What are the top metrics to include in a budget forecast dashboard?

1. Revenue Forecast: This metric is central to any budget forecast. It helps you track expected income and assess the health of your business. Break it down by product lines, customer segments, or sales channels for deeper insights. 2. Expense Forecast: Monitoring anticipated operating expenses is essential for cost control. Categorize expenses as variable and fixed to understand their impact on profitability. 3.Budget vs. Actual: this metric enables you to compare forecasted figures to actual results, highlighting discrepancies that require attention. 4. Cash Flow Forecast: Predicting cash inflows and outflows helps ensure sufficient liquidity to cover expenses and investments.

A revenue forecast should have the following elements: - Revenue (current) and Revenue (forecasted) - COGS (current) and COGS (current) so you can get to net revenue - Progress towards revenue targets YTD, QTD, MTD - Revenue by stage % approaching closed/won - Amount at risk due to churn, contraction. - Net Dollars Retained (how well are we retaining current revenue)

Following could be considered: Revenue Forecast: Projecting future income based on historical data and market trendsz Customer Lifetime Value (CLV): Understanding the total revenue a business can expect from a single customer over their entire relationship. Revenue by Product/Service:Breaking down revenue streams by individual products or services. Market Share: Assessing the percentage of total market Sales Funnel Metrics:conversion rates at different stages of the sales process. Price Elasticity:Understanding how changes in pricing affect demand Repeat Business Percentage:Measuring the portion of revenue generated from repeat customers. Seasonality:Recognizing patterns of revenue fluctuations based on seasons.

From my experience in FMCG sector, breaking down the analysis (volume, price, value; sales breakdown; sales cycle) is key to have a full and clear understanding of the revenue forecast, and be able to show it in a Dashboard. Sales Breakdown by: - sales by market, channel, main clients, product From sale status: - actual sales - backlog execution - sales done pending to be invoiced - leads x success rate % - sales forecast Target: - YTD, QTD, MTD budget - year to go; month to go vs budget Hope it helps!

I would include existing revenue vs new revenue generated. In addition a few metrics on profitability would be great… even in budget mode

Revenue is a lagged indicator. Whilst revenue is (obviously) important, wherever possible, including lead indicators that drive revenue (eg new customers acquired)is very powerful. These can be monitored to give an early warning if performance is below budget, allowing management to intervene while there is time to make a difference.

Budget Utilisation Trend. It's based on the percentage of the last 3-5 years of budget utilized. It gives you a fair idea of your level of spending in the past , also provides a picture of realistic future spend. It helps resource allocation which is key to the kind of budget technique to be adopted in the next year .

Including a revenue forecast in your budget forecast dashboard is crucial. It shows expected earnings based on historical data, market trends, and customer behavior, helping you gauge income generation and target achievement. Additionally, incorporating churn rates is important, as it reflects revenue loss from customer attrition, enabling better planning and adjustment of strategies to minimize revenue loss and maximize growth.

Any service or product or both's mix should be assessed on the basis of their latest performance and upcoming demand will be key to get close to accurate budget numbers and it's variance analysis study of last comparative period will help to avoid those reasons of variances in current period

Revenue forecast is a derivative from various growth indicators over historical data, and based on economic indicators, market trends, and consumer behaviour. 1. Volume growth 2. Price growth 3. Region growth 4. Same store sales growth 5. New customer acquisition 6. Channel growth These are important for forecasting revenue and measuring with actual performance.

A great expense forecast is created based on powerful teamwork between business teams and their financial planning business partner. Business teams have the knowledge to understand the specific factors, trends, risks, and needs of their business. Financial Planning Business Partners understand how to translate this data into financial models and forecasts. When creating expense forecast, it is acceptable to use a 'bottoms up' estimate based on business unit projections for smaller line items such as office expenses or other non-material expenses. Larger expenses should require a detailed financial model, ideally driven by the Financial Planning Business Partner.

