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Forecasting on a budget

A client hired me to create their forecast. Here’s how we worked together, on time and on budget.


My client is a professional service provider using an online accounting ledger. They wanted me to help them understand their expected cash balances each month for the next two years given a set of assumptions. And, they wanted to be able to compare actual results to expected results.

Like many products, their online accounting ledger has a simple P&L budgeting tool included with the base package. You’ll remember from accounting 101 that cash and income are not the same thing; in fact, net income is found on the Profit & Loss Statement and cash is found on the Balance Sheet. There are many sources and uses of cash that are not related to income, cost of goods sold, or operating expenses, such as equity contributions and distributions, increases and decreases in lines of credit, and fixed asset purchases.

Working Together

So, one day last week, I sat with my client for a few hours to discuss all their expectations, by project by month from now through the end of 2018. The decision-makers at this company value knowing when they will have excess cash on hand (“working capital”) to do things like hire employees, purchase computers, or issue shareholder distributions.

During our meeting, I recorded their assumptions in a spreadsheet; this is usually the fastest way for my client to verbally communicate many expectations in a face-to-face meeting.

I went back to the office and connected their accounting ledger to an online tool that allows me to 1) define KPIs, 2) create assumptions, and 3) generate a full set of pro-forma financial statements (balance sheet, income statement, and cash flow statement).

By entering in my client’s assumptions for revenue, expenses, and other sources and uses of cash into a cloud-based forecasting tool, I was able to graphically show the decision-makers I’m working with when to expect a surplus or deficit in their cash balance over the next two years (by day, by week, or by month!). I also created a cloud dashboard that calculates key performance indicators, which my clients can access from any device 24/7.

Finishing Up

Today, I walked my clients through the functionality of their new forecasting dashboard. I taught them how to make changes and create different scenarios. My clients were so pleased to have a meaningful easy-to-use, modern dashboard that includes both actual and expected results. They also love knowing that they can update new scenarios themselves in the future now that it’s set up correctly and syncs directly with their accounting ledger.

Why Do This?

By going through the arguably tedious exercise of getting all those assumptions out of their heads, they are now able to see (in pretty graphs and charts!) when they will have a surplus.

Unlike many of my competitors, I give my clients full administrative access to their dashboards. This allows my clients to control their service-provider costs, set up a workflow that works for their internal staff, and have room in their budget to have someone to call when they have questions.

Next Steps

Want to learn more? Send me a note:

We can create your forecast on a budget, too.

Elizabeth Adams

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