Driver-based Profit & Loss "Break-back" Forecast Model

    What is a Driver-based Profit & Loss "Break-back" Model ? Driver-based P&L forecast forms are considered one of the most important components of a corporate forecast and are used by executives and budget managers to plan for revenues and expenses for the remaining months of the year. A key functionality in this type of forecast form allows input of the target Net Income that then automatically calculates all the revenues and expenses across all departments. The model also allows for immediate comparison to the annual budget and last year's actual figures. You will find an example of this type of forecast form below. Purpose of Driver-based P&L Forecast Forms Companies and organizations use Driver-based P&L Forecast Forms to automatically create one or many scenarios that can support many of their financial and operational decisions. When used as part of good business practices in a Financial Planning & Analysis (FP&A) Department, a company can improve its tactical planning as well as reduce the risk of having unexpected cost overruns and liquidity issues. Driver-based P&L Forecast Form Example Here is an example of a driver-based P&L input template that automatically calculates the forecast for the remaining months of the year. Profit & Loss Forecast You can find 100’s of additional examples here. Who Uses This Type of Forecast Form ? The typical users of this type of forecast form are: The Board of Directors, Executives, CFO and the Budget Manager. Other Forecast Form s Often Used in Conjunction with Driver-based P&L Forecast Forms Progressive Financial Planning & Analysis (FP&A) Departments sometimes use several different Driver-based P&L Forecast Forms, along with cash flow and more detailed forecast templates and other management and control tools. Where Does the Data for Analysis Originate From? The Actual (historical transactions) data typically comes from enterprise resource planning (ERP) systems like: Microsoft Dynamics 365 (D365) Finance, Microsoft Dynamics 365 Business Central (D365 BC), Microsoft Dynamics AX, Microsoft Dynamics NAV, Microsoft Dynamics SL, Sage Intacct, Sage 100, Sage 300, Sage 500, Sage X3, SAP Business One, SAP ByDesign, Netsuite and others. In analyses where budgets or forecasts are used, the data most often originates from in-house Excel spreadsheet models or from professional corporate performance management (CPM/EPM) solutions. What Tools are Typically used for Reporting, Planning and Dashboards? Examples of business software used with the data and ERPs mentioned above are:
    • Native ERP report writers and query tools
    • Spreadsheets (for example Microsoft Excel)
    • Corporate Performance Management (CPM) tools (for example Solver)
    • Dashboards (for example Microsoft Power BI and Tableau)
    Corporate Performance Management (CPM) Technology Solutions and More Examples