Difference between planning and forecasting pdf

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difference between planning and forecasting pdf

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Successfully running any business requires a combination of coherent goals, strategies to meet those goals and analysis to evaluate what to do when goals are not met. Planning, budgeting and forecasting are all pieces of the financial management puzzle and together they can help form, analyze and evaluate financial performance and suggest solutions to problems.

Posted by Terms compared staff Apr 28, Management. Forecasting and planning are two critical managerial functions and are also relevant for many other functions in the organization. Forecasting essentially refers to making projections or predictions regarding a future event, based on the previous trends as well as current performance. On the other hand, planning refers to the process of developing plans for things that need to be done in the future, and is also based on the existing performance as well as the expectations for the future. In this article, we will discuss the terms forecasting and planning in detail, and elaborate on the main differences between the two terms.

Difference Between Planning and Forecasting

Most of the companies use strategic planning, budgeting and forecasting to evaluate their current situation and to get a better view on the future of the company. Especially the use of spreadsheets may lead to problems like inconsistencies and a lack of flexibility. We would like to deal with two main questions in this article: what are the differences between strategic planning, budgeting and forecasting? And how can a professional tool help you in achieving efficiency in these processes?

Strategic planning has the purpose to define the direction and expectations of a company, which are based on the vision of the stakeholders. An activity plan is established for a timeline of three to five years: what are the main objectives and where does the company want to be within 3 to 5 years?

Strategic planning is a process of continuous reflection. The establishment of the budget happens in many cases on a yearly basis and is based on data from different sources and levels. The resources are being divided and the company defines how the general plan and the objectives can be achieved per period. When doing forecasting, various data is being used to predict the financial outcomes of the company for the coming months or years. The executives make use of realistic historical data to establish new projections, which are then integrated in the budget.

Timing can be per year or per semester. A dedicated tool can help you to structure your processes and spend significant less time and resources to your budgeting and planning.

A couple of the advantages are:. Do you want to implement simple, reliable consolidation, management reporting and budgeting processes to increase your group's performance? Contact us and we'll explore how we can help you reach your goals. Necessary cookies are absolutely essential for the website to function properly.

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It is mandatory to procure user consent prior to running these cookies on your website. Differences between strategic planning, budgeting and forecasting Strategic planning, budgeting and forecasting Most of the companies use strategic planning, budgeting and forecasting to evaluate their current situation and to get a better view on the future of the company.

The main differences Strategic planning Strategic planning has the purpose to define the direction and expectations of a company, which are based on the vision of the stakeholders.

Budgeting The establishment of the budget happens in many cases on a yearly basis and is based on data from different sources and levels. Forecasting When doing forecasting, various data is being used to predict the financial outcomes of the company for the coming months or years. How can technology help you in structuring these processes?

A couple of the advantages are: Improved data management: a professional tool allows you to use a centralized database and to obtain an automatic import and processing of the data. Flexibility for the users: they can manage multiple versions, take immediate decisions rolling horizon decision making and align their decisions with the long term strategy of the company.

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Difference Between Forecasting and Planning

Log in. Request for Access. Planning and forecasting is the managerial process of mapping out corporate actions based on past and present data trends. Planning encompasses everything from high level corporate plans to strategic plans, to operational, HR, expense, capacity, sales and operational, balance sheet, profitability, capital, cash flow planning and more. Some may be long term, like strategic planning, while others are short term, like operational planning.

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Both Planning and forecasting are basic and most important managerial activity. They are closely related to each other. Planning gives answer to how, when and what to be done. It is a goal oriented activity which designs future course of action and provides future environment of organization. As future is uncertain, planners are forced to make some assumptions.


is the process of thinking about the future course of action in advance, whereas.


Differences between strategic planning, budgeting and forecasting

Most of the companies use strategic planning, budgeting and forecasting to evaluate their current situation and to get a better view on the future of the company. Especially the use of spreadsheets may lead to problems like inconsistencies and a lack of flexibility. We would like to deal with two main questions in this article: what are the differences between strategic planning, budgeting and forecasting? And how can a professional tool help you in achieving efficiency in these processes?

Planning and decision-making are the most important managerial functions, and there are many relations between them. Planning is thinking of doing. Decision-making is a part of planning.

Forecasting, is basically a prediction or projection about a future event, depending on the past and present performance and trend. Conversely, planning, as the name signifies, is the process of drafting plans for what should be done in future, and that too is based on the present performance plus expectations. Planning and forecasting are two important managerial functions that are relevant for other functions. On the contrary, planning implies thinking before acting, i.

Financial Plan vs. Financial Forecast: What's the Difference?

Forecasting vs planning

Among the various activities and functions performed in the management, Planning and Forecasting are two of the most essential functions. Both these functions are integral for any organization and help in the growth and development of an organisation. Various other functions within an organization are dependent on the process of Planning and Forecasting. Planning and Forecasting are closely related to each other. Both these functions are key steps in the decision making process.

The main difference between Forecasting and Planning is that Forecasting, is a prediction or projection about a future event, depending on the past and present performance and trend and planning is the process of drafting plans for what should do in future, and that too based on the present performance plus expectations. Forecasting is predicting the future performance of the organization based on past and present performance and data, whereas planning is the process of thinking about the future course of action in advance. Forecasting provides a base for planning and plays a vital role in the process of planning. Forecasting based on a certain degree of guess and assumption of a particular event conversely planning is based on objective, performance and relevant information which require making a plan. Forecasting based on Facts and some assumptions based on past and current performance. Planning on the other hand stresses on facts and expectation.

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Relation between Planning and Decision-Making

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