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To do an accurate financial forecast in just ten minutes, here are nine elements you need to look at

by , 26 January 2015
Financial forecasting can take a long time when you don't know what you're looking for. After all, you have to analyse your company's financial past to predict its future.

But I have good news for you. You don't have to spend hours trolling through your financial records.

All you have to do to save time and ensure your forecast is accurate, is focus on these nine elements in your financial history...

Focus on these nine financial elements to do your financial forecasting in under ten minutes

  1. Sales figures
Look at how many product units you sold on average for the last three years. Record the total average for the year and for each month.
This will show you when you sell more products and if your sales figures increased over the last three years.
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  1. Production expenses
Look at your production expenses for each year. This is your cost per unit. Add together the expenses for each year to see if they increased.
Also look for months where expenses are higher, such as a time when you had to hire more workers.
  1. Overhead expenses
These are the expenses you pay to run your overall operations. These include rent, electricity, water and Internet costs. Total these for the year to see if they increased.
  1. Direct labour
Work out the number of workers you used each month and then workout the average number of workers you needed each year. This will show you your employment growth rate.
  1. Cash flow
Calculate your average cash flow for each month. Record how many months have a positive cash flow and how many have a negative one.
  1. Debt
Analyse your debt rate for the last three years. Look to see how quickly your clients paid their debts and how quickly you can pay yours.
  1. Bad debt
Calculate how much bad debt your company accumulated each year. Determine which months have the highest bad debt rate. This will show you when your clients struggle most to pay their debts so you know when to avoid making a sale on credit.
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  1. Financial losses
Identify any financial losses you incurred during the last three years. Work out which months you made the losses in and what the circumstances were at the time.
  1. Profits
Look for months when you made a profit and record the circumstances during that time. Work out your average profit or loss for each of the last three years.
Look for trends when you analyse these nine elements. See how often they repeat and what circumstances cause them. This is the information you need to do a financial forecast for the year.
To do your financial forecast even faster, do it in Excel. Because you can filter the data, you can find the exact information you need in a matter of minutes. You can find out how to do this in the Excel Training DVD.

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