Whatever industry you are involved in, forecasting the potential earnings for your business is essential in preparing for the ups and downs of the year ahead. Although a complex task, forecasting helps you make important decisions about your budget, such as how many employees you can afford to hire or how much you can spend on marketing.
You wouldn’t be able to make these decisions if you don’t know how much revenue and profit, you’d be generating, which is where forecasting comes into play.
Why is accurate forecasting important?
Accurate forecasting and accurate accruals are vital to success within your business to ensure that you are aware of what the future is likely to hold so that you can appropriately allocate resources to assist in key areas. Accurate forecasting also helps you reduce unnecessary spending, avoid missing potential opportunities and means you can manage your cash flow better.
For many businesses, forecasting is not a focus and even for those that make a point to forecast their future, various challenges can limit the accuracy and benefit of these financial forecasts.
Challenges of forecasting rebates
Businesses face several challenges when developing forecasts and can lose a lot of precious time in the forecasting process. It becomes even more strenuous when there is a lack of common tools and inconsistent approaches. With this in mind, let’s dive in to the four common challenges of forecasting rebates.
- Many in-house forecasting tools are too basic.
- Renegotiating the best deals in the future.
- The forecasting process is too manual.
- Forecasts are not updated throughout the deal.
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