Do You Need Financial Projection Software?

If you're involved in the day-to-day business operations or otherwise strapped for time, reviewing and updating your financial forecasts may not be at the top of your to-do list. Financial projection software can save small business owners time and increase the accuracy of predictions. But, do you need another subscription or tool?

Accounting and budgeting systems may offer financial forecasting features, or you could use a template in Microsoft Excel or Google Sheets; however, there are also many free and paid standalone financial forecast solutions. Below, we'll help you decide if you need financial projection software, what to look for and how different tools compare.

Do you need financial projection software?

Having accurate financial forecasts is essential for updating a business plan or applying for funding. Even minor errors in your calculations can dramatically under or overstate your future revenue or expenses.

Accounting software like QuickBooks lets you create a financial forecast from your data. Usually, it only takes a couple of clicks to get a cash flow forecast report. Likewise, spreadsheets provide financial forecast tools, and you can create a template for financial predictions. But, you may decide these options aren't working for you and need a better solution.

Here are some reasons why small business owners choose financial projection software:

• They are required by a third party. If you're applying for a loan, trying to entice investors or want to bring another stakeholder in, you may need up to three years of financial forecasts.
• You want to save time. Writing a financial forecast is time-consuming. It takes additional effort to manually enter and verify data in a spreadsheet.
• You face cash flow problems. If you’ve experienced an unexpected shortfall, you may feel under pressure to quickly predict the next six months or upcoming year.
• You prefer an all-in-one tool. Business owners who are in the market for new accounting software may prioritize forecasting features and integrations to get what they need from one vendor.
• You need an easier solution. An Excel financial forecast is tricky for beginners and isn't as visually appealing or intuitive as financial projection software.
• You are preparing for growth: If you want to launch a new product or purchase equipment, you want assurance that it'll work out financially. Many business owners invest in software to manage financial forecasting as their business grows.

What to look for in financial modeling solutions

Think about who will use your software and who will receive reports. Workforce planning tools may be overkill if you're a solopreneur or small team. On the other hand, if you have or want investors, solutions that automatically generate pro forma statements are a good choice.

The best financial forecasting software lets you compare budgeted, actual and forecasted revenue, then send custom reports to various stakeholders. For instance, your accountant may use projections to prepare future company-wide budgets, but top-level executives want to look at what's driving your revenue.

Financial projection and modeling software offer features, such as:

• Pre-built reports, including variance analysis.
• Ability to save reports and data as CSV or PDF files.
• Integrations with existing accounting and payroll software.
• Financial dashboards with key performance indicators (KPIs).
• User-friendly what-if scenario tools.
• Long-term rolling forecast capability.
• Mobile apps for iOS and Android devices.
• Automation of key reports.
• Driver-based modeling tools.
• Real-time data analytics and reporting.

[Read more: Startup 2021: Financial Tech Tools for Startups]

Financial forecast software examples

Take a look at the various features and service plans offered by providers. Many solutions provide a free trial, so you can get an idea of how user-friendly the software is and decide if it's a good fit before purchasing.

Here are three vendors offering financial projection software:

• Pulse: Use Pulse to forecast growth based on recurring expenses or income and integrate with QuickBooks Online. It's built for small businesses and supports collaboration. Prices range from $29 to $89 per month.
• PlanGuru: Choose cloud-based or a Windows download for $99 per month to import Xero, QuickBooks Online or Excel data. PlanGuru features more than 20 forecasting methods and can provide projections for up to 10 years.
• Jirav: Learn what drives your revenue, create custom investor or stakeholder reports, and plan your workforce with Jirav. It starts at $250 and integrates with Xero, QuickBooks Online and Gusto.

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