Improving Budgeting and Forecasting with Predictive Analytics

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Improving Budgeting and Forecasting with Predictive Analytics

Sarah Dawson, CFO Tech Outlook | Tuesday, October 27, 2020

As firms consider strategies to increase organizational profitability, an optimized planning process based on predictive analytics can yield results far exceeding expectations.

FREMONT, CA: Accurate plans, budgets, and forecasts set the cornerstone for smart, confident decisions that can help businesses react to competitive threats, tap into opportunities, and grow profitability. All this begins with providing relevant performance data to decision-makers so that they can get a better understanding of the factors that have an impact on performance. In today’s dynamic market, top performers must tweak their plans, budgets, and forecasts to create greater accuracy. By leveraging advanced analytics, top performers can identify trends and thrive in the market. Here is how.

Top 10 Budgeting and Forecasting Consulting/Service Companies - 2019Predictive analytics offer help in providing estimations for the company´s spending for incoming periods. It is very useful across several types of industries. As in charge of a cost center, it is usual to have indicators by which firms evaluate performance. Keeping track of KPIs and having the ability to forecast for future periods through the tracked KPIs is very helpful. Being able to accurately forecast the company´s cash flow is complex. If employed predictive analytics, firms can use historical data and historical project plans to forecast the cash flow accurately and promptly. Using these historical figures can even spot areas that require prompt attention.

A significant predictive analytics benefit is that firms can see emerging patterns from the past project in terms of overall revenue and payment history by using project and financial data. When it comes to budgeting, planning, and forecasting, it is vital to look at key drivers, and one of the important things for a finance person to look at is identifying key drivers for late payment. Using many forecasting techniques, predictive models, and dashboards analysis, it becomes possible to calculate the probability of late payment given a new project.

Not only can predictive analytics speed up the decision making process by making the data more accessible, but it can also focus on trends and exceptions, foster an understanding of the several drivers of performance and their connection to future outcomes, and help develop new insights based on the use of data, statistical and quantitative analysis and predictive modeling.

See Also: Top Predictive Analytics Solution Companies

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