Forecast 5 Essentials Guide - the basics of Forecast 5

Forecast 5 Essentials Guide - the basics of Forecast 5

This guide will walk you through the steps of setting up and using Forecast 5.

Introduction to Forecast 5

Forecast 5 is a purpose-built forecast and budgeting tool that uses a pre-built metric template and contains an integrated report set (P&L, Balance Sheet, Cashflow and Funds Flow), removing the time-consuming processing of creating budgets and reports from scratch. Forecast 5 can have you completing budgets within minutes, not days! Completely breaking your dependence on spreadsheet budgets.

An important feature Forecast 5 offers is the four integrated reports, Profit and Loss, Balance Sheet, Cashflow and Funds Flow, that work together to prove the integrity of the model you have created.
This guide is to help you create and understand the budget process with using Forecast 5.


Creating a new forecast

Forecast 5 allows you to create forecasts from scratch, from an existing template or from a financial package (e.g. Xero, Sage 50 Accounts, MYOB etc.). We recommend accumulating any information that you require to build your budget, for example;
  1. Chart of Accounts – We recommend matching your records in F5 to your accounting package if you are going to enter actuals to your forecast.
  2. Currency/Exchange Rate details
  3. Debtor/Creditor Collection/Payment Terms
  4. Depreciation Schedules including Assets’ estimated life and Depreciation rates
  5. Expected Capital Expenditures and Sales
  6. Details of Bank Loans
  7. Bank Details – Interest Rates, Overdraft facilities
  8. Details of Debtor/Stock Financing
  9. Details of Corporate Tax Rates & Dividend Policy
  10. Details of Financed Assets (Hire Purchases and Leases)
  11. Expense relationships to sales, wages in terms of %, units etc
  12. Stock management rules (days on hand, batch purchasing rules EOQ)
  13. VAT/GST Details – Method, Rate, Scheme and term (ie two monthly/quarterly)
  14. Manufacturing Bills of Materials overheads and wages absorption rates
  15. Opening Balance Sheet
  16. Provision Details – i.e. Bad Debt & Obsolete Stock
  17. Wages details down to individual and/or groups of staff
  18. Budget data for the year or last year’s historical data as a guide for coming year’s budget
To begin your forecast creation, you will need to log in. The default login is Admin: with no password


Once logged in, you will be asked to select from a list of current forecasts or create a new forecast.
To create, select New Forecast from the menu on the right-hand side.


You will be prompted to fill out your forecast details and defaults, starting with country. This will load the default tax rates, currency, etc for your selected country.



Company Name: Appears on the top of your reports.
Sub Heading: Brief headings e.g. Draft or date.
Description: Enter notes about the forecast you are creating that would be useful.
Number of Years: Select the extent of your forecast in years (Forecast 5 goes up to 15 years).
Start Date: Select the month and year that represents your tax or reporting year.
First Data Period: Select month and year which will be the first month to have data entered.
Local currency: Select the base currency or define a new currency in update currencies.
3rd Party Integration: Select the financial package to integrate (available as an add on)
First Daily Cashflow Period: Select the month and year you want the daily cashflow to begin. 

Clicking Ok will create your forecast.




Opening, Importing, Saving and Closing Forecasts

Forecast 5 has a file structure like Microsoft Office files. It automatically saves data to the forecast file whenever you move off the cell you entered data in, so you never have to worry about losing any data. Forecast 5 sits on Microsoft SQL database (Localdb, SQL Express (free versions) or full SQL (purchased version)). This allows you to schedule backups through SQL Server Management Studio (SSMS), so your data is always preserved.

OPENING AN EXISTING FORECAST

To open an existing forecast, highlight the forecast and click Ok, or double-click the forecast from the New/Open screen:

IMPORTING A FORECAST

If you have already created a forecast or someone has sent you a copy of an existing forecast, you can import the forecast into your Forecast 5 database from the New/Open screen, click Import Forecast.
You can access an existing forecast from here to import and make your assessment easier.

Browse to where the forecast is located. Highlight the forecast and click Open. The forecast will then appear in your list of forecasts.


