A better way to forecast your business finances
Do you know what your profit is likely to be 6 months from now? How about your projected cash flow in 12 months? Do you feel confident in your answers?
Every business owner needs this vital information, yet it can be annoyingly difficult to figure out. Take for example this statistic from Quickbooks - 44% of SMBs who experienced cash flow issues said the problems were a surprise.
The problem most business leaders face with forecasting finances is the tradeoff between speed and accuracy: either spend the time to analyse the data properly and risk making a late move, or go with estimates and risk making the wrong move.
Or option 3 - go with your gut.
We recently surveyed 500 small businesses and found that 61% are creating financial forecasts once a week or more, and their most essential concerns when going through the forecasting process were:
- To minimize the amount of time it took to generate the forecast (speed)
- To reduce the likelihood that the forecast was off by a moderate degree of accuracy (quality)
Quality forecasts are needed faster than any analyst can produce them. They've gone from being a once-a-month obligation to a continuous weekly necessity.
So, is there a way to forecast business finances fast enough AND accurately enough to keep up with the pace of change in 2021?
The answer, we’re happy to say, is yes.
AI-powered forecasts are at least 50% more accurate and 100 times faster
AI predictive models hold the answer (don’t freak out).
Because compared to humans, AI predictive models:
- Are better at identifying patterns in the data
- Can analyse large amounts of data in seconds
- Continuously improve in accuracy, creating a robust, self-learning system
Basically, AI predictive technology makes reliable, continuous forecasting a reality. And that is an enormous advantage to any business.
However, most businesses can’t access this technology because it requires specialist skills and substantial resources. But we’ve made it easy for anyone to use. No coding needed.
giniPredict: AI-powered forecasts for non-tech people
giniPredict uses AI predictive models to do the work for you, analysing your historical data and running reliable forecasts that reflect the seasonality in your data, giving you a clearer view of the road ahead.
In other words, giniPredict makes running reliable data predictions easy.
Here’s how it works: First get your data in order, then try our AI-powered financial dashboard, and if you’re someone who runs a lot of forecasts, you’ll love our AI-powered forecasting add-on, too.
Step 1: Get your business finance data in order
For a proper forecast on your business finances, you’ll need to have your income, operating expenses, cost of sales and net profit data for the last few years organised.
Our AI predictive models are robust to missing data, but only to a certain extent.
This is the part that can take the most time, and usually involves consolidating spreadsheets from numerous departments and software systems (and a considerable amount of cursing).
We highly recommend – for the sake of your sanity – automating the work with accounting software like Xero. All your financial data in one place, simplified, easy, done.
Step 2: Get forecasts on your Xero data with the giniPredict Financial Dashboard
The giniPredict Financial Dashboard generates an AI-powered forecast on your business finances as soon as you connect to Xero.
You get a baseline prediction for your income, expenses and profit, with a 95% confidence interval for guidance.
The data syncs automatically every 12 hours and is refreshed in a click, so you don’t have to worry about outdated forecasts again.
Plus, the more you use it, the more the models learn from your data, and the more accurate the forecast becomes.
To get a reliable forecast, you’ll need to have these reports in Xero, going back at least 3 years:
- Total income
- Operating expenses
- Net profit
- Cost of sales (optional)
The dashboard also performs key driver analysis for you, and gives you clarity on the true profitability of your business at a glance.
To get started, simply log into Google > open our dashboard template (link to dashboard landing page) > follow the instructions to authorise Xero and Google Data Studio > and voila! AI-powered insights for your data will be populated in a new dashboard before your very eyes.
Step 3: Run your own AI-powered forecasts with the giniPredict add-on
If you want to run further forecasts and scenarios on your Xero data, or any other time series data, the giniPredict Google Sheet add-on makes it easy.
You’ll get AI-powered forecasts in a few clicks, saving you hours, so you can dive straight into analysing and testing decisions.
You can either import business finance data directly from Xero, or paste in any quantitative time series data to run forecasts on, such as web traffic, ad performance, user growth, and much more.
Run forecasts on any variable in a few clicks.
You’ll get a 6 to 12-month forecast reflecting the seasonality in your data, with a 95% confidence interval.
Run scenarios to see potential outcomes
Once you’ve run a forecast, you can change any of the predicted data and run scenarios to see the potential impact of a spike in demand, losing a major customer, a late payment, hiring a new employee, or any decision you need to test.
When running forecasts, bear these principles in mind:
- The further into the future you forecast, the less accurate it will be.
- The more data you give it, the more the model learns, the more accurate the forecast.
- The higher the quality of your data, the more accurate the forecast.
To get started, first install the add-on (Link to GWM)> open a new Google Sheet > go to “Add-ons” and “giniPredict” > follow the instructions to connect to Xero or paste in and format your own data.
Quicker, easier and more accurate forecasts for your business finances
To sum up, giniPredict makes it possible for anyone to forecast their business finances faster, so they can make quick, confident decisions and navigate fast-changing environments with speed.
Here’s a nifty little summary of why giniPredict is better than manual forecasting in a spreadsheet or advanced forecasting in Python:
Oh, and did we mention it’s free?
Yes, it’s free.
Go on, take it for a spin and see the difference it makes.