Forecast profit and loss - The Book-keepers Forum (UK)

NickyW · Veteran Member

Forecast profit and loss

BackOfficeGroup · Guru

nicky

If you have a projected cashflow, then you can use these figures to draw up the P&L. Its just like doing a normal P&L but your using forecast figures and not actuals.

But you do need some figures from the company to put on the P&L, normally taken from past years.

P

NickyW · Veteran Member

Thank you very much. This certainly helps!
Nicky

Marky65 · Guru

I know this might be a bit late but I always find it easiest to do the forecast p&l first and then work the cashflow from that.

Mark

NickyW · Veteran Member

Hi there - thanks for replying. This is where my inexperience shows - if you do the P & L forecast first - do you just look at the previous year's P&L and say add on 10% increase for sales, then do the same for expenses etc.. or is there another way of doing it.
If you do the P & L first doesn't this make it possibly inaccurate. Where I work, (it is a s/w company) sales are only put in the cashflow if they are definite. Therefore if the P&L forecast is drawn from this data it makes it pretty accurate.
I hope I am making sense!!
Regards
Nicky

adi2402 · Senior Member

the forecast should contain expected sales and expenses. You should probably take last years p and l and identify any one off costs this year and next year and discuss the expected increase / decreases with the directors. That would be a good start i think.

Sales should not just be confirmed sales unless you have almost a full 12 m order book, otherwise you will be in danger of understating expected income.

If u will be doing a fair few cashflow and p&l forecasts i find the programme winforcast pretty handy.

NickyW · Veteran Member

Again this is really helpful. Thank you for replying!
Nicky

BackOfficeGroup · Guru

Forecasting is an art and gives you a feel for your company and the trading. In this current climate, forecasting is very difficult. We don't do a cashflow forecast until after the P&L forecast is complete, like Mark and we update both on a monthly basis.

Adi
Is that Sage Winforecast or just Winforecast?

P

-- Edited by BackOfficeGroup on Tuesday 17th of August 2010 08:44:51 AM

adi2402 · Senior Member

sage winforcast. its a bit pricey but if you are doing a few or offer this service it is very good.

littlebookkeeper · Senior Member

I agree, I like winforecast and have used it a lot in my time.

Yes, do a monthly profit and loss projection first, as only then can you do a forecast of where the cash is going in and out and be prepared to revise it many times in order to get the desired cash flow!

Use the previous years p&ls and cash flows if you have them to give you an idea of when things are paid and seasonal trends etc

Carole

NickyW · Veteran Member

Thanks guys for all your help. I have started doing it and feel a lot more confident doing it.
I do however have a few more questions ..... sorry!

1. Would you suggest doing a forecast P & L on a monthly basis rather than just have a yearly one?
2. Am I right in thinking that sales revenue for a cash flow projection would be based on confirmed orders. Sales figures for a forecast P & L would include these confirmed orders and projected growth(??) something I would have to discuss with the Sales Director.

Again thanks for all your advice
Nicky

adi2402 · Senior Member

hi,

I would generally do them on a monthly basis.

You can only base it on confirmed sales if your order book is full. Generally i would look at last year, look for any exception orders, consider the expected trend for the year and as you say speak in detail to the sales director.

Obviously just very general advise. The approach will vary for business to business, sector to sector.

BackOfficeGroup · Guru

Nicky

We have a 12 month forecast ie the financial year that we do for the bank and ourselves. It is based on a month by month basis, very detailed in the expenditure section also, more so than the general accounts would be.

As we go through the year, we amend as necessary.

With cash flow, your business may not have confirmed orders, so you have to project as er the forecast P&L what your cashflow will be.

P