Unlike forecasts, which are predictions, actuals are the final results and reflect real-world performance. By regularly updating your actuals, you can get a clear view of your business's financial health. Tracking actuals allows you to measure how well your company performed against the estimates made in your forecast.
A project budget defines the total cost and resources allocated for a specific project, typically created before the project begins. A project forecast updates these estimates based on the project's ongoing performance, reflecting actual expenses and any deviations from the budget.
The Forecasted vs. actual report provides interval-level breakdowns that help you understand the performance of your staffing plan. In particular, the report helps you understand when you missed SLA across each forecast, and which planning factors you might adjust in the future to improve performance.
They also usually take market trends and impact into account. The key difference between the two is that a budget is what you would like to achieve and have happen whereas a forecast is a reflection of what will very likely happen.
A budget is a fairly static document often used to set spending limits. It enables companies to create a culture of accountability for their financial results. A forecast reflects more real-time estimates of financial results and is updated on a more regular basis.
expectation. The first major difference between a budget vs. forecast is that a budget is based on reality, while a forecast is based on expectations. If your business is currently selling an average of 500 units per month, that's what you'll most likely base your budget on.
Also known as a budget variance analysis, a budget vs actual report compares budget or forecast goals against actual performance for the profit and loss statement, balance sheet, and KPIs.
It's equal to the actual result subtracted from the forecast number. If the units are dollars, this gives us the dollar variance. This formula can also work for the number of units or any other type of integer. In the same example as above, the revenue forecast was $150,000 and the actual result was $165,721.
While forecast cash flow is a prediction based on calculations, actual cash flow is based on real figures and revenue streams and not dependent on any guess work. Actual cash flow consists of both a company's income and expenses, so it can provide a clear and reliable picture of a business' financial position.
The actual budget is the true revenue you are achieving, usually varying slightly from the static budget prediction due to unforeseeable variations in spending and financial activity from quarter to quarter.
A budget covers a year or longer and focuses on income and expenses, while a cash flow forecast (generally) covers a shorter period and focuses on the timing of cash inflows and outflows.
A budget forecast is a projection of the budget. This means it's a key component of variance analysis or any P&L budget vs actuals model. The budget forecast references the budget instead of historical values, which is especially helpful for organizations with inconsistent historical performance.
The key difference between a plan vs. a budget vs. a forecast is that a plan is high-level and focused on goals, a budget determines a company's resource allocations according to the plan, and a forecast is a potential future state based on the resource allocations in the budget.
We define a residual to be the difference between the actual value and the predicted value (e = Y-Y').
Forecasts are built on assumptions. Assumptions about number of customers, conversion rates or product release dates (for example). Comparing your actual results with your forecast will put your original assumptions to the test and help you identify where they were wrong and, crucially, why they were wrong.
((actual/budget)-1) 100.*
In this case, ($500,000/$475,000) = 1.0526. Then, we subtract 1 to have 0.0526 and multiply this by 100 to have a percentage variance of 5.26%. Based on this period data, your percent variance was 5.26% above expectations.
Forecast is what the analysts/economists think the value will be this time. Actual is what the actual reported value for this time is.
A budget typically covers a fixed period, usually one fiscal year, and remains relatively static once it's set. A financial forecast can cover anywhere from the next one to five years with varying levels of detail.
A budget variance is the difference between the budgeted amount and the actual amount. It is calculated by subtracting the budgeted amount from the actual amount. Depending on whether the actual numbers are higher or lower than the budgeted amount. It can be expressed as a positive or negative number.
What is the budget to actual report? Monthly Budget to Actual reports allows you to monitor State expenditures against the defined State budget, much like when you set your yearly budget and then monitor spending after each pay period. All actuals are incremental data from month to month hence the upward trend.
Use project forecasting if your organization has an operational perspective, and if it focuses on revenues and costs that are derived from specific transactions. Use project budgeting if your organization focuses more on the financial amounts.
The difference between a budget and a cash flow forecast is that the budget will show expected income and expenditure for a full twelve-month period, whereas the cash flow forecast will break down month by month when you expect the money to actually be spent or received.
A forecast is an attempt to predict what will happen. A budget is a plan of what is intended to happen. All budgets are prepared in financial terms. The master budget consists of a budgeted income statement and a budgeted balance sheet.