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How our forecasting module can help you to manage your cash flow better and maximize your profits

Posted by Richard Neil on March 23, 2020 10:04:07

Whilst many of us wish that we had the ability to glimpse into the future and see what’s in store for us over the next few years, we all know that this, of course, is an impossibility. In the world of business, however, useful processes can be put in place to predict what might happen in the future based on past and present data, in other words, financial forecasting.

Accurate financial forecasting helps your business decrease costs, avoid missing potential opportunities and schedule workloads according, providing you with valuable insight on how to manage your cash flow and maximize your profits!

This is something that Enable is extremely passionate about. For over a decade, our rebate management software has helped merchants, buying groupswholesale distributors and retailers to drive mutually profitable growth with suppliers, whilst improving cash flow and reducing risk. That's why we call it the supplier success platform.

What is the Forecasting module?

The Forecasting module is an optional feature within DealTrack that gives you the ability to view the earnings for your deals and configure the method by which they are forecast.

Forecasts will always be shown in a deal context and a typical deal might be configured with monthly phasing periods and a forecasting period of a year. This allows the seasonality to be modelled monthly and reported on yearly. DealTrack will initially forecast based on the default phasing, which is a default seasonality profile that can be uploaded to the system for each supplier or client division.

To view a deal’s forecast, simply click ‘View Forecast’ on the selected deal. DealTrack forecasts the total spend of the deal and then calculates the forecast earnings based on that spend. You can also view a deal's forecast by entering that deal and clicking on the ‘Forecasting’ tab, which is next to the deal earnings and deal edit tabs.

forecasting 1

For each deal there are three different types of forecasts that are featured, let’s dive in and take a look at these.

Initial (green)

The Initial forecast looks at what the baseline turnover is for the deal and takes that as the total turnover that you will spend. It will then spread the turnover across the deal according to the default phasing for that deal.

If you do default phasing at the trading partner level, that will be the default phasing for the trading partner.

If you do default phasing at client division level, then a deal may be made up of a blend of client divisions so then it will be a weighted average of the defaults for the client divisions. This is worked out by looking at baseline turnover for a deal and seeing what the blend of client divisions looks like.

Previous (light grey)

At the end of every phasing period, the phasing period will be locked, and the actuals get populated. A snapshot is taken immediately before the locking of the phasing period and this becomes the previous forecast. This allows you to see how the forecast has changed by comparing the current and previous forecasts.

Current (yellow)

This forecast is the one currently being used if you are using the manual forecast method. If you are using automatic forecasting, then the current forecast is the latest automatic forecast.

What different forecasts option are available?

DealTrack can be configured to default to the forecasting method that most commonly fits your needs, let’s dive in and take a look at the different forecasting options for you to choose from.

Automatic Forecasting

When automatic forecasting is selected, the forecast cannot be edited. As with all forecast methods, the initial forecasts are calculated using the baseline turnover apportioned over the default phasing values uploaded for the supplier. When using automatic forecasting, you are able to either use all of the available locked phasing periods to generate the forecast, or you can restrict the scaling factor to a certain number of previous phasing periods (between 1 and 120) by selecting the maximum phasing period. The maximum phasing period is determined either in the settings tab to be globally set, or on a per deal basis.

At month end, DealTrack calculates a spend per phasing unit, using either the maximum phasing period or all available locked phasing periods, and uses that to calculate the deal total spend. The deal total minus the actual spends is apportioned over the future months according to their phasing values. So, if October came in lower than expected, for example, the total actuals for the deal are 1% lower than previously forecasted, then November and December forecasts will be adjusted down by 1%. 

Preserve phase spending

This calculation method allows the user to directly edit the forecast spend for a future month. It then calculates the total spend as the sum of the actual and future months.

At the end of the month, this calculation method keeps the future months the same but adjusts the total spend based on the actual turnover which has been realised, for example, if October was lower than the forecasted amount, the forecasted total would be reduced accordingly but future months forecasts would be unchanged. 

Preserve total

When the preserve total method is selected, the user can change the total spend for the deal. The difference between the new total spend and the previous total spend is then apportioned over the future months based on the phasing for those months. The user can also change the phasing for the future months by entering values for these months. DealTrack then apportions the total spend over these inputted values.

When a month is finished, this calculation method keeps the total spend the same and adjusts the future months to account for the actuals which have now been realised, for example, if October was higher than the forecasted amount then November and December will be scaled down to preserve the forecasted total.

Preserving the total forecasted spend is most useful when you are confident of your spending predictions. DealTrack will automatically adjust its forecasts based on the actual spends that have been realised so that your total is met.

Recent changes log

Any changes that you make to the forecast will be recorded in the ‘Notes’ box at the bottom of the page. These notes will all be timestamped and viewable in the ‘Recent Changes’ tab, giving you full visibility of any changes to the forecast.

Forecasting displays

The forecasting page will also display the forecasting data on various graphs to help you get the most out of your data, these include:

  • Expected spend in {Currency};
  • Cumulative expected spend in {Currency};
  • Expected spend in units;
  • Cumulative expected spend in units.

Forecast reports

Under the ‘Reports’ tab at the top of the page, there is a ‘forecast earnings’ option. It is possible to run a report to see forecast earnings at a higher level. However, the earnings can be broken down in a number of ways including per Supplier, Scheme, or Deal. It is also possible to report by the forecasting period or the phasing period. If required, your forecast reports can also be downloaded as a CSV file.

forecasting2

So, there you have it – DealTrack’s Forecasting module gives you the ability to view the earnings for your deals and configure the method by which they are forecast, providing you with a valuable insight on how to manage your cash flow and maximize your profits. If you’d like to find out more about DealTrack, and how its many innovative features can benefit your business, then take a look at our website.

Topics: Rebate Management System