A forecast of expected financial results is only accurate as long as the underlying assumptions do not change. The realization of actual events over the passage of time creates a need for regular reforecasting, on a quarterly or even monthly basis. Reforecasts must consider multiple potential portfolio scenarios and a stochastic analysis of these scenarios, in addition to sensitizing assumptions about the market and the organization’s operating and financial activities.
Through a process of regular rolling reforecasts, an organization is better able to respond to volatile market conditions, and uncertainty over geological, operational and financial outcomes. In this way, it can reactively adjust activities and portfolio holdings to meet expectations.
Depending on availability of data within the organization, a true point forward reforecast may be performed, building upon actual financial results to date. Where latest financial data availability is restricted, the reforecast calculation may alternatively consider only updated scenarios and sensitivities.Learn More
E&P Companies have a need to increase the speed, frequency and accuracy of reforecasts. Unfortunately, the reforecasting process is generally protracted, laborious and resource intensive due to the planning tools that are typically used. Spreadsheets and enterprise resource planning tools, containing financial consolidation extensions, are the most commonly used systems, although they have not shown any material reduction in time taken:
The annual budget takes on average 3 months to produce and signoff. A reforecast takes on average 2 weeks, so an organization reforecasting monthly would spend half its time performing that process. Assumptions underpinning the forecast become rapidly out of date. Accuracy quickly suffers as a result of outdated data and scenarios.
Spreadsheets, familiar and readily available, remain the predominant application used to model non-financial data and line item costs, which are core to the process. There are many downsides to this approach, which include:
Version control, broken formulas, lack of security and time spent consolidating. The disconnect between finance and business units, and between the forecasting application and spreadsheets, leads to an onerous process of information collation.
PlanningSpace™ Financials Reforecasting & Budgeting solution enables companies to implement a system of regular reforecasts, which generates forecasts with accuracy and speed by:
Streamlining the process with budgeting templates that instruct employees on exactly what data they need to put and where, in order to complete the reforecast. Assigning workflows and resources to compose iterations of budgets and forecasts as quickly as possible in response to market events. Performing calculations of ‘what if’ scenarios to mix and match possibilities and build contingency plans that enable companies to immediately react when conditions change. Performing accurate and agile reforecasts, combined with actual results to generate real-time updates to financial metrics and outlooks.
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