What is a Predictive Forecasting Based on Trend Analysis?

Predictive forecasting models are considered automated planning tools and are often used by budget managers to quickly get an idea of what the future may look like for important financial items. Some of the key functionality in this type of planning model is that it automatically predicts the next 12 months based on the past 36 months. The user can adjust weighting and other drivers on the top of the form. Color codes above each forecast chart shows whether it is likely to trend up or down in the final months. The user can also adjust the individual revenue and expense items at the row level. You find an example of this type of planning model below.

Purpose of Predictive Forecasting Models

Companies and organizations use Predictive Forecasting Models to enable managers to quickly get a picture of future revenues and expenses. When used as part of good business practices in a Financial Planning & Analysis (FP&A) Department, a company can improve its ability to predict a year into the future every single month without manually entering any forecast data as well as reduce the chances that the strain of a manual planning process prevents them from monthly reforecasting and resulting business insights.

Predictive Forecasting Model Example

Here is an example of a completely automated Predictive Forecasting Model with user-driven parameters.

Predictive Forecasting Based on Trend Analysis Example

Predictive Forecasting Based on Trend Analysis Example

You can find hundreds of additional examples here

Who Uses This Type of Planning model?

The typical users of this type of planning model are: Budget Managers and Analysts.

Other Planning models Often Used in Conjunction with Predictive Forecasting Models

Progressive Financial Planning & Analysis (FP&A) Departments sometimes use several different Predictive Forecasting Models, along with regular, detailed budgeting and forecasting models and other management and control tools.

Where Does the Data for Analysis Originate From?

The Actual (historical transactions) data typically comes from enterprise resource planning (ERP) systems like: Microsoft Dynamics 365 (D365) Finance, Microsoft Dynamics 365 Business Central (D365 BC), Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics GP, Microsoft Dynamics SL, Sage Intacct, Sage 100, Sage 300, Sage 500, Sage X3, SAP Business One, SAP ByDesign, Acumatica, Netsuite and others.

In analyses where budgets or forecasts are used, the planning data most often originates from in-house Excel spreadsheet models or from professional corporate performance management (CPM/EPM) solutions.

What Tools are Typically used for Reporting, Planning and Dashboards?

Examples of business software used with the data and ERPs mentioned above are:

  • Native ERP report writers and query tools
  • Spreadsheets (for example Microsoft Excel)
  • Corporate Performance Management (CPM) tools (for example Solver)
  • Dashboards (for example Microsoft Power BI and Tableau)

Corporate Performance Management (CPM) Cloud Solutions and More Examples