Who can use this feature
Roles: Owner, Admin, Staff and optional on custom roles
Plans: Available on Standard, Plus, Advanced and Scale (with more advanced options only available on Plus, Advanced and Scale)
What is a 4-Way Forecast
4-Way Forecasting is an incredibly powerful tool that allows you to create an integrated forecast across the profit and loss statement, balance sheet, cash flow statements, financial ratios and connections where any impact to a particular statement will carry through to all other statements.
Navigate to "Forecast" > "4-Way Forecast" where you will be able to see all created forecasts at a glance.
How to create a 4-Way Forecast
Navigate to "Forecast" > "4-Way Forecast" where you will land on the 4-Way Forecasting dashboard.
Click "Add Forecast" where you will be prompted to specify information in the pop-up about your forecast
Write a name and description for your forecast. It's useful to give your forecast a description so that you can create multiple forecasting scenarios for the same period (for example, a 5-year best case forecast and a 5-year worst case forecast).
Select a start and end date. Forecasts can range from 1 month to 10 years into the future.
Select a forecasting interval (monthly, quarterly or yearly). If you create a monthly forecast, you will still be able to download it in a condensed, annual view.
Select the type of data you would like to populate your forecast with under the "Forecast using" dropdown. There are eight methods to create a starting point for your forecast which are all fully editable:
Click "Create"
Once you've set up your forecast, the profit and loss statement, balance sheet, direct cash flow statement, indirect cash flow statement and financial rations will be generated for the time period selected.
Syft will also group certain accounts based on your chart of accounts setup. For example, all bank accounts will be grouped under cash and cash equivalents on the balance sheet. This is used to simplify your forecasting process and applies to bank accounts, inventory accounts, receivables accounts, payables accounts and VAT/GST accounts.
📓 Note
Syft creates a Cash & Cash Equivalents balancing account to record the contra-side of any manual adjustments you make.
Use the menu bar at the top of your screen to jump between each of the financial statements (any changes you make are automatically saved).
🛠️ Use cases
If you want your forecast to start with historical data or "flat" data, we suggest using the last period or last value methods. Forecasting adjustments will be more apparent under these methods.
Seasonality and trend methods are useful if you want a quick 4-Way Forecast or don't have many adjustments to make to your forecast. Note that seasonality is the preferred method for stable entities with more than 2 years of data while trend is preferable for newer or high-growth entities.
Forecast layouts
Forecasts have total columns that can be optionally added on creation or edit. This mimics the behaviour when you download a forecast to Excel. Please note that only monthly forecasts can add these total columns since they appear every 12 months.
Forecasts have their own saved layout configuration for hiding or showing line items. This is shared across the P&L and BS in the item and is initially set to the default layout's configuration. Changing the layout that is applied thus only effects the structure of the rows.
Click on "Layout options" within your forecast's P&L or Balance Sheet to change the layout or the layout view, as shown in the image below.
📓 Note
Changing the P&L or Balance Sheet layout within a forecast will not change the layout within your reports (that are not forecast reports) or the "Financials" tab.
Adding adjustments
Forecasting adjustments are changes that you expect to happen in the future which will impact your financial position. Any adjustment you make should be specific to your business, plans and expectations.
There are two ways to add an adjustment to your forecast:
Click "Add adjustment": specify the account, adjustment description, type of adjustment, value or percentage and adjustment duration
Automates adding a consistent change that occurs for the entire forecast or for specific periods
Manual adjustments: editing any figure directly on the financial statements.
Quicker for simple, once-off changes
Useful for extremely varying adjustments for different periods across one account
Once you create an adjustment, it will be displayed in the account in question. You will be able to identify it by the set of up and down arrows next to the account.
Syft displays more information about each adjustment including its frequency and who added it.
Within each account, you can now see your forecasting adjustments represented in a line graph. You can then drill down into the details for each category and click on any points along the graph to see their value. Syft graphs both the base case forecast as well as the forecast with adjustments so that you can visually see the impact of the adjustment.
As always, you have the ability to toggle adjustments on and off, and you can then compare the adjusted data to other scenarios.
Remember to provide a description for each adjustment so that you can determine the impact of each individual adjustment. Adjustments are also useful if you choose to export the forecast to PDF; it serves as a trail of forecasting changes that your team, clients, investors or your bank can read through.
📓 Note
Syft automatically creates a contra-account adjustment to bank to balance your balance sheet. However, this will not always be correct. For instance, not every sale made is cash.
You may want to add a matching adjustment in accounts receivable if the sales are on credit to move the contra from bank to accounts receivable or the correct account.
Adjustment types
There are several options for once-off and recurring adjustments:
Increase: Apply an increase to the current value
Increase on prior value: Apply an increase to subsequent prior values
This image shows the difference between increase and increase on prior value.
Decrease on prior value: Apply a decrease to the current value
Decrease: Apply a decrease to the current value
Formula: Build a formula using any combination of accounts by typing "@"+account name (current or prior period values) and arithmetic operators (that's +, -, × and ÷).
New Value: Apply a new value that overrides the previous value.
Export
Once you've created a complete 4-Way Forecast with all the forecasting adjustments you require, you can see all your saved forecasts on the 4-Way Forecast dashboard. You can either edit, download or delete a forecast from the dashboard.
If you choose to download a forecast, you'll be given the following options:
How to create a rolling forecast
A rolling forecast replaces the forecasted values with actuals as time passes and then updates your forecast according to the most recent actual values. To create a rolling forecast:
Navigate to "Forecast" > "4-Way Forecast"
Click "Add forecast"
Toggle on "Rolling forecast", as shown in the image below, whilst setting up your forecast.
Alternatively, click the three dots next to an existing forecast on your 4-Way Forecast Dashboard and click "Edit". You will then be able to toggle on "Rolling forecast" if it was previously not a rolling forecast. However, you cannot change an existing forecast from rolling to non-rolling.
Why create a 4-Way Forecast
A 4-way forecast is essential for loan applications as it provides a forward-looking view of your financials. It combines projected profit and loss, balance sheet and cash flow statements, linking them to ensure coherence. Additionally, it allows you to integrate business plans and expectations, offering a comprehensive picture of your future financial health and viability.
You can now see the avatars of people who have been tagged in a forecast. Additionally, you are able to tag or assign the forecast to to any additional user to facilitate collaboration within the team.
The impact of changing an entity's currency on your forecast
If you change the currency of the entity you are forecasting, you need to do so before creating your forecast as we do not convert it from one currency into another using exchange rates. All that happens is that the sign will change from, say, dollars to pounds. The reason for this is that we aren't able to accurately account for adjustments with an exchange rate.
📓 Note
Remember to change your entity's currency if necessary within "Options" > "Entity" before you build your forecast
Consolidated forecasts
You are able to add a forecast column to your Build P&Ls or Build Balance Sheets which will sum multiple forecasts from different entities within a consolidation into one forecast column. The underlying forecast columns will automatically be hidden.
Stripe entity
To forecast your subscriptions, you can use the following tools:
"Upcoming Churn" sub-tab: which details future churn from existing paid customers cancelling, downgrading to a free subscription, pausing, or becoming delinquent.
"Renewals" sub-tab: which details customers of annual and monthly plans who are expected to renew in the next 90 days
Tenure column: found in the "Upcoming Churn" sub-tab that displays the number of days between when the customer signed up and when they churned.
"Recurring" sub-tab: found within "Visualize" which analyzes recurring revenue and customers in terms of existing and new customers, reactivations and churn.