For an expense forecast, list your fixed and variable costs, account for any planned increases or decreases, and consider unexpected expenses. Regularly review and adjust your forecast to stay on top of your financial situation.

Expense forecasts provide a critical financial roadmap for businesses. They encompass planned spending on operations, marketing, payroll, and more, guided by historical data and budget allocation. This metric ensures efficient cost management, identifies potential savings, and guards against overspending, serving as a vital tool in your financial planning.

You must know your expense/overhead forecast and any forthcoming increases/step changes. The key for me here is understanding the Gross Margin and related break even point. A high margin business controls/dictates prices and is valuable usually as a result of differentiation, niche or scarcity; a low margin business typically competes on price and as a result is a "me too" business and is of low value.

Understanding your expenses can be complicated, especially if you want to effectively analyze how your dollars out contribute to dollars in. Finding a way to tag important expenses against projects (as an example marketing $ spent on campaigns for a specific product) to understand how different expenses might impact your bottom-line. For fixed-expenses like your workforce, vendors, and others - it's important to have a financial model that is kept up-to-date and syncs with your various systems (ERP/HRIS/CRM/etc.) so that your forecast is as accurate as possible. It's also paramount to be able to communicate what's happening with leaders across your organization, as they'll have the best understanding of contextual spending.

when forecasting expenses, it is important to understand the strong correlation between revenue vs. expenses. Any expenses incurred should have a revenue generated. check your historical data to better understand what was spend in the past and how of ROI was brought. Hence is it a necessary expense ? Make sure to involve your team when forecasting expenses as they will know in operation what needs to be spent, be careful expense forecast should not become a "christmas" wish list :)

Expense forecast should also include the strategic Decision of the business. If Management has decided for expansion of the business then historical data might not help. In such scenario, Budget needs to be aligned with Strategi Plan. Another example is that Management might have decided to enter into the new geographic location. In such case also, budget should include those expenses related to cross border establishments or transactions.

I’m in non-profit, often grant funded healthcare, so for us, this measure is not a raw number but is a more powerful tool when it is presented as ratios. Personnel expense cannot exceed 60% percent of revenue or we will experience shortfalls. Translating that down to different service lines and locations is difficult because of allocation of overhead and significant variation in gross margins, but I’m hopeful we can figure it out. Our surplus leading departments (pharmacy) are who we depend on to fund the rest of the loss leading departments in ambulatory care and enabling services; life changing services that don’t generate reimbursement.

It is important to check monthly, or ytd monthly, the kpi (in % i.e.) of expense forecast, in terms of each line of cost in % or Net Rev, not only in gros value.

Many find cash forecasting one of the most difficult things to get right, because it is affected by so many factors - including some that are not entirely within management control, such as accounts receivable (debtors) and other working capital elements. A good financial model will be updated each month (typically) and take account of all elements of working capital - inventory, debtors, creditors etc as well as the more obvious items - revenue, costs etc It forecasts the cash position in future periods and identifies future funding requirements, or highlights that management action is required to avoid cash problems.

You must have a cash flow forecast. It is impossible to run a business without it, other than badly. A rolling 13 week cash flow is usually long enough to have an element of certainty and the time to do something about shortfalls. Update it weekly for actuals and understand the variances. It's vital. Business owners must understand the difference between cash and profit.

Managing cash flow is a challenging yet vital part of forecasting, given its susceptibility to external factors. Proactive management of outstanding receivables and payment terms is essential. Implementing a 13-week cash flow model can offer valuable insights. It's also crucial to maintain open communication across teams regarding the collectability of accounts receivable (AR), ensuring continued service to customers. This approach not only helps in anticipating cash flow challenges but also in strategizing effective solutions.

Las empresas no mueren por las pérdidas, lo que realmente las asfixia es la pérdida del flujo de efectivo, por esta razón es de vital importancia tener esta previsión dentro de tu proceso presupuestario y tratar de generar modelos que te permitan reaccionar y ajustar el rumbo de forma oportuna.

