Financial forecasting is what separates good Financial Planning and Analysis (FP&A) from great FP&A.
It’s a combination of data, past performance, future predictions, gut feel, and so much more.
Your financial forecasts then drive budgeting, planning, headcount, investments, and the overall strategic direction of the organization.
...But doing it well requires more than just a spreadsheet and some formulas.
Great forecasting, especially in today’s business climate, requires modern forecasting tools to enable accurate projections your organization can use with confidence.
This guide provides an overview of the top 15 forecasting tools available today for FP&A.
Table of Contents
- What is Financial Forecasting?
- How are Financial Forecasts Used?
- What are the Methods of Financial Forecasting?
- How Do You Do Financial Forecasting?
- The Best Financial Forecasting Software Tools
What is Financial Forecasting?
Financial forecasting is the act of making financial projections to predict and estimate the near-term and long-term financial performance of your organization. Forecasting is fundamental to Finance and FP&A, and is used by organizations across the globe as the basis for decision-making. FP&A typically works with the c-suite and the broader business to gather data, determine market trends and shifts, and ultimately develop forecasts.
In the past, forecasting has traditionally been based on historical performance, current performance and trajectory, and predictions of future market, competitor, and internal performance, strategy, and execution. FP&A then uses this information to estimate revenues, profits, cash, expenses, and other financial metrics in the future.
How are Financial Forecasts Used?
If, for example, FP&A forecasts strong growth in profits, the CEO, CFO, and other executives may decide to increase budgets in different areas of the business to maximize that profit potential.
Or if FP&A forecasts slow growth or contractions for specific products or markets, business leaders may plan to preemptively leave or reduce investments in those areas.
Externally, financial forecasts are also used by the CEO and CFO to inform external creditors and investors, develop reports and projections, and calculate broader financial metrics, such as company valuation, goals, bonuses, and more.
Banks and lenders may use forecasts as a measure of risk to determine lending attractiveness, funding levels, or interest rates for loans.
Potential acquisition candidates, merger partners, and acquiring companies may also look at forecasts to determine the net value of a transaction or the valuation of a particular deal.
The primary goal of financial forecasting is to help the business make better plans and decisions based on future expectations. Therefore, the accuracy of financial forecasts is critical to good decision-making, goal attainment, and financial sustainability.
Of course, it all falls on FP&A shoulders to ensure accurate forecasts.
What are the Methods of Financial Forecasting?
Historical and current financial performance requires FP&A to gather organizational data from the past several years or quarters, depending upon the cyclicality and seasonality of a particular business or sector.
Estimates of future performance, however, vary widely by company and sector. There are several methods of financial forecasting, as follows:
Straight-Line Financial Forecasting
An organization in a steady sector may have experienced an increase in revenues of 3% per quarter for the past several years. Therefore, barring any economic chaos, they simply assume similar growth going forward. This is termed a “straight-line forecast” and is relatively simple and straightforward. With this method, Finance simply assumes the organization will continue progressing forward in a straight line.
Of course, straight-line forecasting is more complex in practice. Organizations may see new products enter their market, economic uncertainty, pandemics, internal decisions, headcount or executive movements, and other factors that can impact their financial forecasts. This all needs to be taken into account. So, even when using straight-line forecasting, FP&A would do well to depend on a financial software tool or solution to assist.
Time Series Financial Forecasting
For sectors or organizations with less predictable financial results, FP&A may choose to employ a time series method of financial forecasting. Time series forecasting is particularly helpful for industries that experience cyclical or seasonal changes, such as winter sports apparel companies or lawn mower manufacturers.
Time series forecasting may be helpful for organizations that experience market, competitive, or other changes frequently and cannot rely on years’ worth of historical data. In those cases, FP&A may choose to limit historical data usage to only recent months or quarters.
Time series financial forecasting typically requires more computing horsepower than standard straight-line forecasting. But, the intent of the method is to accurately estimate similarly cyclical, seasonal, or fast-changing financial results into the short-term future.
When using time series financial forecasting, FP&A will benefit from the help of a modern, capable FP&A software tool.
Moving Average Financial Forecasting
For industries or organizations that rely on historical data to develop financial forecasts, moving average financial forecasting brings more data and statistics into their financial projections.
A moving average is exactly that: it uses data from a number of prior periods to estimate the next period’s results. It is helpful in eliminating or reducing the impact of anomalies, one-time changes, or other fleeting factors from affecting the future forecast, since it is based on a longer series of period averages.
