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Budgeting and Forecasting Software
Get the best budgeting and forecasting software for your business. Compare product reviews, pricing below. Read our buyer’s guide for more help.
Budgeting and Forecasting Software Buyer’s Guide
A realistic budget will help your business plan for the future. You’ll be able to improve business decision-making with accurate and relevant financial information. Being able to anticipate demand and expected revenue will help you decide how many new employees to hire, how many products to manufacture, or how many materials to purchase.
Budgeting and forecasting software coordinates financial planning activities, as well as tracks and reports on actual financial progress. This guide will help you select the right budgeting and forecasting software to improve the predictability of corporate expenses and create efficiency in the budget creation and tracking processes:
What Is Budgeting and Forecasting Software?
Budgeting and forecasting software assists with the creation and management of detailed corporate financial plans. Historical data and estimates of future market conditions are used to approximate a company’s future revenues and expenses.
Budgeting and Forecasting Software Features
|Departmentalized budgeting||Departmentalized budgeting provides the ability to create hierarchically categorized budgets organized by units such as business department, location, or cost center|
|Budgeted versus actual comparisons||The ability to compare budgeted figures versus actuals relies on the import of GL data and enables improvement monitoring of corporate performance against goals|
|Collaborative budgeting||Collaborative budgeting features supports document management functionality that allows multiple individuals to contribute to budget creation|
|Budget approvals||Budget approvals functionality allows for the authorization of budgetary plans by users at pre-defined user privilege levels|
|Versioning||Versioning capabilities allow for non-destructive storage of multiple budget versions and tracking features to document changes to budget plans|
|Rolling budgets||Rolling budgets allow for dynamic revision/extension of budgets to refresh budgets for a consistent period of time from the present moment|
Types of Financial Forecasting Methods
Quantitative Forecasting: With quantitative forecasting, historical data is used to calculate predicted future demand. Types of quantitative methods include time series and causal methods.
Qualitative Forecasting: Qualitative forecasting methods are subjective and based on judgment and opinions from the sales team, consultants, or industry experts. Types of qualitative forecasting include the consensus method, Delphi technique, survey or research method, and sales force estimates.
Static Budgets vs. Rolling Forecasts
Static Budgeting: Static budgets are typically set once a year and are not intended to deviate for the remainder of the budget period. An estimate of the upcoming fiscal year’s expenses and revenue is formulated before the year starts.
Rolling Forecasting: Rolling forecasts predict revenue and expenses over a set period of time. The time period continuously rolls over, adding on another month after the current month passes, so it always covers the same timeframe (i.e. 12, 24, or 36 months). The predicted results are based on data from year-to-date results and your original budget. Rolling forecasts are constantly updated to reflect events and sudden changes in your business.
What Does Your Business Need?
Startups and Small Businesses: Startups and small businesses should look for a lower cost budgeting solution that will help manage and track revenue and expenses. Most startups won’t have historical data, so forecasting functionality isn’t a requirement. As your business grows, however, forecasting will become a more important feature. If you already have an accounting software system in place, you’ll also need a solution that will easily integrate with it.
Medium-Sized Businesses: Mid-sized businesses should look for a software solution that has predictive budgeting, forecasting, and financial reporting capabilities, so you can track business performance and plan ahead.
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Large Businesses: Large companies with multiple departments or facilities to manage should look for software featuring departmentalized budgeting and collaborative budgeting. With departmentalized budgeting, businesses create a separate budget track and report on financial progress of specific departments or locations. Collaborative budgeting allows multiple individuals to contribute to the creation of budgeting plans – this is useful if you have multiple locations nationwide or even worldwide.
Can QuickBooks Handle Budgeting and Forecasting?
QuickBooks can handle basic budgeting and forecasting. Startups and small businesses looking to move away from Excel spreadsheets can get away with using QuickBooks Online Plus or Advanced to set up budgets to monitor current and historical data for the business’s revenue and expenses – the Budget vs Actual reports will help you make informed business decisions.
QuickBooks Desktop Premier, Accountant, and Enterprise feature cash flow forecasting to help businesses predict incoming future revenue over a specified period of time. Currently, QuickBooks Online does not handle cash flow forecasting.
Free Budgeting Software
While free budgeting software options do exist, they are typically for personal budgeting. These solutions are used for personal finance and help people achieve savings and retirement goals. Some popular free budgeting solutions include Mint, BudgetPulse, and Personal Capital.
