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Factors To Consider In Sales Forecast, Production And Cash Forecast (Part 3 of 3)

slang — Sun, 23 Sep 2007 11:37:49 +0000

Continued from Part 1 & 2 on Sales and Production Forecast, append below a suggested checklist of what factors and the sources might be considered when constructing the Cash Forecast

Cash Forecast

Factors:

How long a period the forecast will cover?
Past cash forecasts;
Demand for the products;
Supply of raw material;
Credit control policy of company and government;
Overtrading condition;
Influence of external factors like bad weather, short supply on price of resources;
Cost of finance;
Running cost;
Credit terms;
Investment opportunities;
Level of activity;
Raising finance;
Profit;
Major future commitments such as capital expenditure, and research and development;
Expansion or political condition;
Payments to suppliers or repayment of loan;
Receipts from sale of assets, dividend received and collection from customers; and
Previous cash balance

Sources of Information:

Past cash forecast;
Cash controller and departmental managers;
Other forecasts such as sales, production, expense, capital expenditure, profit & loss and balance sheet;
Economic indicator like consumer price index and various publications;
Journals, press reports, etc and
Statistical techniques

Factors To Consider In Sales Forecast, Production And Cash Forecast (Part 2 of 3)

slang — Sun, 23 Sep 2007 11:36:28 +0000

Continued from Part 1 on Sales Forecast, append below a suggested checklist of what factors and the sources might be considered when constructing the Production Forecast

Production Forecast

Factors:

Sales activity;
Availability of resources such as labor and materials;
Rate of inflation;
Influence of the market forces on resources;
Industrial relations;
Union agreements such as productivity, redundancy, union membership and industry agreements;
Finance or capital required;
Type of machine employed;
Availability of plant capacity;
Company and government policy on redundancy;
Location of plants overseas or locally;
Opportunity for sub-contracting;
Effect of overtime and shift working;
Nature and type of production;
Production methods used
Size of organization;
Quality of resources used;
Indirect costs relating to production, separated into fixed, variable and semi-variable coss;
Production service available such as transport, maintenance, repairs and servicing;
Type of product;
Inspection and
Normal loss allowance

Sources of Information:

Production manager, foreman, supervisor,etc
Past production capacity;
Economic indicators, manufacturer’s specification, documents on production scheduling and routing, dispatching, inspection reports and standards;
Work study; and
Sales forecast.

Factors To Consider In Sales Forecast, Production And Cash Forecast (Part 1 of 3)

slang — Sun, 23 Sep 2007 04:52:23 +0000

To plan, we need to put up forecasts. By doing so, Management can better anticipate major opportunities, challenges, etc that may impact the company’s performance

Managers use economic and statistical techniques to anticipate the future. There are many varied method of forecasting which include Delphi method, econometics, simulation, correlation. Forecasting techniques are qualitative or quantitative.

However, to ensure the success of any forecasting, the following should be considered:

To get those responsible actively involved and accounted for;
Statistical evidence and techniques together with managerial judgment should be used in arriving at estimates

Append below a suggested checklist of what factors and the sources might be considered when constructing Sales Forecast, Production and Cash Forecast

Sales ForecastFactors:

Previous sales activity;
Demographic statistic related to the sales area concerned;
Income distribution in sales area;
Geographical features of a sales area;
Economic, industrial and political conditions;
International condition (political, trade and economic);
Rate of technological change;
Competition;
Pricing policy;
Stage in the life cycle;
Production capacity;
Promotion policy;
Quality, experience, competency of sales personnel;
Sales trends;
Costs relating to selling;
Classification into fixed or variable and controllable or uncontrollable costs;
Credit policy or terms;
Principal budget factor;
Seasonal fluctuations;
Expected returns on capital employed;
Market research;
Profitability of different products; and
Customer goodwill

Sources of Information:

Sales personnel whether sales men, area manager,etc
Market research;
Past sales volume;
Economic indicator, journals and press reports; and
Statistical analysis.