1. Customer Relationship Management for Sales Implementation Guide
  2. Understanding Sales Forecasts

Understanding Sales Forecasts

To successfully manage the business, you must be able to forecast, or estimate with reasonable certainty, the amount of business that the organization will close in the upcoming months. Using the Manage Forecasts program (P90CB060), you can create sales forecasts that can help you project what the organization's sales will be.

Sales forecasts enable you to review the amount of potential revenue for a specified group of opportunities. You can specify search criteria, and then click the Generate button to automatically generate a group of opportunities. You can enter any of these search criteria to generate the list of opportunities:

  • Opportunity Type

  • Sales Team/Sales Team Member.

    You can enter the address book number of a sales team or sales team member. The system searches for opportunities that include the specified address book number on the sales team:

  • Industry

    The system searches for opportunities whose associated Sold To customer record includes the specified industry.

  • Close Date

    The system searches for opportunities whose close date falls within the specified date range.

  • Probability

    The system searched for opportunities whose probability is greater than or equal to the value that you enter in the Probability field.

You can also manually select opportunities to add to the forecast. For example, you might want to create a sales forecast that includes all of the opportunities that are associated with a particular customer. Therefore, you can search for, and assign opportunities to the forecast based on the customer number. If necessary, you can also remove opportunities from the forecast.

Lastly, you create a combined list of system-generated and manually-selected opportunities to create a sales forecast. However, if you click the Generate button after you manually add opportunities to the list, the system regenerates the list according to the current search criteria, and all manual changes are lost.

When you create a sales forecast, the system calculates the amount of potential revenue for the selected opportunities. The system calculates the revenue amount for each selected opportunity by multiplying the opportunity's probability by the value in either the Line Item Total or the Potential Amount field. You specify which field is used in the processing options of the Manage Forecasts program. The system then totals the calculated revenue for the selected opportunities and populates the Revenue field. If necessary, you can override this amount by entering an amount in the Override Revenue field.

If you feel that the forecast is an accurate depiction of upcoming sales, you can specify that the forecast should be included in demand forecasting by selecting the Approve for Demand Management option.

After you create, review, and, if necessary, update a sales forecast, you can freeze the forecast. When you freeze the forecast, the system disables all of the information on the forecast so that it cannot be changed. The system also creates a point-in-time snapshot of the forecast. The snapshot includes the associated opportunities, as they are at the time the forecast is frozen. If these opportunities change after the forecast is frozen, the snapshot does not change, which provides you with an audit trail of the actual data that was used to create the forecast.

For example, you might create a forecast for Employee A for the month of August. The forecast includes an opportunity with a large amount of potential revenue. You freeze the forecast. After the forecast is frozen, the large opportunity is lost. At the end of the month, you determine that Employee A's actual revenue was far less than the forecasted amount. When you review the forecast, you can see all of the opportunities that were active at the time the forecast was frozen. These opportunity records appear as they were at the time the forecast was frozen. You can then compare the forecast opportunity records against the current records for these same opportunities to determine the cause of the revenue discrepancy.

This graphic illustrates forecast creation:

Creating forecasts.

When you create a sales forecast, the system creates records in these tables:

  • F90CB060

  • F90CB06A

  • F90CB060Z

When you freeze a forecast, the system deletes the record in the F90CB06A table and creates records in these tables:

  • F90CB06B

  • F90CB06C