The Importance of Financial Forecast vs. Actual in Excel Template

It is vital to prepare a financial forecast to guide in deciding on the direction you want to take for your business. The financial estimates will let you make a simulation of what a future can be and prepare for various scenarios that might happen. However, nothing will go 100% right with your plan. Some changes may be for the better, and other outcomes can be worse. To help correct and improve the forecast, you need to compare the estimates to the actual and make some adjustments.

Below are the reasons why we have to compare the forecast vs. actual result in the Excel template.

1.    To help you track the progress. By comparing the forecast vs. actual in Excel template, you can have an effective tool in assessing the progress you made so far in your projections, and if you are still staying on track.

2.    To Stay in Budget. You don't want to stay out of the budget without forecasting in advance. Since it will serve as your guide on what and what is not part of the plan, your actual spending must not be a far fetch from your forecast, though small variances are acceptable.

3.    Optimizing on what’s working out. Being able to assess what’s working out in your forecast that can derive more savings or increase in sales, you have to highlight that aspect and work it out to give more advantages to the company.

4.    Change things that are not working well. By assessing that part of your forecast not going as expected, you must change it to the direction that would turn out to be beneficial for the business. We don't expect everything to go well in our forecast, so a back-up plan must be put into action.

5.    Make a better forecast. You are now able to see what's working and what's not. From there, you can create a better forecast going ahead since you already have an idea from the previous results. However, back-up plans and resources should always be at hand so that you can prepare for the worse outcomes without jeopardizing the business operation.

You can expect a better result when you compare your forecast to the actual wherein adjustments can be made. Changes are expected when you prepare a projection, but it should be to a minimum by regularly comparing your actual result. It may sound tedious, but it is a proven tool to have a better outcome that is crucial to your business' success. eFinancialmodels has different financial model templates that utilize the forecast and actual in the preparation.