Track how long it takes on average for customers to pay their invoices. A high DSO could indicate credit issues or inefficiencies in your billing process.

In healthcare, we accomplish this via accounts receivable monitoring; both patient accounts and grant receivables. I find it incredibly challenging to predict what cash will come in as we are at the whim of the payers. Pharmacy claims are paid on a 60-90 lag, grants 30-90, and healthcare claims, while sometimes paid within 2 weeks, also have a history of being taken back without notice. Monitoring on going payment issues with the payers and the scope of them is valuable to us. (Focus on the variances). We largely communicate the A/R metrics and days cash on hand widely and finance and top management/board monitor actual cash levels.

Cash Flow is not, or mainly not, a metrix pertaining the P&L, that is drive by the principle of, i.e. rev of a product released in the period, with related cost allocated in the same period. The cash is driven by the "cash principle", since we track the cost/revenue at the time we have physically the flow of the cost/revenue in the company. This is important wherever there is the necessity to have a control on the liquid asset, money asset in the company.

Essa é uma prática essencial para empresas, que permite antecipar entradas e saídas de recursos financeiros. Analisando receitas e despesas futuras, as organizações podem tomar decisões estratégicas, evitar crises de liquidez e otimizar a gestão financeira. Essa ferramenta oferece uma visão clara do cenário financeiro, contribuindo para o planejamento eficaz e a sustentabilidade econômica das empresas.

Tener muy en cuenta qué cuentas son operativas / financieras y de inversión. Muchas veces se cae en el error de coger cuentas del balance y por estándar usarlas como una u otra. Por ejemplo cuentas por cobrar se las manda al flujo operativo pero hay que indagar y ver si por ahí están quizás préstamos otorgados de carácter financiero

Consider a manufacturing company experiencing a variance in its cash flow forecast. Operating Activities: Cash from sales, payments for inventory, salaries. Investing Activities: Purchases of equipment, investments in property. Financing Activities: Loans, repayments, equity financing. Cash Inflow Variance: Budgeted $300,000; Actual $280,000 (Variance: -$20,000) Cash Outflow Variance: Budgeted $200,000; Actual $220,000 (Variance: $20,000) Cash Inflow Variance: Delayed payments from customers, lower sales. Cash Outflow Variance: Unexpected maintenance costs, higher utility bills. Report Findings: Present findings to management in detail Proposed Actions: Suggest improving credit collection processes and reviewing maintenance schedules

Variance analysis means comparing what actually happened with what you expected in terms of money coming in, going out, and cash flow. It's a key measure for your budget dashboard, showing how well you're meeting goals and sticking to your plan. It helps find out why things didn't go as planned, so you can make corrections for better financial management.

One can only report on metrics they planned on! Hence, reporting should be strategically planned before pulling plans together for budgeting/forecasting Once, decisions are made on what metrics the business wants to focus on, they then can ensure those drivers form the foundation of the budget/forecast and therefore can then be used for Variance Analysis

Variance analysis is crucial in business management, but its real value lies in informing actionable solutions or raising pertinent questions. For example, a variance analysis I conducted on utilities revealed higher costs due to unexpected cold weather—a factor beyond our control. This underscores the importance of focusing on variances within management's control and those with material impact on business performance. Effective variance analysis should guide actionable strategies, not just highlight uncontrollable external factors.

Three Variance Analysis numbers include Material, Labor, and Overhead Absorption. Are your raw materials and components properly valued by adding indirect material expenses, such as freight and duties? Are the goods you produce properly valued, by including labor and overhead expenses? First, decide which expenses will be included and how these will be applied systemically. You will need a process to measure the applied absorption against actual expenses. Decide on a tolerance. This tolerance could be a percentage, a dollar value, or both. This will guide you in analyzing indirect material, labor, and overhead expenses and provide the best, timely, and accurate information to leaders, enabling them to make better decisions.