When you consider budgeting software for your small business, you’ll be hard-pressed to find a free option that includes all of the functionalities you need like credit card processing and year-end reporting. Most of the information found in this guide will refer to business budgeting and forecasting software and their importance.
Budgeting Software vs. BI Tools
Budgeting software uses financial information to plan future budgets based on expected revenue and expenses, as well as track financial progress.
BI tools also analyze financial data. However, BI tools also take into account non-financial data to plan for future growth. Examples of non-financial data include: how long it takes for a product to be built, the parts or materials used to create the product, and how many products were produced per hour per employee. Advanced reporting functionalities in BI tools will also help you make informed decisions for hiring, taking in new customers, and buying new equipment.
Common Pain Points Solved
Human error in the data entry process: Budgeting and forecasting software streamlines the budgeting process. Recurring expenses can be saved in the system to be included in the reports as needed and calculations are automated to reduce human error. Budgeting software also keeps data more secure and data can’t be overwritten or deleted easily compared to budgets in Excel.
Creating budgets is time-consuming: The right budgeting and forecasting software solution will save time in the budget cycle. You’ll be able to reuse relevant data from previous years, as well as quickly import data from integrated accounting software.
Budgeting Software Trends
Cloud-based budgeting and forecasting software: Financial planning and analysis (FP&A) are predicted to continue to move to cloud-based, software-as-a-service (SaaS) solutions. An article from Jedox predicts that by 2020 there will be more expenditures on cloud-based software than on-premise solutions.
Replacing annual budget processes: According to a 2020 article on ThomasNet.com, 60% of business spend more than 3 months putting together their annual budgets. Companies are replacing annual budget processes with rolling forecasts to save time by continuously planning for the future.
Automating planning, budgeting, and forecasting processes: FSN’s study: The Future of Budgeting, Planning and Forecasting, found that 82% of CFOs listed automating planning, budgeting, and forecasting processes as a top technology priority for their business over the next 3 years.
Benefits of Budgeting and Forecasting Software
Create Reliable Forecasts
Budgeting and forecasting software will give you a better handle on expected revenues and expenses. Software modules use a combination of approaches to create financial forecasts. The key components of creating a budget are inputting accurate historical information and querying users for estimates of future financial conditions. Budgeting software programs provide a framework for reinforcing budgeting best practices. Ensuring the inclusion of all relevant data and collecting information from distributed sources can be deceptively difficult tasks.
Any budget relies on user-created estimates. Budgeting programs can help turn guesses into expectations by requiring estimates at a more granular level and integrating margin of error controls. Once data has been translated into predictions for financial outcomes, actual earnings and expenses can be compared against the predictions to monitor business progress.
Avoid Time-Consuming Manual Processes
Manually creating effective budgets can be very difficult and time-intensive. Companies have limited confidence in hand-created budgets due to concerns that the historical information is incomplete or inaccurate.
Budgeting software allows direct data imports from integrated applications such as the general ledger and other key accounting applications. Automatic data entry prevents the kind of errors introduced by manual re-keying.
Planning for unexpected external factors is a difficult task. Budgeting software can help you easily correct for external factors like inflation.
One of the main advantages of using budgeting software is the cost savings. Creating budgets can be one of the most time-intensive tasks for executives. Budgeting software will help you eliminate the reliance on cumbersome spreadsheets. For anything but the most basic budgeting needs, spreadsheets use dozens if not hundreds of formulas and macros. One mistaken keystroke can spoil weeks of careful preparation.
Increase Collaboration in the Budgeting Process for More Accurate Forecasts
Budgeting software also promotes collaboration.
Each employee may have responsibility for different segments of your financial data. If you need to receive input from multiple employees, using a manual approach to creating budgets can easily become impractical. You’ll likely be spending unnecessary time standardizing information into normalized formats. Furthermore, creating a budget is often a process that depends on working through multiple versions. Passing information back and forth multiple times can easily drain resources and generate costly delays. Instead, you need one single updatable version of the truth.
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How Do Budgeting and Financial Forecasting Differ?
Budgeting and financial forecasting are tools that companies use to establish a plan regarding where management ideally wants to take the company (budgeting) and whether it is heading in the right direction (financial forecasting). Although budgeting and financial forecasting are often used together, distinct differences exist between the two concepts. Budgeting quantifies the expectation of revenues that a business wants to achieve for a future period, whereas financial forecasting estimates the number of revenues that will be achieved in a future period.
A budget is an outline of expectations for what a company wants to achieve for a particular period, usually one year. Characteristics of budgeting include:
- Estimates of revenues and expenses
- Expected cash flows
- Expected debt reduction
- A budget is compared to actual results to calculate the variances between the two figures.
