This Financial Projections Template is Upleveling FP&A Outcomes

Q: What are financial projections?

Financial projections are all the financial metrics that your organization monitors and tracks over time. You can look at historical data, current actuals, and future projections to get an idea of how your business is performing compared to prior periods and how you expect it to perform moving forward. If your financial projections fall out of alignment with your actuals, then you know how to adjust your financial plan to boost the health of your business.

Q: Why is financial forecasting important?

Financial forecasting directly informs business decisions. If your cash flow forecast looks too low in Q3, you can adjust your spending to avoid negative business outcomes. Having financial projections that are reliable and flexible will change how you do business, both internally and externally.

Q: What should I include in financial projections?

Depending on the projection you’re focusing on, financial projections should include detailed transaction-level data, high-level aggregates, and breakdowns of different data cuts such as region or business channel. Your sales forecast will look different than your cost of goods sold (COGS) forecast, but both should have detailed enough drill-down capabilities that you can easily determine what’s influencing your overall performance.

Make your financial projections more effective and accurate, so you can drive better decision-making and achieve your financial goals with confidence.

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Financial projections have long been something that FP&A teams have tried to perfect with different spreadsheets, processes, and data sources. In the past, the outcomes of these templates have been iffy at best, but with today’s technology, the insights highlighted by the right financial projections template can truly change your business. Let us show you how to utilize the built-in financial projection template within Abacum. We’ll focus largely on cash flow in this article, but our financial projection templates can be used for your expense projection, revenue projection, and everything in between.

Content created by: Eduardo Bork Alvo, Senior FP&A Ops Manager at Abacum

Table of contents

Author

Eduardo Bork Alvo

Senior FP&A Ops Manager, Abacum

For businesses, accurate financial projections serve as a blueprint, guiding leaders on what decisions to make, how to achieve financial health, and helping them make tough financial decisions when necessary. In every industry around the world, the financial health of a business is the one true marker of how well it’s performing.

What are Financial Projections Used for?

Financial projections are used to highlight strengths and weaknesses within your business. Every financial projection offers a look into what is working and what needs to be changed within your business operations.

There are a number of financial projections that businesses focus on, such as:

Payroll Expenses
Cost of Sales
Cash Flow Forecast
Sales Projections
Break-Even Analysis
Financial Ratios

Many businesses monitor and analyze similar financial projections, but depending on your industry, you might have specialized metrics to track. That’s the beauty of a tool like Abacum; it has out-of-the-box templates for classic financial projections but leaves space to create templates that are unique to your business.

If your business has great sales numbers but still isn’t meeting bottom line targets, you might need to adjust your spending plans. There are many different types of financial projections that need to be examined for most businesses including cash flow, sales forecast, and even the revenue projection. When the insights from every financial projection template come together, they paint a picture that drives action and stimulates business endeavors.

Just like mid-market businesses, the SaaS startup world, small business operations, and large enterprises all rely on financial projections of varying complexities. Being equipped with the right financial projection template for every aspect of your business is critical, but it can be challenging to know where to start.

Cash flow forecasting? Revenue projection? Break-even analysis? How do you prioritize the shifting financial priorities that come with doing business? With Abacum, your financial projection templates can be tailored to your business, hooked to your internal systems like your ERP, and customized as needed.

Our system turns financial statements like your balance sheet and income statement into accurate, actionable financial insights.

FP&A Tip:

Even while in the business planning stage, startups need to have financial projections to convince investors that their business is a worthwhile investment. With a professional financial projections template, the entire endeavor will be seen as more put together and reliable, supporting the notion that investors will see a return down the line.

How Do I Make a Financial Projection?

To get the most out of your financial projections, invest in your data infrastructure, organize and align your data sets, and use Excel or tools like Abacum to monitor your financial data, automate forecasting for different business areas, and prioritize your financial needs.

Financial projections can be changed over time to include new data inputs or business operations, too. Be sure to compare your current financial projections to past and future projections in order to understand data trends, market behavior, and business performance.

Get Your Data Right

The foundation of every good financial projection is sound data. There’s a saying amongst data and finance professionals around the world; it’s simple but true: “Garbage in, garbage out.” If the core data is managed poorly, the accuracy of your financial projections will be off, leading your organization to make the wrong business decisions and navigate business changes with less-than-helpful insights.

If you’re truly committed to understanding the financial picture of your organization, data integrity has to be your number 1 priority.

FP&A Tip:

If you use Microsoft Excel for a variety of financial processes, be sure to utilize tools that work seamlessly with your existing data sources to maintain your data integrity. Abacum connects directly with Microsoft tools and many other source systems, data analytics tools, and even Google Sheets.

Key Pillars of Financial Business Projections

Just like your balance sheet, income statement, and amortization schedule are critical to weekly and monthly financial operations, there are a few types of financial forecasts that most businesses rely on regularly.

