Accounting word of the Week: Sales Forecasting

As we are about two weeks left in the first quarter, many companies in the next couple weeks will conduct their quarter-end work and will start looking at their budgets to see if they have to adjust it. An area that is often overlooked is the top-line of their income statement - sales.

Sales forecasting is an important planning process in which companies should do on a monthly basis. It is the sole foundation in which it quantifies the business plan and in their master budget. Sales forecasting is a projection of future sales. It is the basis for a company to plan for capacity, production and inventory, manpower, and purchasing planning.

A company can use two approaches in creating a sales forecast: qualitative and quantitative. In the qualitative approach, the company will conduct a poll with their salespeople and conduct consumer surveys. In the quantitative approach, this requires the business owner to do a moving average, exponential smoothing, trend analysis, and regression analysis.

At A & C Bookkeeping Services, we will meet with our clients to discuss their budgets and to help in their planning process. This is important for business owners who need an independent and unbias approach with their budget and planning.

Please contact us today for your accounting needs.

Disclaimer: This blog is for information purposes only and is not intended to provide investing, accounting, tax or legal advice and should not be relied upon.