The use of 3-way forecasts is an important business and management tool. And with cloud accounting software programs providing real-time reporting, the ability for SMEs to g to get access to high-level future business insight into the future business operations through a 3-way forecast is significantly easier.
A 3-way forecast encompasses a forecast that covers the three ways that a business can be impacted. A 3-way forecast covers the profitability of a business, the cash flow impact of a business and the financial wealth (balance sheet) of a business.
For example, a start-up business could enjoy a high cash flow from investors and be unprofitable. So, a simple “profit and loss” will not give insight into the solvency or viability of the business. And the same business could be increasing market share significantly during the start-up phase – and the balance sheet should show the increasing value of the business goodwill if that is relevant for a business.
A 3-way forecast recognises that each business transaction has a multi-pronged impact. And getting your 3-way forecast to correctly identify, incorporate the changes across the spectrum and give clarity in future operations is the driving goal. If you present your business plan to a bank, purchaser, investor or even to your management team, a 3-way forecast is an important “backbone” document to support the director’s report.
A sound strategy for running your advisory board is to present your forecasts, present historical results to the forecasts and account for changes. This exception reporting allows an advisory board to drill down to items of interest – from financing operations and investing activities to operation exceptions. And if Westcourt prepares the 3-way forecast, together with our CFO services and board roles, your business insight and advisory board will work the way you hoped it would from the start.
A 3-way forecast can also be an essential tool for families in business with significant tax debts to negotiate a payment arrangement with the Australian Tax Office.
At Westcourt, we are skilled at enabling software to prepare 3-way forecasts quickly and accurately and also allow ongoing review and changes. An example of our commitment to 3-way forecasts can be seen as Westcourt is a global foundation partner with Futrli – even before the software company became a household name (among forecasting accountants). We also use other software programs – like Calxa – to assist our clients.
So, if you consider preparing 3-way forecasts for your business through your cloud accounting software Westcourt is a natural choice. Our technical knowledge in cloud accounting, business acumen, and insight from creating and running our business. Together with decades of experience in helping family-owned businesses flourish means that we can provide true insight into the preparation, monitoring or review of your 3-way forecast – so give us a call.