Moving average financial forecasting uses straightforward averaging, but can quickly become complex as FP&A looks to forecast more granularly than just revenue or profits. Organizations with complex product lines, multiple regions, and other factors will do well to equip FP&A with a modern tool for financial forecasting.
Linear Regression Financial Forecasting
Linear regression is a statistical method for modeling the relationship between a dependent variable, meaning the variable that is influenced, and an independent variable, being the variable that is the influencer. This method of financial forecasting shows the effect on profits, for example, based on taking an action, say adding additional sales reps.
More complex linear regression financial forecasting may take many dependent and independent variables into account to determine how those factors will affect future financial performance.
FP&A can use linear regression financial forecasting to create various forecasting models based on differing assumptions to then focus on a final likely forecast. But, as the number of assumptions and variables increases, these forecasts quickly become complex.
Employing linear regression financial forecasting with spreadsheets can quickly add undue confusion, complexity, and manual effort to forecasting, leading FP&A to find a dedicated financial forecasting solution.
How Do You Do Financial Forecasting?
Most organizations need to understand not just their internal performance, strategy, goals, and investments, but also take into account market trends, competitive moves, cyclical or seasonal impacts, supply chain events, raw materials prices, and more. This all requires both data and assumptions, and it can quickly overwhelm FP&A relying on spreadsheets and manual effort.
But, FP&A is ultimately responsible for driving financial forecasting. In general, FP&A teams take the following steps to build financial forecasts:
- Work with the business to locate, collect, aggregate, understand, and analyze financial data.
- Collaborate with sales, the business, and executives to understand outside influencers and account for their impact on financial forecasts.
- Research external data and rely on third-party forecasts and analyst reports to estimate the impact of market forces and economic realities on potential future performance.
- Analyze corporate activities and past periodic performance to evaluate how different actions have impacted past financial forecast accuracy.
- Provide detailed financial forecasts and decision guidance to the business, executives, board of directors, and others.
- Publish financial forecast reports and communicate the organization’s overall financial projections, estimations, and granular details to internal and external parties.
- Use financial forecasts to guide planning, budgeting, modeling, and scenario planning, as well as inform the allocation of assets and investments to achieve overall corporate financial goals and business objectives.
The Best Financial Forecasting Software Tools
Even the most straightforward business models require financial forecasting to estimate and prepare for the future. Running out of cash would be disastrous for any business, be it a corner lemonade stand or a massive global enterprise. Or, not preparing for an expected surge in demand could leave you scrambling to retain customers. Better, more accurate financial forecasts are invaluable to every organization.
No matter which method of financial forecasting is employed, FP&A has traditionally used large, complex, and interconnected offline spreadsheets to develop financial forecasts. Perhaps no other business team is more reliant upon Microsoft Excel or Google Sheets than FP&A.
For much of the past thirty-plus years, Excel has been the go-to tool for Finance because it’s easy to use and naturally designed for numerical data and calculations, flexible for any financial forecasting method, etc.). But, spreadsheets also come with major drawbacks in today’s fast-changing world that can create huge problems and inefficiencies when Finance attempts to use them at scale.
Some of the main reasons spreadsheets are difficult to use include:
- Being highly manual and prone to human error
- Can contain unknown yet stale or incorrect data
- Are not easy to share and collaborate on
- Have few controls and compliance mechanisms
- Can create version control confusion
- Require constant checking of numbers, formulas, and cell references, and more.
To help solve these common challenges, software developers have built modern, cloud-first, highly powerful solutions to help FP&A do financial forecasts better, faster, easier, and with much more confidence.
These robust and capable solutions come from both progressive, innovative, and well-financed software startups as well as the large, traditional enterprise software vendors. However, each financial forecasting solution vendor takes a different approach and focuses on specific market segments.
These are the top 15 financial forecasting software providers, with key details on their features, benefits, targets, and more, all evaluated through an FP&A lens.
Cube is a powerful and intuitive FP&A tool and our #1 choice for FP&A software. Here's a quick overview of Cube:
- The first spreadsheet-native FP&A software that helps finance plan for the unexpected and move the business forward.
- Eliminates manual work and provides the real-time insights finance needs to strategize with speed and agility.
- Pairs the flexibility and familiarity of your spreadsheets with the control and power of enterprise software.
- Implements quickly. Cube gets you up and running in days, not months, which means faster time to value at a lower cost.
- Connects with any source system, any browser, and any sheet in moments, so you don't have to change how you work.
- Access to an award-winning customer team with deep FP&A experience.