Sales, revenue, and cash flow are 3 critical financial projections for every business:

Sales

A good sales forecast predicts how many products or services you’ll successfully sell within a certain time period. Most organizations have an annual sales forecast, a quarterly forecast, and a monthly forecast. The idea is that if monthly targets are hit, quarterly targets will be hit, and ultimately, annual targets will be met or surpassed.

Sales forecasts can be split by region, product type, sales channel, and more. The more granular your forecasting mechanism gets, the better perspective your FP&A team will have to business partner with the sales team and boost your top line: revenue.

Revenue

Your revenue forecast is closely linked with your sales projections because revenue is the amount of money brought in from all selling activities. If you sell 1,000 widgets at $5 per unit, then your revenue will be $5,000 for that time period. You can use historical financial data to inform upcoming revenue forecasts.

Cash Flow

At a time when inflation is high and market volatility is unavoidable, businesses are monitoring their cash flow projections with more importance than ever. Having enough cash on hand is critical to be able to make investments and cover surprise expenses. If you have too many liabilities on your balance sheet, your cash flow could take a hit, putting your business in a vulnerable position. With Abacum, your cash flow statement will become more actionable than ever.

These pillars of financial projections barely scratch the surface of what most FP&A teams track, but they are very high in importance. We’re going to dive even deeper into cash flow, breaking down exactly how Abacum can help revenue your cash flow forecasting process and build financial models that inform business decisions.

Breaking Down Cash Flow with Abacum

With sufficient cash flow, you can invest back into your business to reach business goals, insulate your organization from financial threats, and have the funds to hire new employees or promote deserving individuals. If you run out of cash, your business operations will be severely limited, so getting an accurate read on the cash you have coming in and going out is extremely important to organizational success.

With Abacum’s cash flow projections template, you can toggle see your actual cash flow numbers right next to your monthly, quarterly, or annual cash flow forecasts.

The view is completely customizable, but to start, Abacum breaks down cash flow into multiple categories: operational activities, investing activities, and financing activities.

Cash Flow from Operational Activities

Representing the cash your company brings in or spends through regular business operations is called out as “cash flow from operational activities” within the financial projections template. It includes things like your net income, depreciation and amortization of your assets, operating expenses, and even your operating liabilities.

With our cash flow template, you can click on any of these line items to see a transaction-level display of every inflow and output that makes up this category. Drilling down is intuitive and can pull data directly from NetSuite, QuickBooks, or other source systems you use in your financial ecosystem. You can also monitor each metric for different subsidiaries and regions, gaining a more granular look at the performance of different business areas.

Cash Flow from Investing Activities

Another subset of your cash flow projections template is cash flow from investing activities. When your organization purchases intangible assets or makes investments in the stock market, you’ll track cash outflow.

In the short term, you may not see a large amount of cash coming in from this category because so many investments are long-term, but if you have investments that pay dividends or you sell stock, there will be positive cash flow coming in.

Cash Flow from Financing Activities

Repayment of debt is the most prominent line item in this category, but your organization may have other line items, too. Managing your liabilities is the main “financing activity” for most organizations. It’s important to track because you need to maintain enough cash on hand to pay your debts and still have leftover cash for emergencies or other expenditures.

Opening Cash Balance vs. Closing Cash Balance

At the very bottom of the cash flow projections template, you’ll clearly be able to see what your cash balance was at the beginning of the period tracked and compare it to the cash you have on hand at the end of the period. If your closing balance gets too low for comfort, you can adjust your spending or focus on boosting your revenue in future months.

Features and Capabilities

The best part of interactive financial projection templates is the ability to test different scenarios and toggle through a multitude of business assumptions.

FP&A Tip:

For instance, with Abacum, you can adjust certain working capital assumptions like days receivable and days payable. Broken down by vendors and customers, these assumptions directly impact your cash flow and runway.

When you’re ready, you can move to the module functionality where all the financial projections roll up into financial statements and can be funneled into reporting mechanisms or modeling tools. Within the cash flow modules area, you’ll see exactly what each line item is made of and can make adjustments for your business as needed.

Using Abacum to Refine Your Process

If you’re still doing cash flow analytics in Microsoft Excel, Google Sheets, or a separate worksheet application, you’re not alone. However, true business transformation comes when you boost the efficiency and accuracy of your analysis. Abacum makes the transformation seamless, intuitive, and accurate. Our tool is designed for mid-market businesses that are looking to increase productivity, make better business decisions, and experience impressive growth.

Our FP&A team can create accurate financial projections based on all your data sources if you are an SMB business with a finance team who wants to be the hero of your organization.

common challenges, and implementing the right strategies, businesses can enhance their financial performance and drive sustainable growth. With tools like Abacum, businesses can simplify the P&L management process, allowing them to focus on making strategic decisions based on accurate financial insights. Abacum can help you do it. Call us today!