Budgeting represents a company’s financial position, cash flow and goals. A company’s budget is usually re-evaluated periodically, usually once per fiscal year, depending on how management wants to update the information. Budgeting creates a baseline to compare actual results to determine how the results vary from the expected performance.
While most budgets are created for an entire year, that is not a hard-and-fast rule. For some companies, management may need to be flexible and allow the budget to be adjusted throughout the year as business conditions change.
Financial forecasting estimates a company’s future financial outcomes by examining historical data. Financial forecasting allows management teams to anticipate results based on previous financial data. Characteristics of financial forecasting include:
- Used to determine how companies should allocate their budgets for a future period. Unlike budgeting, financial forecasting does not analyze the variance between financial forecasts and actual performance.
- Regularly updated, perhaps monthly or quarterly, when there is a change in operations, inventory, and business plan.
- May be both short-term and long-term. For example, a company might have quarterly forecasts for revenue. If a customer is lost to the competition, revenue forecasts might need to be updated.
- A management team can use financial forecasting and take immediate action based on the forecasted data.
Financial forecasting can help a management team make adjustments to production and inventory levels. Additionally, a long-term forecast might help a company’s management team develop its business plan.
The Bottom Line
A budget is an outline of the direction management wants to take the company. A financial forecast is a report illustrating whether the company is reaching its budget goals and where the company is heading in the future.
Budgeting can sometimes contain goals that may not be attainable due to changing market conditions. If a company uses budgeting to make decisions, the budget should be flexible and updated more frequently than one fiscal year so there is a relationship to the prevailing market.
Budgeting and financial forecasting should work in tandem with each other. For example, both short-term and long-term financial forecasts could be used to help create and update a company’s budget.
PocketSmith Review 2020
Forecasting Your Future Finances
Cost – 8
Customer Service – 8.5
Ease of Use – 8
Tools & Resources – 7
Synchronization – 8
Accessibility – 7.5
PocketSmith is easy-to-use, convenient personal finance software that lets you track all of your spending, credit and investing accounts, as well as projecting your future finances. Unfortunately, if you just want to use the free version, you’ll find its functionality somewhat limited compared to other free personal finance apps.
The software’s Google-like calendar is particularly helpful, giving you a glimpse of both your current account balances and future forecasts. The calendar syncs up to your accounts and your budget categories and is a real selling point for the platform.
|Price||$0.00 – $19.95/ month|
|Access||Web Based , iOS , Android|
|Credit Score Monitoring|
|Import QFX, QIF Files|
- Forecasting — PocketSmith bills itself as “A Time Machine for Your Money.” While some apps focus on budgeting, this software is all about forecasting. Using your existing data and trends, PocketSmith will forecast your finances up to 30 years into the future, including your estimated daily bank balances.
- Budget Calendar — PocketSmith finds your recurring costs and helps you track them with a calendar. DonвЂ™t rely on just a feed of upcoming bills due; look at a user-friendly calendar that shows projected expenses color-coded by category.
- Scenario Testing — Enter possible financial scenarios, such as a year abroad, and watch how it impacts your financial forecast. You can plan for the future and make big financial decisions with data, not just a gut instinct.
- Budgeting — While forecasting is on the forefront, PocketSmith did not forget about the trusty budget. Create and track your budget and adjust to view spending plans by month, quarter, a year or other flexible periods.
- Net Worth — Based on your connected accounts, PocketSmith automatically calculates your net worth. Link specific assets to liabilities (like a home to a mortgage loan) to track that assetвЂ™s total value.
- Income and Expense Statements — Look at your money as a business with PocketSmithвЂ™s version of a profit and loss statement, or P&L. The income and expense report is laid out similarly to a business financial statement but is categorized with your financial categories.
What Is PocketSmith?
PocketSmith is a personal finance aggregation and analysis app that allows you to view a summary of all your financial accounts, transaction histories, and budgets in one place. If this sounds familiar, it is because there are many competing products in the industry that offer similar features.
But PocketSmith is unique from competitors in a few ways. On the negative side, one of the more obvious differences is that — unlike Mint and Personal Capital — unless you want a very basic version with limited capabilities, it’s not free. These competitors are supported by advertising. PocketSmith is ad-free, but you have to pay for most of its useful features.
However, one of the advantages that PocketSmith has over the competition is that it allows you to create a budget at any time, for any amount of time. This flexibility is in contrast to the traditional standard monthly budget that begins on the first of the month. PocketSmith allows you to create daily, weekly or monthly budgets that start on whatever day you want.