Cube’s simple and intuitive experience makes it a great choice for mid-market companies that want to get started fast with scalable, enterprise-grade technology at a reasonable price.
Key functionality Cube provides includes:
- Automated data consolidation
- Sharable planning templates
- Customizable dashboards and reports
- Scenario planning and analysis
- Bidirectional Excel and Google Sheet integration
- Approval workflow
- Drill-throughs and audit trails
- User-based controls
- Centralized formulas and KPI
These FP&A software features translate to easier reporting and KPIs, more accurate forecasting and budgeting, faster close and consolidation cycles, and collaborative teamwork for more control and fewer mistakes.
Cube vs. Adaptive:
Cube offers a simple and intuitive financial forecasting experience designed for mid-market companies. Workday Adaptive Planning is best for large enterprise companies looking to transform how their business fundamentally operates. Small and growing FP&A teams that lack massive budgets and strong IT resources would be better served by Cube over Adaptive.
2. Workday Adaptive Planning
Workday Adaptive Planning, formerly known as Adaptive Insights, provides enterprise solutions for planning, modeling, budgeting, and forecasting for financial, workforce, and sales needs. Their tools aim to promote collaboration across the enterprise without spreadsheets or legacy solutions.
Workday Adaptive Planning for finance specifically provides financial planning and analytics for large enterprises. Their FP&A solution also adds capabilities for modeling, collaboration, analytics, management reporting, board reporting, scenario planning, and financial consolidation.
Their strong capabilities outside of Finance and FP&A make Adaptive Planning a good choice for large enterprises seeking a transformational, company-wide FP&A solution.
Adaptive Planning vs. Planful:
Adaptive Planning and Planful are both tailored towards larger companies and enterprises with large finance teams and bigger overall teams. Adaptive Planning is a good choice for those seeking to modernize how Finance works and goes far beyond just FP&A. Planful is a great choice for organizations focused on Finance capabilities and collaboration.
Anaplan helps with complex scenario planning, intelligent forecasting, and faster decision making. Their enterprise-wide solutions connect strategy to outcomes with accountability connected to a single source of truth.
Anaplan specifically provides FP&A solutions to connect people, data, and plans across the organization to arrive at the right decisions. The solution includes planning, budgeting, and forecasting; specialty finance planning; and operational planning, which deliver better and faster decision-making; automated cost management practices; and connected financial and operational plans.
Anaplan is great for large enterprises that have a strong IT team which can lead an enterprise-scale business transformation.
Anaplan vs. Vena:
Anaplan and Vena target different segments of the market. Anaplan is great for bigger, complex organizations, while Vena is good for smaller companies looking to standardize financial forecasting around templates. Vena should be considered by organizations eager to control how FP&A works.
Planful offers a cloud FP&A software platform covering structured and dynamic planning, consolidation, and reporting. Planful’s platform elevates the financial conversation and helps you make better decisions more quickly, confidently, and strategically.
For Finance, Planful offers solutions for managing cash flow, workforce reporting, financial reporting, annual operating planning, monthly close and consolidation, and multi-dimensional analysis. The company rebranded from Host Analytics in early 2020 to focus on mid-market customers.
Planful is ideal for larger companies with big FP&A teams that want to work more collaboratively with the business.
Planful vs Anaplan:
Planful and Anaplan are both tailored towards larger companies with an affinity for engaging implementation consultants and support. Planful is better for FP&A teams looking to expand their influence in decision-making and business strategy. Anaplan is better for CFOs hoping to transform Finance.
Vena offers a complete planning platform designed to bring people, processes, and systems together with pre-built solutions to automate time-consuming tasks. Specific capabilities include financial planning and analysis, reporting, compliance reporting, and financial close. Vena offers “pre-configured” FP&A software for a prescriptive approach that can be customized to meet specific needs.
Vena is ideal for companies that need the rigid process and planning controls of pre-built FP&A processes, or that want to customize a pre-built solution for their unique needs.
Cube vs. Vena:
Cube enables FP&A to continue working as they like while increasing efficiency and effectiveness through smarter, simpler financial forecasting, planning, analysis, and reporting. Vena uses a structured, template-driven approach to standardize FP&A. Cube is the better choice for FP&A teams that already have existing processes yet want to be faster and more confident in their work.
Prophix sells a Corporate Performance Management (CPM) solution designed to improve profitability and minimize risk by automating repetitive tasks. Their solutions help Finance automatically budget, plan, consolidate, and report with cloud or on-premise solution options.
