1. Administering Predictive Cash Forecasting
  2. Forecasting Methods
  3. About Trend-Based Forecasting Methods

About Trend-Based Forecasting Methods

Predictive Cash Forecasting provides trend-based forecasting methods.

Trend-based forecasting methods can be used for any line items where the cash forecast can be determined based on historical trends. Trend-based methods can be used only with Periodic forecasts. Trend-based methods could be used if the cash inflows and outflows use a standard pattern.

Administrators enable Trend Based Forecasting when enabling the application. Cash Managers set the assumptions for the trend-based forecasting methods.

Process for Working with Trend-Based Forecasting Methods

  1. Set up the trend assumptions by selecting the trend method to use and the percent increase or decrease.

  2. Load or input the data used to drive the cash forecast.

  3. Run the daily Daily Process Forecast / Periodic Process Forecast, which calculates the cash flows.

  4. When you load or save the trend form, Predictive Cash Forecasting calculates the cash inflows or outflows based on the driver amount and trend assumptions, and posts them into the appropriate periods.

  5. The cash inflow or outflow is automatically populated in the Rolling Forecast form.

Here are some of the trend-based methods that are supported in Predictive Cash Forecasting.

  • Current Year Actual Average—Calculates the average for the cash line item for the current fiscal year. Example: Bank charges.
  • Current Period Actual—Last period actuals are used for the forecast periods. Example: Utilities.
  • Prior Year Actual—Takes the prior year actual for corresponding periods. Example: Marketing or Service Revenue.
  • Prior Year Actual Average—Calculates the average for a cash line item for the year prior to the current fiscal year. For example, if the current fiscal year is FY22, the prior year is FY21. Example: Travel.
  • Forecast Average—Calculates the average of the forecast for the current fiscal year. Example: Labor.
  • Seasonalization—Applies the seasonality of last year actual for forecast periods to the current year actual average. For this method, the current year actual average rate is calculated first. Then, the forecast is calculated using the following formula:

    Forecast = Prior year actual amount for the period * sum of forecast amount (as per Current Year Actual Average method) for the remaining periods of current year / Sum of prior year actual data for same remaining periods.

    Example: Trade Spends

  • Year over Year Inc / Dec—Applies a percentage increase or decrease to the prior year’s value. Example: Rent.
  • Periodic Growth—Calculates year over year change for a line item using current year and prior year as the basis to calculate the growth. Example: Variable Compensation.