Five Financial Forecasting and Analytics Best Practices

With the right software and data, financial forecasting and analytics best practices can inform decision-making to help an organization grow.

Unfortunately, many organizations only conduct financial forecasting and analysis at the start of their fiscal year. Periodically reviewing the data, updating your analysis, and providing updated forecasts can help managers adjust their plans to compensate for new insights.

Using these five financial forecasting best practices, your organization can proactively adjust course before significant changes impact your organization.

Best Practices for Forecasting and Analytics

1. Evolve beyond budgets written in stone. Many organizations start their new fiscal year with a budget. Managers take the approved budget as if it’s written in stone. Instead of treating forecasting and budgeting like an unshakeable law, approach it as an ongoing conversation. It helps to work with managers frequently on their budgets to assess how they’re tracking against goals, KPIs, and budgets.
2. Share the results of working with data. It can be challenging to ask managers to spend time working with their data in preparation for forecasting and analysis. Some may view the request as a waste of time. Share with managers how their data impacts important choices within the organization so that they feel empowered and invested in the analytics process.
3. Ask the right question: Far too often, forecasting conversations become more of a conversation of expenses than how spending aligns with the organization’s mission, vision, and strategic plan. By asking the right questions, you can help people think differently about budgeting. Good questions include: What happened last (month, quarter)? Does this match what you expected? If there’s a difference, what is it, and why did it happen?
4. Focus on tasks with strategic importance: All too often, forecasting and analysis get pushed to the side to make way for urgent tasks like reconciling credit card and banking statements, sending invoices, and other more pressing accounting tasks. Block time on your calendar, monthly or quarterly, to work on forecasting and analysis.
5. Automate the process: The right software dramatically improves accounting efficiency. This is especially true when managing budgets, forecasting, and analysis. Accessing timely and accurate data through a software program is much easier (and faster) than managing multiple spreadsheets and reduces the chance of data entry mistakes. It also makes the process less painful for managers since the data they need is easily accessible.

Automation Helps You Move Forward

Nonprofits that thrive throughout changing conditions do so through smart strategic planning. This includes budget analytics and forecasting. The right software solution enables users to improve efficiency.

If your organization is still managing its financial processes via Excel spreadsheets, it’s time to consider updating your accounting program. Newer, more cost-effective cloud-based platforms offer nonprofits accounting software options made for nonprofit budgeting. These programs include features such as tracking expenses and income back to specific programs or budget items, grant reporting, data and analytics, forecasting, and more.

Now is a great time to consider your options and incorporate accounting best practices such as nonprofit accounting software.

Welter Consulting

Welter Consulting bridges people and technology together for effective solutions for nonprofit organizations. We offer software and services that can help you with your accounting needs. Please contact us for more information.