So what exactly is revenue forecasting? If you’ve heard the term but are not entirely sure, we’ll break it down for you: a revenue forecast is simply an estimate of your revenues over a set period of time, usually monthly or quarterly. It’s a powerful tool to help you plan ahead for resource management and build project estimates. Your agency’s revenue forecast should take into account past financial performance as well as your upcoming sales pipeline.
While it may be difficult to gaze into your crystal ball and predict the future, sitting down to build a revenue forecast is an important exercise. A properly utilized revenue forecast from Deltek WorkBook’s Finance and Accounting module will help agency leaders make better decisions on everything from hiring to resource allocation to budgeting and results in stronger agency finances.
5 Tips to Help With Accuracy
When you place a bet, you want as much accurate data as possible in order to make the right prediction. The same goes for revenue forecasting – your plan will only be as good as its inputs. Here are some tips to improve the accuracy of your revenue forecasts:
1. Pinpoint capacity – knowing your actual utilization rate will help tremendously here. Evaluate current and estimated workloads to better understand how much work you’ll be able to commit to.
WorkBook’s capacity status graph forecasts team capacity into the future so you can bring in new work while avoiding burnout.
2. Calculate expenses – a clear picture of current costs is a crucial element of a revenue forecast. Include everything: rent, payroll, software licenses, etc.
WorkBook’s Cash flow forecast is a powerful tool for accurate, short-term forecasts of all money coming in and going out of your agency.
3. Past project revenue – it’s easier to predict the future when you have a reliable picture of the past. Focus on the average revenue per project, so you aren’t deceived by outliers of projects that were extremely profitable or lost revenue.
The ability to identify profitable projects from WorkBook’s Revenue forecast is a key factor that helps you pursue similar projects for the future.
4. Involve the right people – this is where you lean on your resource managers and financial leaders. They should be able to quickly give you data on the current state of things, but don’t involve too many people or the process can get bogged down.
When Project Managers are empowered to make WIP adjustments in WorkBook, it streamlines the revenue recognition process and improves the ability to more clearly forecast remaining revenue.
5. Focus on the right level of detail – if compiling monthly forecasts is slowing you down, switch to a quarterly forecast instead. The most important factor here is that you review your forecast on a regular cadence, updating it often for better accuracy.
WorkBook’s Revenue forecast helps you make better decisions based on real-time financial data from the CRM, Project Management and Resource Planning modules.
Put Revenue Forecasting Best Practices to Work
Deltek WorkBook’s total agency management system makes it easy to combine both your resource management and project estimates so you can quickly build accurate revenue forecasts. Watch this webinar on demand and learn how WorkBook uses real-time data to create revenue forecasts and best practices for reviewing and producing the forecast. You’ll also get a step-by-step guide to the best configuration for your agency.
Learn How to Create Accurate Revenue Forecasts in WorkBook
Webinar: Combine Resource Management and Project Estimates to Quickly Obtain Accurate Revenue Forecasts
This post was adapted from an article courtesy of our partner, Premier Consulting & Integration, LLC. The original post can be found here.
Premier Consulting & Integration, LLC (PCI) is the leading provider of financial management consulting services, implementation and audit support for government contractors and marketing agencies. PCI consultants combine 40+ years of relevant experience acting as former CFO’s, controllers and accountants, offering small business solutions that are affordable, easy-to-use and profitable.
Deltek Project Nation Newsletter
Subscribe to receive the latest news and best practices across a range of relevant topics and industries.