SAVING A FORECAST

While Forecast 5 automatically saves each entry as you move away from a cell, you can also choose to save manually by clicking the Save button from the Home menu:


If you wish to create a copy of the forecast, simply click the Save As button from the Home menu;


Or one of the Copy Forecast options from the New/Open screen:

CLOSING A FORECAST

To close a forecast, click the Close button from the Home Menu:


Forecast Settings

Once your forecast has been created in Forecast 5, the next step would be to update your default settings. From the Home menu, open the Settings menu by selecting one of the settings options:


You will then be able to switch through the tabs and update the settings as you require:


FORECAST DETAILS

Company Name: Appears on the top of your reports.
Sub Heading: Brief headings e.g. Draft or date.
Description: Enter notes about the forecast you are creating that would be useful for subsequent users/own reference.
Start Date: The month and year that represents your financial tax or reporting year you want to start your forecast.
First Data Period: The month and year which will be the first month to have data entered.
Local Currency: Selected base currency
First Daily Cashflow Period: The month in which Daily Cashflow will start. Uses forecast start date by default.

VAT/ GST RATES

Update or add new tax rates. Use 0% rate if VAT/GST is not applicable. Updates to the VAT/GST calculation method will apply to the whole forecast – i.e. all existing and newly created elements.

VAT/GST Scheme: Choose either Invoice Accrual or Cash Payments for your tax Scheme.
Tax Period Ends: Select the period frequency, e.g. Monthly, etc. and the end month.
Months in arrears: Enter this if required.
VAT/GST Rates: Add any more tax rates you require and set their monthly tax Rate.

PROFILES

Choose or create profiles that will allocate any annual data entry by a customised profile. The default is to split annual totals across 12 months evenly.
Profile: Add new profiles and select defaults.
Examples of profile options are;
PROFILES
Choose or create profiles that will allocate any annual data entry by a customised profile. The default is to split annual totals across 12 months evenly.
Profile: Add new profiles and select defaults.
Examples of profile options are;
  An annual total of 200                      Calendar Days 
           

PAYROLL TABLES & OPTIONS

PAYE/PAYG Rates: Update and check the rates tables.
Bonus: All wages and salaries are multiplied by this figure. Note: if you set this to 0, then all wages will be 0. Wages multiplied by 0 = 0.
Pension Details: Update or add any pension details.
PAYE/PAYG Options: Set PAYE payment timeframe.
NI Details: Update or add any NI details. Note: available in UK version.

PARAMETER DEFAULTS

Receipts: Choose your default input method.
Payments: Choose your default input method.
Add to Stock: Choose your default input method.
Depreciation: Choose your default input method, percentage and section to display in.

These settings are covered in more depth on the online training course, along with Payroll Tables and Options, Forecast Other Options and Preferences.

Forecast Records and Structure

Before creating your budget, it is important to take some time to understand the basic concepts of Forecast 5 and consider the structure you are after.

With Forecast 5’s integrated set of reports, this means that not all accounts need to be setup. We provide forecast records that are interlinked and are automatically calculated, updated and controlled based on your input and setup.

For example; A sales record calculates through to trade debtors, the bank account, GST, Income Tax Provision and has the potential for more automatic calculations.

FORECAST STRUCTURE

Forecast 5 provides a default structure which is easily customisable. Forecast 5 uses Sections, Records, Folders and Departments to design your budget.
By default, section of each type is created along with a bank account record. Each section type generates record types. You can create more sections of each type and records in each section.

Sections: Indicated by the blue arrow. Determines your record types.
Folders: Indicated by the orange arrow. For a greater detail up to 5 levels.
Departments: Indicated by the olive arrow. For sub-divisions.
Records: Indicated by the green arrow. Where your data is entered.

Adding additional sections, folders, records and departments can be done from the Home menu:


SECTION AND RECORD TYPES

Sales:                              Income
                                        Separately Invoiced Income
                                        Accrued / Prepaid Income
Costs/Overheads:         Costs
                                        Accrued / Prepaid Costs
                                        Stock
                                        Stock Made
                                        Stock On Hand
                                        Wages
                                        Gross Wages
                                        Separately Invoiced Costs
                                        Separately Invoiced Stock
Depreciation:                 By default fixed assets depreciation is reported here
Other Income:               Separately Invoiced Income
                                        Accrued / Prepaid Income
                                        Investment Income
Bank Accounts:             Main Bank Account (created by default and cannot be deleted).
                                        Bank Accounts
Fixed Assets:                  Fixed Asset
                                        Financed Asset
                                        Calculated Loan Made
                                        Manually Entered Loan Made
Loans:                             Calculated Loan Taken
                                        Manually Entered Loan Taken
                                        Financing
Other Assets/Liabilities: Other Creditor / Debtor
                                        Current Asset Liability Working Capital
                                        Current Asset Liability Finance
                                        Long Liability Working Capital
                                        Long Liability Working Finance
                                        Calculated Loan Made
                                        Manually Entered Loan Made
Capital Accounts:          Capital Reserve
                                        Capital Changes
Memo:                            Memo Records, create KPI’s, Non-financial data to be included in the budget numbers or reporting information define EBITDA and other ratios
Assumptions:                 Assumption Records

As each section type provides different record type options, record types also provide different data entry options and entry screens.