Businesses grow and scale at different rates, and are constantly adding new (unplanned) expense lines and revenues. In order to properly understand the "Why" behind a variance, you need to set a baseline of what your expectations are - typically by going down your P&L and forecasting it line by line. Once you have your basis, you then need a way to consistently match your baseline with fresh data that's being generated from your various source systems, so that each line of your P&L is matched accurately. Once that's done, you need to dig into the largest variances by engaging with others in the organization who are closer to their specific function and understand context.

Ugh. I believe this has value TO A POINT. I am not a fan of spending tons of our resources finding out what happened in the past. The reality of it for an #FQHC (federally qualified health center) usually one big grant, or one big project or payment that did or did not come thru and variance analysis ends up being a commentary on all the things outside of our control. It has value, but only to the extent that it is NOT the measure of anyone’s success. I believe the more valuable variance analysis is actual compared to a historical average. We are our own best benchmark. If we are always improving against our own performance we’re moving in the right direction.

El análisis de varianza es una métrica fundamental para evaluar la evolución y resultados del negocio comprando en ocasiones contra prespuesto, año pasado o contra mercado. Este indicador que abarca las líneas de Estado de Resulados y Balance General permite identificar y alinear el ejercicio presupuestal con los objetivos estratégicos al destacar incrementos o disminuciones y sus principales variables y las razones detrás así como realizar ajustes durante el año para lograr los objetivos planteados.

Categorize variances into revenue, cost, and profit variances to systematically identify issues. Quantify the variances by comparing actual figures against budgeted or forecasted amounts. Analyze the root causes of variances to understand why they occurred. For instance, a sales variance might be driven by lower-than-expected demand. Assess the financial impact of each variance on overall profitability. For instance, determine if higher COGS affects the company’s ability to invest in growth initiatives. Use financial ratios and CM analysis to understand these impacts. Share your findings with relevant stakeholders through clear and concise reports. Highlight significant variances, their drivers, and proposed corrective actions.

I agree, and the Data Table function in Excel is a great way to perform a Sensitivity Analysis on 2 complementary KPIs. This will help you identify the relative impact that the same % change applied to each KPI will have on the end calculation.

When creating scenario based analysis, it is important to be specific about: 1) Define the scenario - what is this scenario intended to cover. If 'best' case, define what the best case outcome or situation entails. 2) Define the assumptions for the scenario. Each scenario should have a 'hypothesis'. For example, if you are forecasting vendor expenditures, a best case scenario could include a 10% volume discount negotiated on all contracts over a certain size. 3) Be clear about the likelihood of each scenario using data based analysis. For example, a 10% volume discount may be ideal however how realistic is that given the composition of your expense portfolio--are there many fixed expenses, have contracts been recently negotiated, etc.

Looking at worst and best case scenarios allows decision making on appetite for risk acceptability within business parameters. Different markets, geographical locations and pestle analysis would add to the numerical analysis provided for a holistic approach.

I always include the main assumptions for the scenarios on the dashboard, so that they can be changed, either in a scenario group via drop down list, or individually and the results can be seen to flow seamlessly through the P&L, Balance Sheet and Cash Flow forecast. It’s an incredibly powerful tool.

Consistency is key! Your different scenarios should use the same drivers and inputs as your existing financial forecast/plan, so that you know which variables you're going to vary. This means clearly defining the different drivers that are going to impact a forecast, and making sure they're all linked together. As an example if you have expenses that are based on headcount, you need to ensure that any changes made to your headcount accurately reflect in your expense lines. Once your base-model is set up - you can create different versions of it and start tinkering with the different variables to better understand the end result.

KPIs vary from industry to industry. For e.g. GP margin may be a good indicator for a company's performance operating in an FMCG sector but may not be that relevant for companies operating in the oil and gas sector. Every company is different, they need to understand what are the levers that can be measured to define their success.