Prophix is best for automating slow, manual, repeatable FP&A processes using pre-built functionality.
Prophix vs. Cube:
Prophix off-loads manual work with structured automation of repetitive tasks, such as data imports and report generation. Cube is the better choice for FP&A teams who want to expand, improve, and accelerate financial forecasting along with the rest of FP&A.
Jirav is financial planning and analysis in the cloud that helps accounting and finance teams budget and forecast without the need for stale, error prone spreadsheets. It’s designed to be completely customizable so you can track, forecast, and share the data that matters most to your business.
Jirav is designed for small businesses looking to move their financial processes off of spreadsheets and onto a simple tool with straightforward capabilities.
DataRails is analytics for the finance function. Their financial analytics platform was designed to empower finance professionals to collect, report, and analyze data with ease. Without changing how you work, DataRails creates a unified database of all your numbers by automating the collection of data from each of your organizational systems and spreadsheets.
Centage’s Planning Maestro empowers FP&A to make faster, more informed decisions, react quickly to market changes, take calculated risks, and capitalize on new opportunities. The tool enables you to build flexible, driver-based plans, forecast likely financial performance, analyze results, and share critical information across the business.
Planning Maestro is suited for FP&A at small businesses looking to drop spreadsheets and enable more complex financial processes. Their solutions are developed for specific industries, such as Architecture, Engineering & Construction, Education, and Nonprofit.
OnPlan is financial modeling software that allows you to forecast, budget, and collaborate with your FP&A team for better visibility, greater transparency, and more effective benchmarking. You provide your existing spreadsheet models to OnPlan and they build you a customized model with informative dashboards, charts, graphs, and more.
OnPlan is for small companies looking to eliminate financial modeling errors inherent to spreadsheets by transitioning those models to a more powerful financial modeling platform.
Budgyt is an easy to use, intuitive platform with a clean simple interface for budgeting multiple P&L’s without needing Excel. It is a fully cloud-based, multi-department budgeting tool that delivers solutions for small-medium sized businesses, nonprofits, or larger enterprises with complex needs like cost-allocation.
Budgyt is perfect for companies seeking a solution designed specifically for budgeting multiple P&Ls that eliminates their need for Excel.
12. Oracle Essbase
Oracle Essbase gives organizations the power to rapidly generate insights from multidimensional data sets using what-if analysis and data visualization tools. It is a business analytics solution which can complement other FP&A tools with deeper analytics and modeling capabilities.
Oracle Essbase is best for very large Oracle shops seeking an analytics and modeling solution which can be used across the business.
13. Oracle Hyperion
Oracle Hyperion Planning is a planning, budgeting, and forecasting tool that brings financial and operational processes together to increase business predictability. It has capabilities for planning, budgeting, and forecasting to align financial plans, models, and forecasts across departments, cost centers, and lines of business. It is a part of Oracle’s bigger enterprise business planning solutions.
Oracle Hyperion Planning is built for very large organizations looking for an enterprise-grade performance planning management solution integrated with other Oracle solutions.
14. Oracle PBCS
Oracle Enterprise Planning and Budgeting Cloud Service (PBCS) is for operational planning with
flexibility, scalability, transparency, and control. Their software solution uses built-in best corporate finance practices through a configuration framework that can be used as-is or customized for unique needs.
Oracle PCBS is suited to large enterprises that combine financial and operational planning and have existing investments in Oracle solutions.
NetSuite Planning and Budgeting offers planning and budgeting applications to automate planning and budgeting processes and centralize financial and operational data for companies operating in specific industries. It then lets Finance quickly and easily create budgets and financial forecasts, what-if scenarios, and reports within one tool.
NetSuite Planning and Budgeting is designed for large companies in specific industries that already use NetSuite solutions in their business.
So which financial forecasting software solution and vendor is best for you? The choice really comes down to how you run Finance, the size of your business, and the capabilities you need to support growth.
If you’re in FP&A at a mid-market company, and you’re looking for an easy-to-use, scalable, and robust financial forecasting tool that maintains your spreadsheet experience yet adds the power of a cloud platform, you should definitely take a look at Cube. The simple and intuitive experience Cube delivers makes it perfect for Finance leaders at mid-market companies who want to modernize how they work, get started quickly, and scale FP&A with their growing business.
Large enterprises should look to Oracle or NetSuite. Companies with a very large and capable IT team should also consider Workday Adaptive Planning and Anaplan. If Finance needs structured, template-driven financial forecasting tools, give Vena a look. And, bigger companies with big FP&A teams should investigate Planful.