Some key data entry options are:

Manually Entered: Input your data month by month, in the Set All box (copies the figure to each month) or Total (divides the total per month as per your default profile)
As %: Can be used with a range of records, e.g. Sales, Memo, Wages, etc.
Profile: Can be used with any set up profile, not just the default.
Hot Link: Pull figures in through from your spreadsheet
Calc from Units: Automate the calculation by entering price and units per month.
Employee Groups: Calculate wages on a per group basis.
Formula: Create a formula of calculations for your record.

Opening Balances

Once your record list has been created, the opening balances screen will reflect your records list. To enter, from the Home menu, select Enter Opening Balances.



You can import your balances from an integration (if set up initially) or a spreadsheet or enter them manually. If your openings do not balance when you close out of the screen, you will be prompted to auto-balance. Note: If you choose not to, your balance sheet will not balance.

Reports and Visuals

The reports below are available within Forecast 5 by going to the Reports tab;

Standard:       Profit and Loss
                       Balance Sheet
                       Cash Flow
                       Funds Flow
                       Profit and Loss by Department
                       Profit and Loss by Tracking
                       Assumptions
Schedules:    Statistics and Ratios
                       Employee schedule
                       Fixed Asset schedule
                       Loan schedule
                       VAT/GST schedule
Variances:      Profit and Loss
                       Balance Sheet
                       Cash Flow  
                       Funds Flow
                       Profit and Loss by Department

These standard reports are available in all modes of the forecast, e.g. budget, rolling, what if, and can be viewed annually, quarterly and monthly.

One Touch Reporting:    

This unique feature allows you to build a template customised with your data, logo, disclaimer, profiles and commentary. One Touch then exports the selected reports from Forecast 5 in to this spreadsheet and present it as a company report that can be saved to pdf and circulated or presented to clients, the board or financiers.

SHOWING REPORTS

You can run any report by clicking on the report name. The Type dropdown box will determine what state the report is, e.g. Rolling, What Ifs or Budget (options available if in relevant states).
Using the Show All button will run the P&L, Balance Sheet, Cashflow and Funds Flow (for either the budget or variance reports):

The reports will remain open when moving to other tabs on the menu.

Note: they will only be closed when a system calculation is required.

PRINTING AND EXPORTING REPORTS

Once you have run the report, the following buttons will appear in the bottom right corner:


Refresh:                              Any changes made to your budget that do not affect the system records, e.g. bank account, will not cause a recalculation. Refresh will update the report.

Print:                                   Print your reports to your printer.

Export to Clipboard:       Send the report to your computers clipboard to allow you to paste into Excel, Notepad or any location you wish.


CLOSING REPORTS

You can close the reports any open reports individually by click the x next to the report or the Close All button will close all open reports:


VISUAL REPORTS

Visuals are graphic reports that show your data. These visuals are available in rolling, original or what if states, and can be viewed monthly, quarterly or annually. When viewing the report, hover over any month point to get the exact figure. The Refresh and Print options are also available for visuals.
The visuals below are available from the Visuals menu.

Profit & Loss:             Sales

                                    EBITDA

Cashflow:                   Bank Balance and Movement

Balance Sheet:           Working Capital Days
                                    Debtors Days
                                    Net Bank


Actuals & Revised/Rolling Projections

Forecast 5 allows you to enter, import or integrate with your financials your actual data from which you can then produce variance reports that compare your actual data to your budget data.

Additionally, you can reforecast the future months based on the current known events. The rolling forecast then recast your Profit & Loss, Balance Sheet, Cashflow and Funds Flow reports blending actuals and projections to provide a forecasted position.

In general, accounting software provides good profit and loss analysis, some degree of balance sheet analysis and rarely any cash flow analysis. For this reason, when entering Actuals, you enter the Actual P&L and Balance Sheet data and Forecast 5 derives the actual Cash Flow.

You enter or import your actual P&L, Balance Sheet and Asset purchases and disposals on a month by month basis. Actual data is normally obtained from your accounting software package.

Entering Actual Data

When putting a forecast into Actuals mode, Forecast 5 locks your underlying budget data to ensure you have a comparable platform between your budget and actual figures for variance reporting as well trying to stop you adjusting set budget information to improve variances.

