Forecasting for Finance

Units and bites

1. Unit 1·4 bites·About 12 min

   Finance forecasting basics

   Budget, forecast and actuals: three numbers read together.

   1. Budget, forecast and actuals

      The budget is set once a year, the forecast is updated, and actuals are what really happened.

      3 min

   2. Why forecasts get updated

      Every month brings new actuals, and a forecast that never moves means nobody is looking.

      3 min

   3. Top-down and bottom-up

      Forecasting down from the company target or up from each team, and how to reconcile them.

      3 min

   4. The forecast calendar

      The monthly and quarterly cycle: when the books close and when the numbers are agreed.

      3 min
2. Unit 2·4 bites·About 12 min

   Revenue forecasting

   Price × volume drivers, the sales pipeline and recurring revenue.

   1. Driver-based forecasts

      Breaking revenue into price, volume and customer count so every assumption is visible.

      3 min

   2. The weighted pipeline

      Multiplying each deal by its chance of closing, and why those chances are often too hopeful.

      3 min

   3. Recurring revenue and churn

      MRR, customers who leave and upsell in a subscription forecast.

      3 min

   4. Seasonality in revenue

      Ramadan, year-end and clients' budget cycles in monthly revenue.

      3 min
3. Unit 3·5 bites·About 15 min

   Costs and cash

   Fixed and variable costs, the 13-week cash forecast and the cash peak before Lebaran.

   1. Fixed and variable costs

      Costs that rise with sales and costs that don't, in one forecast.

      3 min

   2. Profit isn't cash

      Why a profitable company can still run out of cash.

      3 min

   3. The 13-week cash forecast

      Cash in and out, week by week, for the next quarter.

      3 min

   4. Payment terms

      How long customers take to pay, how long you take to pay suppliers, and what that does to cash.

      3 min

   5. THR and seasonal cash needs

      Planning cash for the THR holiday allowance due before Lebaran, bonuses and seasonal stock.

      3 min
4. Unit 4·4 bites·About 12 min

   Rolling forecasts and scenarios

   A forecast that always looks 12 months ahead, and scenarios for FX, inflation and demand.

   1. Rolling forecasts

      Adding a new month every month, so the forecast never stops at December.

      3 min

   2. Scenario planning

      Base, upside and downside cases built from the same drivers.

      3 min

   3. FX and inflation

      Building rupiah moves and price rises into the forecast for imported costs and salaries.

      3 min

   4. Sensitivity tables

      One table that shows profit across combinations of price and volume.

      3 min
5. Unit 5·4 bites·About 12 min

   Forecast accuracy and bias

   Variance analysis, sandbagging and optimism: measuring whether a forecast can be trusted.

   1. Variance analysis

      Splitting a variance into price, volume and cost effects.

      3 min

   2. Sandbagging and optimism

      Why teams deliberately forecast low or high, and how to spot it.

      3 min

   3. Tracking forecast accuracy

      Comparing the forecast from three months ago with actuals, month after month.

      3 min

   4. Explaining a miss

      Writing an honest variance commentary for the board.

      3 min
6. Unit 6·4 bites·About 12 min

   AI in finance forecasting

   Using AI to draft models and commentary, checking it, and keeping financial data safe.

   1. AI as a spreadsheet assistant

      Asking AI to draft the formulas and structure of a forecast model.

      3 min

   2. Checking an AI-built model

      Formulas that look right but are wrong, and how to test them with simple numbers.

      3 min

   3. Financial data and privacy

      Which data may go into an AI tool, and which may not.

      3 min

   4. Writing forecast commentary with AI

      An AI draft of the management commentary, with every number checked again.

      3 min

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