Know your agency's future with cloud forecasting
For your agency to grow and be profitable it’s vital to keep a close eye on both the present and future of your financial health – a task that cloud accounting software excels at.
We’ve already highlighted the importance of having real control over your agency numbers and the need to measure the right key performance indicators (KPIs). But there comes a time when historic accounts are not enough. You need to start looking forward – taking a view not of where you’ve been, or where you are now, but where you could be in the future.
Don’t just look backwards at the road travelled
Traditional accounts show you what your agency did in the past. You see your costs and income, all outlined in your profit and loss (P&L) reports and monthly management accounts.
But these accounts only give you a historic view – they show the road you’ve already travelled and very little about the route that lies ahead. You wouldn’t drive your car by sticking your head out of the side window and looking backwards, would you? So why would you do the self-same thing with your business strategy?
What’s needed is a better view of the present and a more detailed overview of the potential future of the business.
So, how do you get this?
How cloud accounting moves you forward
The answer is to switch to a modern cloud accounting platform – and Xero online accounting software combines the ease of use, powerful accounting and integration your agency needs.
One crucial benefit of Xero is the ability to get real-time numbers and reporting. Instead of looking at management accounts that are weeks out of date, you have instant, mobile access to your numbers at any time, 24/7. And with the right combination of live bank feeds, smart-scanning and automated data entry apps, your Xero data is 100% up to date and delivering a real-time view of your business health as it stands right at this moment.
In short, you see your agency finances as they look right now, not how they looked two weeks ago. That's a game changer when it comes to decision-making and good management.
Forecasting the agency’s future
With Xero as your cloud accounting platform, you don’t just get real-time numbers. You can also use all that data to get a future view of your core KPIs and business information.
How does Xero do that?
It records your data, logging every single transaction and creating a huge pool of business data for you to review and analyse.
It helps you analyse your numbers, with highly detailed reporting and metrics, all viewable from the Xero Dashboard.
It integrates with forecasting tools that allow you to drill down into that business data and project your numbers forward in time.
You get accurate projections by extrapolating your data forward to get realistic forecasts of income, sales, costs and potential profits for the agency.
With Xero as your financial foundation stone, you have the data, reporting and integration possibilities needed to effectively predict the future fortunes of your agency.
Get scenario planning your strategy
Being able to look ahead and see the opportunities and obstacles in your path is incredibly powerful. You’re better informed, you have a deeper insight into the agency as a business and you’re better prepared to set realistic long-term goals for the agency.
In essence, you’ll make better decisions when you have clearer forecasts. Instead of constantly looking in the rear-view mirror, you can now see the road ahead clearly, and set a route and speed that gets you to your chosen destination in the most profitable way possible,
If you want to know more about the advantages of business forecasting, and the kind of scenario planning questions you should be asking yourself, we can help.
Read the full version of this blog on the FD Works site.
Or get in touch with the team to find out how we can bring tailored forecasting your agency.