Clicking Start Actuals will put your forecast into Actuals mode:


Once you start Actuals, you will notice the Enter Actuals and Reset to No Actuals buttons become active:


Note: If you choose to Reset to No Actuals, you will have the option to save your actuals as your budget data. If you click Yes, then your original budget will be overwritten with your actual figures. If you click No, your actual figures will be removed. This is useful when you want to start the budget for the next year make a copy of the existing budget and then switch to no actuals

To input your actuals, click Enter Actuals and the Actuals screen will appear.

You will be able to enter your Profit & Loss, Balance Sheet and Other actuals per month. You can import your actuals using the integration or from Excel using the Export to Clipboard format.

Once you are happy with that month’s actuals, move to the next month by using the drop-down menu.



IMPORTING ACTUAL DATA

Instead of manually entering in your actual data, Forecast 5 has the capability to import in your actual Profit & Loss and Balance Sheet figures from a spreadsheet or directly from financial packages using the integrations.

To import your actuals from a spreadsheet, start by using Export to Clipboard and pasting into an excel sheet. This will give you a formatted template to fill out:



Once you have filled out the template with your actual figures for that month, copy the data from Excel and use Import from Clipboard in Forecast 5 to see your figures populate and the totals automatically calculate.

 

You will need to do this for the Profit & Loss, Balance Sheet and Other actuals and per month.


REPORTING ACTUAL DATA

Once you have entered actuals mode, a new range of reports will be available in the Reports menu. You will now be able to run Variance reports and Rolling budget reports. Your budget reports, by default, will run a rolling budget. If you wish to see the original budget, select Original budget from the drop down and run your report.


You can have multiple version of the same report open at one time, e.g. Profit & Loss – Rolling and Profit & Loss – Original.

The same rolling or original budget options are available for your visual graphs




Extent and Amend – Multi-years

Once you have created a forecast, you can extend the forecast out (up to 15 years) to base the consequent years on your existing budget data from the last year, six months or quarter. You can also incorporate any expected amendments, e.g. Sales will increase by 10%.

You can increase or decrease your amendments and the number of years of your forecast as many times as you need through your budgeting process.

EXTENDING YOUR FORECAST

From the settings menu, select Extent/Amend which will bring up the Extent/Amend screen. From here, enter the number of years you wish to increase the forecast to, what data you want to amend with and if you want to make changes to certain areas.





Once you have extended your forecast, the additional years will appear as tab in the workspace:



If you wish to make more amendments, back in the Extent/Amend screen, you will find the Amend Later Years tab has become active for changes, allowing you to change a record or a range of periods.



MULTIPLE YEAR REPORTS

Running the reports from the report tab will run all years by default. You can easily switch through the years using the tabs and change the report frequency using the drop-down box. 
These options are also available for visuals.


Consolidations

Consolidations are forecasts and other consolidations that are "added together" to produce a forecast for a larger business entity.  For example, you can consolidate departmental budgets to produce a company budget, and/or consolidate company budgets to produce a group budget.

If the forecasts contain different records in their record lists, the lists are merged into a consolidated record list.  A currency can be specified for each forecast with the exchange rate applied as it is consolidated. Inter-company sales & purchases, loans, dividends and shareholdings can be eliminated from the consolidated totals. 

Any, or all, of Main Bank Account Interest, Provisions, Business Taxes and Dividends can be recalculated for the consolidated forecast. 

CREATING A CONSOLIDATION

To create a consolidation, from the New/Open screen, click New Consolidation



The New Consolidation screen will pop up to be filled in. When creating a consolidation, the start date of your consolidations and the start date of each forecast must be the same otherwise you will not be able to pick the forecast. The forecasts must also be in the same state, e.g. Budget or Actuals, and same length of years.

Fill out the required details and select the forecasts using the check box on the right-hand side.



ELIMINATIONS

Forecast 5 has the facility to deal with eliminations; typical items are inter-company sales and purchases set up as “separately invoiced” record types. Eliminations are records which you specify as representing transactions internal to the overall group being consolidated.

To eliminate a record, click the Eliminations button under the Consolidations section to bring up the Eliminations screen.

Then select the records you want eliminated for the balance sheet and then the P&L records:


You will notice, when going to the record, that the eliminated box has been ticked.

In an ideal world, such eliminations would always net exactly to zero.  However, where they do not, the net (residual) Eliminations are shown on the relevant reports.



If you have any queries please email support@forecast5.com or check out our knowledge base on www.forecast5.com/kb


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