In addition to tracking recurring expenses like rent or utilities, you can add one-time expenses or income like quarterly taxes or freelance income. PocketSmith allows you to track all of your spendings with standard budget categories, but you can also create your own.
PocketSmith provides clear information on your spending habits, comparing your budgeted versus actual expenses to see where you are off track. In addition, PocketSmith shows itemized spending categories in an easy-to-read pie chart.
How PocketSmith Works
The Signup Process
Creating a PocketSmith account takes only a few seconds (seriously, it took us only about 25 seconds), and there are a total of five steps. There’s no confidential information required upon signup, and you can change your plan, upgrade, downgrade or cancel the service at any time.
After creating your account, you’re offered three choices: Import your information from another service (like Mint.com), manually add your bank information and transactions or take the tour to see how it all works first.
In my case, I tested out importing information from my Mint.com account. PocketSmith explained some simple instructions in order to do this, which involved logging into my Mint account and exporting the information. Then I simply uploaded the Excel file to PocketSmith’s site.
Once your account is ready, you’ll be taken to the dashboard, where you can view your earning and spending habits. By clicking on the different buttons, you can see your past spending history for up to six months (for the free version). The dashboard also includes a snapshot of your budget and financial forecast. More on those in a moment.
PocketSmith takes an interesting “freemium” approach to its bank feed feature. You can enter transactions manually using the free version, but getting live bank feeds with updates for every transaction requires paying for one of the two premium plans, which start at $9.95 per month. With the paid plans, you can connect to any of 10,000-plus financial institutions and get automatic updates. Every time you log into PocketSmith, you’ll see the freshest data from all of your accounts.
Transaction Tracking and Organization
Look through your transactions and assign categories and labels using your own favorite transaction management method. PocketSmith doesnвЂ™t force you into вЂњone size fits allвЂќ categories. You can also add notes for transactions. Users can search transactions by amount, category, tag or notation text.
After taking a look at your overall spending information, the next step is to create a budget. This will help you spot any problem areas where you’re over- or under-spending.
Importing From Mint
Many people use Mint.com as their first financial tool online but realize that its customer service isnвЂ™t great or that important accounts in their lives are not supported. PocketSmith has a unique import tool — Express Migration — that will transfer all of your information from Mint in just a few minutes.
PocketSmith Plans and Pricing
PocketSmith offers three pricing plans:
PocketSmith Pros & Cons
PocketSmith is a 5-star product with one-star pricing. If you couldnвЂ™t get most of what Pocketsmith does for free elsewhere, it would stand out as an amazing and powerful financial tool. However, its pricing makes Pocketsmith less desirable than most competitors.
If you donвЂ™t mind the cost, PocketSmith is one of the best featured financial aggregators out there.
The crown jewel of PocketSmith is the calendar function, which is used to track all of your accounts, such as checking, credit cards, student loans, etc. The free version of the app offers two calendars, which could be used to track a checking account and a credit card account, but thatвЂ™s it.
Most people have many accounts they are looking to track and see projected forecasts for. In this case, upgrading to a Premium or Super account is necessary.
For $9.95 a month, the Premium account is considered their вЂњbest value subscription.вЂќ If you are looking for high-level, detailed information on your accounts and future financial forecasts, PocketSmith might be worth the investment. However, if your current free system is working, I recommend saving your money for something else.
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Pocketsmith is a total waste of time and money. Their concept is great, but the software does not work so the concept without successful implementation is useless. The way the concept is supposed to work in the software is confusing, but more importantly the system for importing data doesnвЂ™t work reliably, and the accounts get confused by the software. I spent many many hours and many many emails with their support staff to try to work these issues out since I was drawn in by the concept of making future forecasts. But this was all a waste. Since the software doesnвЂ™t work, oneвЂ™s personal data within the software is essentially useless. Without good reliable data, any financial management software is also useless.
I’ve used Pocketsmith since it was in Beta. Over the years, it’s become very refined.
This pulls information from my account and I can compare the forecast with the running amount and plan accordingly. It can be a lot for some people to comprehend, but for me it’s great. There was a small stint in the past were the software was a bit buggy but after that passed everything is very reliable.
I’ve used pocketsmith for a few years now and think it’s great. Not had any major issues and has been very reliable. With the two-factor authentication it’s quite secure too. The user interface has been updated and it’s much cleaner and modern now. Only downside is the iOS app is pretty basic.
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