Sage 50 Forecasting – A review

Many years ago I tried using a product called WinForecast to create financial & cash Flow forecasts for the Company I worked for.  The product couldn’t generate forecasts in the way we presented the management accounts, so I had to build a model using Excel.  Let’s say that the management accounts were “not standard”, because the Dutch MD wanted information displayed in a way he could understand, rather than sharing the information with managers in a way they could understand.  Anyway, that’s another subject (management, direction & control) which one day I might decide to write about.  

Benefits of Sage 50 Forecasting

Sage 50 Forecasting is a good basic tool for creating business plans, irrespective of whether you use Sage 50.  Clearly there is a benefit to using Sage 50 Forecasting with Sage 50 Accounts, because you can hotlink your accounting data to your forecast.  This simplifies the setting up of the report layout, because you simply use the Nominal Ledger structure imported from Sage 50 Accounts.  You can also import live data and use this to create a forecast.  Personally I prefer the Excel hotlinks, where you create streams of data in Excel and hotlink these into your forecast.  This allows you to sensitise the data in your spreadsheet and refresh the data in Sage 50 Forecasting immediately. Once you get into Sage 50 Forecasting, the above methodology becomes a bit of a dilemma.  This is because there are many useful and powerful features within the application for you to generate forecast data.  For example, there is the ability to link costs to specific sales categories on a percentage basis and this can be seasonalised over the forecast period.  You can enter formulas or simply enter a recurring value.

You must first create a financial period you wish to forecast and set the time frame.  This can easily be amended and extended, but we would suggest you create the correct forecast period from the outset, because you need a methodical approach to avoid some of the Gotcha’s. Set up your VAT rates, your pension scheme, check the Ee’s and Er’s NI rates and you’re pretty much ready to start.  There are a number of other tables to set up. But these can be done as you go along, for example receipts and payment profiles.  A logical starting point is the entering of the Opening Trial Balance, this is best summarised into key categories, because the forecast data obviously updates the balance sheet, when you have indicated the receipts and payment profiles.

The reporting is pretty good to, because you can report over the forecast period and define whether you want the reports to be summarised annually, quarterly or monthly.  For medium term forecasts the quarterly summary is excellent, allowing you to report on two financial years on one A4 sheet of paper.  These reports are generated in Excel, together with Groups, so you can expand and summarise data for different readers.  Key reports include Profit & Loss, Balance Sheet, Cash Flow and some limited KPI’s.  There are also a couple of basic charts for break-even and cash flow, but you’re probably better off doing these in Excel, because you have more control over how they will look.

Limitations of Sage 50 Forecasting

For Example you can only define whether invoices are raised equally during the period or at the period end.

Downsides of Sage 50 Forecasting

With complex forecasting within a group structure, you have to consolidate your data in a spreadsheet.  This works reasonably well if your Nominal structure within Sage is the same throughout the group (which is unlikely) and it then becomes quite time consuming when creating your sum formula through the Excel sheets and trying to eliminate inter-company transactions!.

There is no facility to print out the assumptions you have made in a logical way to incorporate into your business plan.