actuals flow in at the press of a button.
🔹Straightforward and quick reforecasting if Actuals suggest to the Board that future expectations should be trimmed or increased.
🔹Fast, ready‑to‑present Board‑quality reports and dashboards including variance analysis, rolling forecasts and more.
🔹Robust modelling of complex financing scenarios and unlimited company consolidations—including inter‑company eliminations, minority interests and goodwill depreciation.
🔹Consolidations are easily handled, including elimination of minority interest and inter-company profits and losses, set off of intercompany loans and depreciation of goodwill. And there is no limit on the amount of companies that may be consolidated.
🚀 Time to Upgrade Your Forecasting Strategy
In a nutshell why don’t you use software developed specifically to do budgeting and forecasting instead of trying to replicate what we already do and with a proven track record.
