A financial forecast serves as a roadmap in your client advisory relationship. A strong forecast is built by analyzing past results, considering current trends, and outlining a path forward to meet the goals of the business.
But even the strongest forecast won’t always be 100% accurate. Unexpected costs, external market factors, and unforeseen challenges can all lead to discrepancies between your predicted and actual results. The further into the future you look, the larger that gap can become.
With a static forecast, you’re forced to either live with these discrepancies or manually adjust your completed months in your forecast to match to actuals. The latter process is tedious and time-consuming. What you really need is something that is dynamic. A forecast that will stay up to date as the business changes and adapts.
LivePlan’s newest feature, LiveForecast, gives you just that: a one-click button that displays actual results for completed periods right into your forecasted Profit and Loss statement.
Now, your monthly process of “truing up” takes only a few seconds. Your forecast becomes a living roadmap — one that adjusts with your business, allowing you to understand your future not just where you thought you’d be by now, but where you actually are.
How to use LiveForecast
To activate this feature, you’ll first need to ensure that you have accounting data in your Dashboard. This can be accomplished through a direct connection with QuickBooks or Xero, or by manually entering your accounting data in the Dashboard.
Once your accounting data is in LivePlan, navigate to your Forecast and select the profit and loss statement. At the top right, you should now see a grey LiveForecast button. Select this to turn LiveForecast on. The button will turn green to notify that LiveForecast is now active.
To revert back to your unadjusted forecast data, simply select the LiveForecast button again. It will turn back to grey to display that the feature is no longer active.
LiveForecast provides additional insights
With LiveForecast active, right away you’ll notice a few changes:
- Past months now display an additional 'Actual' column
- Grey + icons, allowing you to expand columns for past months
- A cash bar displaying your end of month cash balance
Your profit and loss statement now overlays actual results for completed months. Selecting the + icon next to a completed month will allow you to expand that month to display what you originally forecasted, as well as the percentage discrepancy against actuals.
Additionally, you can now easily see your running cash balance via the cash bar displayed below your profit and loss statement. This allows you to quickly know your current cash position, while still seeing how future forecasted months will impact this actual cash balance.
Forecast and actual data combined
For some future periods (year-end balance, for example) LivePlan will use a mixed result. This is calculated by combining actuals for past months and forecasted values for future months. You’ll see a green graph icon next to any mixed result. Future cash balance, for example, will be calculated by taking the closing cash balance for your most recently completed month and then adding on top of that your forecasted cash flow for future months.
Note that LiveForecast will not modify or delete any of your forecast data. You can toggle it off at any time by just selecting the LiveForecast icon again.
Your new streamlined month-end process
Your month-end review process can now start in your Forecast. Once you’ve closed out a month, turn LiveForecast on to quickly identify a few results:
- Difference between forecast and actuals for revenue, costs, and expenses
- Updated cash balance
- Impact of your projected year-end totals based on most recent actuals
For example, you can identify if your client was able to meet their sales goals for prior months. If they did not, you can see how that discrepancy will impact their year-end sales goals. You can also quickly see their current cash balance, and see how their forecasted cash flow will impact that cash balance.
Your Dashboard will still allow you to see additional reports and identify other discrepancies. For example, if you notice your actual cash balance is quite a ways off from your forecast cash balance, you can review the cash flow statement in your Dashboard to identify where that discrepancy may have come from.
Review your results through both the LiveForecast and the Dashboard to look for gaps and trends, and prepare questions to address with your clients to help identify and discuss the drivers behind those gaps. Remember: you don’t necessarily need to have the answers right away. Thoughtful questions will help drive conversation and decision making.
The true potential of LiveForecast will come when you make adjustments to your forecast. Now you can just focus on making changes to future months for revenue, costs, and expenses. No longer do you need to go through, item by item, and “true-up” prior months by manually adjusting them to match actuals. Remember that you can easily change your revenue, costs, and expenses in the forecasted profit and loss just by selecting the name of the item you wish to edit in blue.
Once you make those adjustments, LivePlan will display the impact of those changes for your projected profit and loss and your projected cash balance using your last month's actual closing figures. This allows you to quickly and easily update your forecast to ensure you always have an accurate roadmap for your client.
LiveForecast is one more step in enhancing your ability to better support your clients with LivePlan for Strategic Advising. We hope that this new forecasting feature will streamline your ability to update and analyze forecasts, and allow you to help your clients make quick and confident strategic decisions for their business.
For current LivePlan Strategic Advisors, as always, email email@example.com to let us know how this new feature is working for you. Our team is hard at work on continued evolution of LivePlan's forecasting for better business management.
Liked this article? Click here to share it
Joey manages Customer Success and Training for LivePlan. In his role he focuses on helping accountants and bookkeepers start, run, and grow their advising practice through LivePlan. He has been with Palo Alto Software for over 4 years and is a graduate of the University of Oregon.