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How Sales Forecasting Works

Sales Forecasting Tools
Many business accountants use sales forecasting software to make projections.
Many business accountants use sales forecasting software to make projections.
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Computer software has made business accounting considerably easier. Everything can be kept in one place -- no more file cabinets stuffed with paper -- and data-intensive spreadsheets can be quickly transformed into easy-to-understand charts, graphs and reports. An increasing number of desktop software and Web-based services focus on generating sales forecasts.

The simplest solution is to use a desktop accounting program like QuickBooks Premier or Quicken Small Business. The advantage of these programs is that they use all of the data you enter into the system to make sophisticated predictions about next month's or next year's performance. The software can make forecasts in two ways: either by automatically mining data already in the system, or by walking you through a step-by-step worksheet that collects all the necessary information to make the calculations.

Companies are beginning to migrate to Web-based accounting and business management software. These are record keeping and collaboration tools that are accessible through a normal Web browser.

Sales managers already use these programs to keep track of their team's performance and to identify the best sales leads. These programs also make it easy to generate sales forecasts based on the past performance of each  sales team member. The software identifies trends (a 5-percent monthly gross in Margaret's sales over the past three months, a 2-percent drop in Bob's) and uses that information to make future predictions.

Then there are Web-based business management tools that share information and integrate with a wide variety of other business systems. is probably the best-known example of a Web-based business management system that integrates with CRM tools like SAP, accounting systems like Oracle and any other internal or external data sources, like shipment tracking and customer service satisfaction.

Services like analyze the many layers of data that affect sales performance. It can tell if products are being held up in shipping from the warehouse to the retail store or if sales contracts are getting caught up in legal. This helps business executives make the right adjustments to bump up their sales forecasts for the future.

For even more information about sales forecasts and related business topics, see the links on the next page.