Panax Forecasting: Automate and Customize your Financial Forecasting

Finance teams are required to forecast cash for multiple reasons:

• Staying ahead of upcoming inflows and outflows and preventing a potential short fall of cash 
• Identifying opportunities of excess cash that can be invested and gain interest 
• Contingencies/requirements from investors or banks

But despite the fact that forecasting is a critical tool in financial planning, many organizations struggle to get it right.

Common challenges include data inaccuracies, time-consuming manual processes, and the reliance on outdated methods. These issues can lead to unreliable forecasts, making it difficult for businesses to plan for the future, manage cash flow, and mitigate risks effectively.

Panax's forecast feature is designed to address these challenges head-on, providing businesses with a powerful tool to navigate their financial future with confidence.

Cash forecasting with the Panax platform

Panax’s forecast capability allows our customer to build a monthly forecast. The goal is to allow our customers to foresee their expected inflows and outflows and the expected balance, so they can maintain control and make data-driven decisions. The forecast can either be built at a company level or per entity and then aggregated to a company level.

Why forecast with Panax? 

• Accuracy - Panax connects to all your banking data, providing an easy and automated way to base your forecast on historical data and future ERP data. This allows you to easily and more accurately plan future inflows and outflows.
• Automation - We generate the forecast automatically each month by rolling your forecast based on your input assumptions and updated actuals. 
• Bottom up and customized - We allow you to create forecast methods based on your knowledge of the cash flow. Each category can be configured per your understanding and adjusted to your needs.

How Panax forecasting works

Initial setup

First, define a forecast method. This will determine how the forecast is populated. You can choose between a few different methods:

1. ERP-based - If you have an ERP connected to Panax, you can pull your expected invoices from the ERP and place the total amount as a forecast for the time period they apply to. You can then layer on additional forecast methods for the following months, from additional sources of data. 

2. Recurring amount - Input an amount that repeats monthly. You can also add a formula to increase/decrease the amount month-over-month.

For example, if your office and rent expenses are $120,000 you can input that amount. It will be populated throughout each month of the forecast for that category. 

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3. Based on historical data - By bringing in all your actuals, you can rely on the historical behavior of a certain category to build a forecast. This will be based on the average over a certain period, the growth rate over a certain period, or on your annual growth rate.

For example, if your sales are seasonal, you can build the forecast for your collectionsit to be based on the same month last year’s month sales + add a growth rate.

4. Based on data from another category - You can also rely on amounts from other categories, which means your forecast can be calculated as a % of that category. 

For example, if your shipping expenses are 3% of last month’s collection, you can add that method point to last month’s collection. Panax will populate the forecast for shipping, based on the forecast for collection.

5. Manual input - You can also manually define an expected amount per month and use that as you forecast. 

For example, if your marketing spend is based on a plan you receive from the marketing team, you can just input the spend manually per month.

Actuals vs. forecast 

When the month ends, we will automatically roll the forecast and create a new version that is based on the updated actuals. You will see an end-of-month summary that compares this current  month actuals vs. forecast: 

Based on this summary you can adjust and optimize your forecast for the following month. 

Reporting and analytics

Use the variance report to review what was forecasted for a specific month in a previous months version of the forecast vs. what you are forecasting now. For example, if in May your forecast showed the Closing balance in July to be at a certain amount and then in June the forecast was updated and now the closing balance for July shows a lower amount, you can drill down into the inflows and outflows to better understand what in the actuals / forecast was changed that caused that difference. 

By leveraging the variance report, you can:

1. Identify Discrepancies: Quickly pinpoint where and why discrepancies between forecasts occur, whether due to changes in revenue, expenses, or other financial factors.
2. Improve Accuracy: Use insights from the variance analysis to adjust your future forecasts, making them more accurate and reflective of real-world changes.
3. Enhance Decision-making: Gain a deeper understanding of your cash performance, allowing for more informed strategic decisions and proactive liquidity management.
4. Increase Accountability: Track and explain variances to stakeholders, ensuring transparency and accountability in your forecasting process.

Learn more about Panax forecasting and how automation can help you do your job better.

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