KPIs are so important IF they are measuring the right things! We have begun tying them to mission and purpose. For example, one of Finance’s KPIs is the percent of patient balance collected in house vs sent to a collection agency. I know what you’re thinking-“of course, finance wants more money sooner”. But that IS NOT it. Part of Finance’s mission includes ensuring the dignity of our patients. Sending a patient to collections does not ascribe dignity to them. Working with them to establish payment plans to empower them to be partners in their care-that ascribes dignity. And that’s why the measure is there. And it’s not all Finance’s responsibility-It requires collaboration with multiple departments. So it’s a shared purpose.

KPIs are crucial for tracking business performance and clarifying management priorities. However, it's vital to limit them to those most relevant to the business. Additionally, KPIs gain more value when not viewed in isolation but compared against benchmarks, such as previous year's data, and industry standards. This comparative approach provides a more comprehensive understanding of performance and areas for improvement.

KPIs such as Realisation per unit, direct costs and Indirect costs per unit, Revenue per person, R and d costs as a % of sales, energy costs as a % of Total manufacturing costs, Supply chain costs per km/ per unit, Manpower costs as a % of sales and ROCE and Fixed assets turnover ratios are some of the KPIs which can be helpful in budget .

Based on the industry, KPI’s would be described, like in case of consulting, it would NFC Budgeted , Blue Sky, Fee Billed, OPE Billed , Unbilled at Project level, CSP level and EL level

KPIs will vary based on your industry, and your entire process should revolve around being able to analyze your most important business markers. As an example, if you're selling a B2C software product - some of your most important KPIs might be: - User Retention & Churn - ARPU (Average Revenue Per User) - User Engagement And although some KPIs might not be directly financial, a business has many different aspects to keep track of, and nothing happens in a vacuum. Once you've defined your KPIs - you also need to ensure they're being calculated correctly and consistently, so you can track them over a long period of time to uncover trends and dive into the "Why".

It is important that all KPI are measurable and have a SMART approach. In the Hospitality industry some of the most important KPI are as follow: 1. MPI (market penetration index) , ARI (Average rate index) , RGI (Revenue generated index) this will help you to benchmark your performance vs. your competitive set 2. RevPAR ( Occupancy X ADR) 3. Profitability abs. value & % by department 4. GOP abs. value & % 5. EBITDA 6. Food Cost% 7. Staff turnover 8. Employee satisfaction rating 9. Guest satisfaction rating 10. Revenue Generated from your direct sales vs. indirect sales

Crafting an effective budget forecast dashboard requires selecting metrics that provide comprehensive insights. Key metrics include revenue forecasts, expense breakdowns (by key categories), and cash flow projections. Incorporate variance analysis to compare actual versus forecasted figures, highlighting areas that require management attention. Utilize key performance indicators (KPIs) relevant to your industry and organizational goals. Graphical representations, such as charts or graphs, enhance data visualization, making it easier for stakeholders to grasp complex financial information. Regularly update the dashboard to reflect the most recent data, ensuring that stakeholders have access to accurate and current insights.

A dashboard should include all the KPIs that impact the revenue assumptions in your budget model. As variations to the assumptions are realized, having visibility as to what is impacting your business’ output will be critical to be able to course correct before you need to start updating your revenue outlook for subsequent periods.

The top KPIs are Sales price, Sales volume and mix variations, Gross and net margin value and percentage. Over and under absorption as well as any variance in ppv including exchange rate, SG&A cost and percentage of net sales and last but not least EBIT in value and %

Instead of trying to improve the budgeting process, I would recommend taking a step back and challenge the whole process, as the Beyond Budgeting movement has been doing for 25 years. Check out BBRT.org and also my book "This is Beyond Budgeting" for more information.

Be careful how the first few periods of a forecast treat working capital. How the opening balance is unwound directly impacts cash and can result in unrealistic swings in cash if not done right. For example - for receivables (debtors) if you use a simplistic 45 debtor days to drive your cash collection, make sure you don't have a void in the first forecast period. A simplistic debtor day approach can also cause unrealistic cash patterns especially with seasonal businesses. I like to drive the cash forecast using an aged debtor profile table - how much of the opening balance converts to cash each month over 3-6 months (based on actual cash collection data). Remember payments received in-month will already have reduced the balance.

