While many of us yearn for the ability to peer into the future and anticipate what lies ahead in the coming years, we understand that such a capability is, in reality, unattainable. However, in the realm of business, practical processes can be implemented to project future occurrences based on historical and current data—this is known as financial forecasting.

Accurate financial forecasting serves as a crucial tool for businesses, enabling them to reduce costs, seize potential opportunities, and organize workloads effectively. It provides invaluable insights into managing cash flow and optimizing profits.

In this blog, we embark on a comprehensive exploration of the Forecasting Feature embedded within Enable—an intricate mechanism designed to empower businesses in their pursuit of informed decision-making and strategic foresight. Join us as we unravel the intricacies of this feature, shedding light on its functionalities and how it contributes to the overarching success of businesses embracing forward-thinking rebate strategies.

Enable’s Forecasting Feature Explained

The Forecasting feature in Enable is an optional tool that empowers you to assess the earnings of your rebate programs and customize the forecasting method according to your preferences. Forecasts are consistently presented within the context of a specific rebate program. A standard rebate program setup may involve monthly phasing periods with an overarching forecasting period spanning a year. This configuration enables the modeling of monthly seasonality, providing comprehensive yearly reporting capabilities.

Enable utilizes the default phasing as its initial forecasting basis, employing a default seasonality profile that can be uploaded for each supplier or client division. To access a rebate program's forecast, click on 'View Forecast' within the chosen rebate program. The forecast generated by Enable encompasses the total spend of the rebate program, from which the forecasted earnings are then calculated.

Alternatively, you can navigate to a specific rebate program, enter it, and select the 'Forecasting' tab, positioned adjacent to the tabs for rebate program earnings and rebate program edits. This provides an alternative route to review the forecast details for the respective rebate program.

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For each rebate program there are three different types of forecasts that are featured, let’s dive in and take a look at these.

• Initial (green)

The initial forecast in Enable begins by examining the baseline turnover of the rebate program and considers it as the total turnover to be spent. This turnover is then distributed throughout the rebate program based on the default phasing specific to that program. If default phasing is configured at the trading partner level, it becomes the default phasing for that trading partner. In cases where default phasing is set at the client division level, and a rebate program comprises multiple client divisions, the default phasing becomes a weighted average determined by the blend of client divisions. This is calculated by assessing the baseline turnover for the rebate program and determining the proportionate representation of each client division.

• Previous (light grey)

At the end of every phasing period, the phasing period will be locked, and the actuals get populated. A snapshot is taken immediately before the locking of the phasing period, and this becomes the previous forecast. This allows you to see how the forecast has changed by comparing the current and previous forecasts.

• Current (yellow)

The present forecast is the one actively utilized when employing the manual forecast method. However, if automatic forecasting is in use, the current forecast corresponds to the most recent automatic forecast generated by the system.

What Different Forecast Options Are Available?

Enable offers the flexibility to be configured with a default forecasting method that aligns with your business needs. Let's explore and examine the various forecasting options available.

• Automatic Forecasting
  

When the automatic forecasting option is chosen in Enable, it's important to note that the forecast becomes uneditable. Like other forecast methods, the initial forecasts are computed by distributing the baseline turnover over the default phasing values provided for the supplier.

In automatic forecasting, there are two approaches: utilizing all available locked phasing periods for generating the forecast or constraining the scaling factor to a specific number of prior phasing periods (ranging from 1 to 120) by selecting the maximum phasing period. The determination of the maximum phasing period can be set globally in the settings tab or on a per rebate program basis.

At the end of each month, Enable calculates a spend per phasing unit using either the maximum phasing period or all available locked phasing periods. This calculation is then used to determine the total spend for the rebate program. The difference between the rebate program total and the actual spend is distributed over the upcoming months based on their respective phasing values.

For instance, if the actuals for October are 1% lower than the initial forecast, the system adjusts the November and December forecasts downward by 1% to reflect the variance. This adjustment ensures that the forecasts are dynamically adapted based on the actual performance of the rebate program.

• Preserve phase spending
  

With this calculation method in Enable, users have the ability to directly edit the forecast spend for a future month. The system then computes the total spend as the aggregate of both actual and future months. At the end of each month, while maintaining the future months' forecasts unchanged, this method adjusts the total spend based on the actual turnover that has been realized.

For instance, if the actual turnover for October falls below the initially forecasted amount, the forecasted total is adjusted accordingly, reflecting the actual performance for that month. However, the forecasts for the upcoming months remain unaltered, allowing users to incorporate real-time adjustments based on the observed performance while keeping future projections intact.

• Preserve total
  

When the preserve total method is chosen in Enable, users gain the ability to modify the total spend for the rebate program. The system then distributes the difference between the new total spend and the previous total spend across the future months, based on the phasing values assigned to those months. Additionally, users have the flexibility to adjust the phasing for the future months by entering specific values, and Enable allocates the total spend over these inputted phasing values.

At the end of each month, while keeping the total spend unchanged, this method adjusts the future months to accommodate the actuals that have been realized. For instance, if October's actual expenditure surpasses the initial forecast, the system scales down the forecasts for November and December to preserve the total forecasted spend. This approach is particularly valuable when users have a high level of confidence in their spending predictions, as Enable automatically adapts its forecasts based on realized expenditures to ensure the overall forecasted total is maintained.

Forecasting Displays

The forecasting page will also display the forecasting data on various graphs to help you get the most out of your data, these include:

• Expected spend in {Currency};
• Cumulative expected spend in {Currency};
• Expected spend in units;
• Cumulative expected spend in units.

Forecast Reports

Under the ‘Reports’ tab within Enable, there is a ‘forecast earnings’ option. It is possible to run a report to see forecast earnings at a higher level. However, the earnings can be broken down in a number of ways including per Trading Partner, Trading Program, or Program Line. It is also possible to report by the forecasting period or the phasing period. If required, your forecast reports can also be downloaded as a CSV file.

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So, there you have it – the forecasting feature gives you the ability to view the earnings for your rebate programs and configure the method by which they are forecast, providing you with a valuable insight on how to manage your cash flow and maximize your profits. If you’d like to find out more about Enable's innovative forecasting features, then take a look at this in-depth webinar.