Chief finance officers or senior data analysts have to perform numerous challenging tasks. However, the most difficult thing they have to do is to make predictions about the business. Despite being challenging, it’s one of the most crucial tasks as well because every high-level decision requires some idea about how the business will proceed in the upcoming days.
Financial modeling can be done by using Excel sheets. However, this manual modeling will not give you desired results. They will not be timely and accurate. Therefore, numerous advanced SaaS companies invest big amounts in financial projection software.
However, there are a few questions related to financial projection software. These are:
- What must be present in your financial projection software?
- Which software system is the best one for your company?
- What type of investments does robust financial projection software entail?
In today’s post, we will try to figure out the answer to all these queries.
Understanding Financial Forecasting: Predicting Finances
Financial forecasting is the art of predicting the future of your business, especially finances, by using current trends. Skilled analysts will do the job of predicting the future. They will select a financial model based on the data available. After that, they make interfaces about the future based on its projection.
The biggest problem in this forecasting is that it’s uncertain. We are not wizards with magical crystal balls that we can use to see the future. We have to use the current trends and make assumptions. A seasoned manager can make relatively better assumptions. However, these will still be uncertain.
To deal with uncertainties, scenario planning comes into play. Scenario planning is based on building multiple visions, then modeling every vision or scenario to eliminate these uncertainties. If you manage to do so in an accurate manner, you will get a better idea about the future of finances for the upcoming few weeks. Then you can match the actual happenings with your predictions to figure out which one of them was more accurate.
Let’s understand it deeply with the help of an example. Let’s say your MRR (monthly recurring revenue) is rising continuously every month by up to a 5% rise. Here you can make several predictions. First, you will keep a narrow view and predict the MRR will rise by 5%. Then you make another prediction that the MRR will rise by 7%. Similarly, you have to move towards broader scenarios. Here you will predict the rise will be 10%. It’s a relatively broader and more aggressive view. Then you have to plan for every scenario. It allows you to deal with the situation if things don’t proceed as you expected.
It is the point when financial projection software joins the party. You have to spend numerous hours predicting the future of your company’s finances using different scenarios. It can even take you years to forecast finances for a single year. However, by using Financial forecasting models, you can do so in a short time and can save time to plan things.
Financial Forecasting Software
Financial projection software helps you predict your company’s finances and assists you in planning based on predictions about future events. If you manage to get a suitable software system, it can assist you in almost every department. Let’s have a look at some examples of the use of this software by different managers and workers.
- A manager can use this software program for departmental budgets and financial forecasting.
- An accountant can use financial forecasting software to draw income and cash flow statements for the upcoming year.
- The HR department can rely on such a software program to set a robust hiring plan based on the available budget and upcoming financial situations.
Usually, every accounting software offers this budgeting feature. Financial forecasting is one function of accountancy. However, account departments often neglect this. Therefore, you need a specific software tool to forecast the finances of your business.
Features Your Financial Projection Software Must Have
You cannot pick any financial forecasting software for your business. You need some specific features in it. The size of your business, market size and condition, product demand, and several other things will impact the requirements of features in your financial forecasting software. However, we have made a list of some basic features that must be present in every financial forecasting software.
- Access and pull data directly from your account software
- Direct data input
- Automatic projections of scenarios
- Manual scenarios projection
- Transparency, reflecting which data is used for reflections.
- Pull information from income statements and balance sheets
- Features to monitor and manage changes
- Data visualization
Functions Financial Projection Software Must Perform
The software you choose must meet the aforementioned requirements. It’s crucial because software must be able to perform the following functions.
- Fine-tune your every business plan.
- Produce numerous templates for the budget.
- Maintain different budget interpretations.
- Keep track of previous budgets to predict the future of finances.
- Comparing forecasted and actual figures of revenue
- Combining budgets of all your departments
- Planning to deal with every What if
- Keep an eye on the budgeting process performances.
Top 5 Financial Projection Software Choices to Optimize Planning
The following are the top 5 financial forecasting software. Let’s delve into the details of these software programs.
Flightpath by Baremetrics
It is an all-in-one financial forecasting software for your SaaS company. Flightpath is equipped with all the features that you need to predict the changes in your finance department and business growth. When using this software, you can opt for complete automation by using its autopilot projections feature. It can seamlessly integrate with your accounting software to drive useful data to predict financial events in the upcoming days. It also assists you in improving your basic projections, such as hiring plans etc.
You can get it for $1000/month.
In this ever-evolving world, businesses are improving rapidly. You need to evolve or improve your planings and processes along with this evolution. Achieving company goals, improving profits, and minimizing risks can be done by automating processes such as budgeting, planning, and reporting. Prophix can assist you in automating all these features. Whether you choose on-site or cloud-based forecasting, this software helps you by providing a solid platform that grows and evolves along with your business.
It does not have transparent pricing. Capterra has a rating of 4.5/5 across 67 reviews. The best thing about this software is that it is improving continuously. The negative thing about this software solution is that it does not offer greater transparency. Using it is very confusing for non-finance people.
This financial forecasting software offers a solid solution for budgets, reports, and several other things. Jirav is fast and easily implementable software. It can be used for different businesses. The maximum business size it can handle is up to 500 employees. It can integrate with already-in-use accounting systems to show its effectiveness soon after the implementation.
Though it starts at $250/month, most users have to rely on its $850/month plan to get access to useful features.
Jirav has gotten 4.8/5 rating stars across 12 reviews on Capterra. Their team is often praised, however, their data visualization is not up to the mark.
You can use this software solution to take your cash flow statements, financial reports, budgets, plans, and models to the next level. It offers a familiar feel that enables you to streamline your processes. It also offers shareholders financial statements with deep strategic insights. You can use this software system as per your requirements as it offers customization features as well, apart from that, it can adapt to your evolving requirements as well.
It does not have transparent pricing, but according to Capterra reports, it starts from $15000/user. It has a rating of 4.5/5 across 173 reviews. Though it offers a powerful interface with ever-evolving features, some users find it difficult to set it up for startups.
It will be nice to connect all your departments and existing systems. Vena can help you in doing so. It combines with different accounting systems via integration and offers a familiar, excels-like interface. It allows your departments to cooperate to achieve company goals effectively. This platform has no learning curves, is easy to operate, and is scalable as well.
Vena to has no transparent pricing plans. Across 13 reviews, it has a rating of 4.3/5. Users mentioned that it’s an easy-to-use platform. However, they also mentioned that it’s slow when it comes to creating new templates.
Get Help from Flightpath by Baremetrics
Flightpath has everything to offer that a SaaS company would need. Flightpath can plan your month-to-month and even annual finance forecasting by cash flow monitoring, scenario planning, revenue recognition, and more. Sign up today to get its trial.