An example below I described how to make a budget forecast dashboard for a project : 1. Make a feasibility study of your project on materials, machineries, execution period,manpower,unforeseen delay,weather,location,inflation rate) 2. Spare a percentage of total project value as a profit(ex: 5-10%) 3. Now divide the rest 90-95% in 5-10 section[Ex: Materials 40-45%,Tools & Machineries Rent/ Purchase- 10-15%,Manpower Salary- 15%,Safety- 5%,Unforseen Delay & Demurrage - 2.5 2.5=5%,Execution Premises - 5%,Office Cost -2.5% Others 2.5%] 4. Divide every subsection in assuming (Per type/period/person/quantity/etc) 5. Balancing between subsections.(One section has a better balance than the other so make balance between them) *Implementation*

In addition to above, you need to consider: Burn Rate: Measure how quickly the company is spending its available cash or funding. Return on Investment: Evaluate the financial return on specific investments or projects. Debt/Loan Repayment Schedule: Track upcoming debt payments and loan obligations to manage cash flow effectively. Forecast Accuracy: Measure the accuracy of past forecasts to improve future predictions and planning. Risk Assessment: Identify and assess potential financial risks that could impact budget projections. These metrics provide a holistic view of financial health and performance, enabling stakeholders to make data-driven decisions and adjust strategies as needed.It should be visually appealing and easy to interpret.

There shouldn’t be hard and fast rules as to what should be included in a budget dashboard. It all depends on the narrative that you are trying to get across. The metrics, commentary, analysis etc included should be relevant, joined up and tell the ‘correct’ story. One key thing to remember however is to keep metrics high level and also to concentrate on a mixture of financial and non-financial measures (and of course how they interact).

Revenue Forecast: Predicts future revenue based on factors like historical sales data, market trends, and economic conditions. Expense Forecast: Predicts future expenses based on historical expenses, planned projects, and contractual obligations. Cash Flow Forecast: Predicts future cash on hand, derived from the revenue and expense forecasts. Variance Analysis: Compares actual results to the budgeted results, helping identify areas of strong or weak performance. Scenario Analysis: Assesses the impact of different scenarios on financial performance, aiding in decision-making.

Before you can even think about revenues and expenses you have to understand the business drivers. Volumes, capacity, and productivity. These are what will drive everything else. Do not leave out your operational partners because after all a budget is an operational management tool. Financial professionals cannot develop a successful budget without understanding the operational drivers. And I agree with others who have said to think beyond the budget and I would urge you to also consider revising your budget throughout the year as operations make changes you can update the rolling forecast.

The only thing I have to add is that upper level management needs to know or understand data sources. The people in the weeds understand the data well and know what is possible or not and what is worth spending hours of time on to get one KPI that in the end means nothing. Understand seasonality has an affect as well as economic conditions based on those locations.

Budget vs. Actuals: Highlighting the variance between budgeted and actual figures allows for real-time monitoring of performance and adjustment of strategies as needed. Forecast Accuracy: Evaluating the accuracy of past forecasts against actual results helps in refining forecasting models and improving future predictions. No matter what metrics you use for preparing the budget, it will not mean anything unless you do a monthly deviation analysis and a monthly assessment of your budget assumptions.

Effective budget metrics drive business success by offering transparency and strategic insights. Key indicators, such as revenue and expense breakdown, illuminate fiscal health, optimizing efficiency through COGS and expense analysis. Prioritizing impactful products, profitability metrics like gross profit margin guide decision-making. Cash flow and strategic KPIs, including ROI and CLV, ensure liquidity and provide crucial insights. Workforce optimization is achieved via labor cost and turnover rate metrics. Adaptability is fostered through scenario analysis, while tracking external trends allows proactive responses. These metrics empower dynamic decision-making, strategic allocation, and agile navigation in the business landscape.