That sobering figure comes from a recent KPMG study that surveyed 540 senior executives across the world who are involved in the financial forecasting process for their businesses.
What this study indicates is that poor financial forecasting costs money. Many respondents felt that share prices had dropped by 6% over three years, representing a huge loss of market capital. Meanwhile, that tiny 1% of businesses that were accurate with their forecasting grew share prices by 46%.
The numbers don’t lie. Financial forecasting is a must-have for any organization interested in longevity. At its most basic, the process involves predicting a company’s financial future by examining historical data. This includes cash flow, expenses, sales, etc. It’s looking at business performance and there are plenty of external factors that have a hand in shaping the forecast.
In this article, we’re going far beyond the surface. We’ll show you different types of financial forecasting models so you can make an informed decision on what’s best for you. Plus, we’ll show you how you can build good financial forecasting models instead of models that could break your business.