Why do we forecast?
A forecast is an important part of your business plans. But why? For most organizations, there are four major reasons to forecast:
- Financial Predictability
A budget helps an organization more accurately plan for the future and understand what the organization might look like in the near and far term.
- Understand Business Drivers
A budget is done so business leaders can better understand what external factors impact their business and what their business will look like based on changes on those drivers.
- Manage Performance
For many organizations, management uses budgets to set and evaluate employee’s performance. employees.
- Because we have to
It’s that simple. We budget because we’re asked to present a clear financial plan to our managers, executives, or board members.
Why do you budget? Does your organization have any other specific reasons?