Real-time insights are sometimes lacking from traditional yearly planning and forecasting procedures, particularly when handling unanticipated obstacles and market volatility.
Have you outgrown the basic planning functionality of your ERP system? Or are you tired of running manual cumbersome time-consuming spreadsheet-based financial planning and reporting processes?
With Acterys, you transform Power BI to become a true integrated FP&A solution.
Agile Financial Forecasting Is Necessary
You should know why conventional financial forecasting techniques may not be enough in the current corporate climate is essential before we get into the details of rolling forecast Power BI.
FP&A is a Microsoft Azure, Power BI, and Excel-based integrated product for Data Warehouse Automation, Corporate Performance Management (CPM), and Financial Planning & Analytics (FP&A).
It allows users to:
- With “One-Click” Apps and Acterys’ breakthrough virtual data warehouse capabilities for best usage with Power BI, you can completely automate the process of data model development for practically any data source (ERP/accounting/SaaS applications).
- With 8 Power BI custom graphics, 4 Power BI Apps, and a powerful Excel Add-on, the planning engine delivers unrivaled planning and forecasting tools that directly write back to SQL Server, Analysis Services, and a number of other sources.
- Business users may deploy FP&A and CPM processes on a unified and cost-effective platform that is tailored to their specific requirements and easily connected with their day-to-day productivity solutions.
- With the new Instant Link users can connect nearly any source, generate an optimal data warehouse model that is immediately “write back enabled” with the ground breaking planning functionalities in the 8 Power BI Custom Visuals and Excel Add-in.
- Traditional budgeting and forecasting techniques include creating yearly budgets, revising them on a regular basis, and basing crucial decisions on these static plans.
Rolling forecasts are a kind of financial planning and forecasting that go beyond the conventional yearly budget cycle.
The FP&A team is in charge of preparing profit and loss (P&L) statements, board reports, and management reports such as variance reports, which track budget vs. actual spend by department, and cash flow statements. Finalizing these claims necessitates gathering data from several departments (thus the need for business partnership skills) and then confirming and integrating that data. The FP&A team utilizes this to calculate important financial indicators that will show in these statements, such as the debt-to-equity ratio and current ratio.
Financial statement analysis is frequently used by FP&A professionals to determine which product lines or services have the best profit margins or contribute the most to net profit. Similarly, they may deconstruct the cost and income or profit created by each department inside the organization. Another frequent task of FP&A team members is to evaluate a company’s investments made using its working capital and to identify new investment possibilities.
FP&A’s more forward-thinking tasks include budget planning and estimating the company’s future financial performance. Budgeting is analyzing financial information to determine how to allocate funds. Forecasting necessitates the development of financial models that take into consideration trends within the company as well as changes in the larger industry and economy that may effect sales and profit. A smaller company may predict 4-8 months ahead, but a larger corporation may look 1-3 years ahead. Planning and forecasting are no longer only an annual or quarterly affair; more firms are shifting to continuous planning and rolling forecasts, analyzing the most recent information on a frequent basis to make adjustments.
Scenario planning is a sort of financial modeling in which FP&A professionals map out best-case, anticipated, and worst-case scenarios by entering in different figures for sales and order volume to see how it affects the company’s financial condition. Based on such findings, the team may define actions it would take in reaction to various outcomes, better preparing a firm for the future—according to an AFP/APQC poll, “extremely or very effective” FP&A teams were more likely to have predictive skills. These estimates can also aid in the planning of capital expenditures and other investments.
These on-demand reports, which are often requested by the CFO or controller, frequently give a more extensive examination of a certain KPI or business department. To obtain the exact information required by the executive, an analyst or director may need to extract figures from different bigger reports. This reporting and modeling, particularly if done on a regular basis, provides the FP&A team with the knowledge it requires to deliver fast, accurate, and actionable recommendations to senior management.
They are also known as continuous predictions or dynamic forecasts.
Rolling forecasts include revising and expanding the forecast horizon on a regular basis, as opposed to setting a single, fixed budget for the full year.
This implies that a new month or quarter is added to the forecast every month or quarter, giving a continuous perspective of the future.
How Are Rolling Forecasts Calculated?
Rolling forecasts employ previous data to adjust future estimations based on the most recent actual performance and market conditions.
Power BI is one of the tools and technologies required by businesses to properly execute rolling forecasts.
Organizations may make real-time revisions to their financial plans through this continuing process, ensuring that their plans are always in sync with the firm’s status.
Forecasting Options in Power BI
The line chart graphic contains the majority of the forecasting capability in Power BI. If you need an alternative, you may develop DAX measurements that do the computations for you.
Power BI has limited forecasting models, however you may determine the average for the previous six months using a simple moving average. To use this to forecast the future, you may need to establish a custom date table so that the graphic utilized extends to the future time you are attempting to predict.
Liner regression might also be performed using the LINEST DAX measure. If you decide to create custom DAX measures, we recommend utilizing ChatGPT as a reference for Power BI DAX Measures.
The last option for predicting is to employ bespoke Python and R scripts that can be performed from PowerBI. This strategy is unlikely to be employed outside of the data science community. Power BI excels at producing appealing visualizations, but it presently lacks sophisticated functionality seen in other systems.
Strengthening Financial Analysis with Power BI Dashboard
Power BI financial dashboards make it simple to track an organization’s financial performance in real time. Financial dashboards may give a complete perspective of an organization’s financial health by aggregating data from several sources.
A financial dashboard developed using Microsoft Power BI, a business analytics tool, is a visual representation of financial data and key performance indicators (KPIs). It gives customers a full perspective of financial data, allowing them to monitor and evaluate financial performance, spot patterns, and make data-driven choices.
Key Components of Power BI Financial Dashboards
- Revenue and Profit
- Sales Analysis
- Gross sales
- Sales growth rate
- Average transaction value
- Sales by product or category
- Sales by region, channel, or customer segment
- Operating Income
- Gross Margin
- Income Statement
- Financial Performance
- Return on equity (ROE)
- Quick ratio
- Current ratio
- Debt-to-equity ratio
- Price-to-earnings ratio (P/E)
- Earnings per share (EPS)