Reviews
Part of Financial projections: three linked statements, the assumptions page as the deliverable
Financial projections software: a test, not a ranking
Financial projections software is best judged by visible, editable formulas, three statements that reconcile, and a one-month test—not by a brand list.
This financial projections software test is not a ranking of the best financial projections software: it names no products and quotes no prices. A brand-by-brand comparison can go stale quickly, but the test that matters is not between brands. It is between a tool that shows its arithmetic and one that does not.
That single property decides most of the category. Everything below is a way of testing it before you have committed your figures and your evening.
What to take away
- If you cannot see and edit the formula behind a number, you cannot defend it when asked. Treat that tool as unusable.
- A profit forecast is not a set of projections. Three statements that reconcile is the standard.
- Test on a month you already know the answer to, not on the tool's own demo data.
- A spreadsheet you built yourself is a legitimate answer, and often the best one.
What the category actually contains
What it does well
- Spreadsheet templates
- Full visibility, no lock-in, free or cheap
- Dedicated forecasting tools
- Linked statements, scenarios, tidy output
- Bookkeeping suites with forecasting attached
- Real history feeding the forecast
- Plan writing suites with a financial module
- One document, one workbook
- Industry-specific models
- The right units and stages for your trade
- Lender or program workbooks
- Exactly the format the reader wants
Where it fails you
- Spreadsheet templates
- You inherit somebody else's structure and their errors
- Dedicated forecasting tools
- Hidden formulas, and models that fit their categories rather than yours
- Bookkeeping suites with forecasting attached
- Forecasts built as a growth rate on past months
- Plan writing suites with a financial module
- The financials are usually the weakest part of the product
- Industry-specific models
- Preset assumptions you did not choose and cannot always see
- Lender or program workbooks
- Rigid categories, and no help with your own management view
The last row is worth checking first. If your reader supplies a workbook, build in yours and map into theirs, rather than adopting theirs as your only model. You will need your own version for the next reader.
The rule that decides it
Every figure in a plan is a statement you are making to a lender or an investor. When one is questioned, the answer has to be a source, a method and a date, and you cannot give any of those for a number a tool produced and will not explain.
The visibility rule
- See every formula
- Change every formula
- Export the workings
- Find all tool defaults
- Replace defaults with your values
So the requirement is blunt. You can see the formula, you can change it, and you can export the workings. A tool that computes and hides has moved your accountability somewhere you cannot reach.
The same applies to anything the tool fills in by default: a payment term, a growth rate, an employment cost load. Find those defaults and replace them with your own values, because a default is somebody else's assumption wearing your name. What every input owes a reader is set out in the projections guide.
The three-statement test
Many products produce a profit forecast and call it financials. For most lending decisions that is not enough.
The three-statement test
Does it produce a balance sheet?
Check closing cash agrees with cash flow
Budgeting tool, thin for an application
Ask for an income statement, a balance sheet and a cash flow. Check that closing cash agrees between the last two. If the product cannot produce a balance sheet, it is a budgeting tool, not a forecasting one. That is fine for internal use and thin for an application.
What each statement is for is worth reading before judging output.
Test it on a month you already know
An evening, with one real month of your business or one carefully specified month of the business you intend.
Five checks on a known month
- Closing cash matches your arithmetic
- One change behaves as expected
- Annual cost stays in its month
- You can model your own driver
- Everything exports, workings included
Enter it properly: your prices, your costs, payroll from the team section with employment costs on top, your real payment timing, and any equipment purchase or loan payment falling in that month. Then check five things.
Does closing cash match your own arithmetic?
Does one change behave as expected?
Does an annual cost stay in its month?
Can you model your own driver?
Does everything export?
What to ask before paying
- Can I see and edit every formula, including the ones behind the balance sheet?
- Does it produce all three statements, and do they reconcile?
- What defaults does it apply that I have not entered, and can I see them all?
- What export formats, and do exports keep working after cancellation?
- Where is my data held, who can see it, and how do I delete it?
- Is the output free of vendor branding when printed?
Get the answers in writing. Anything answered vaguely is answered.
Ask before paying
- Can I see and edit every formula?
- Do all three statements reconcile?
- What defaults have I not entered?
- Do exports survive cancellation?
- Where is my data held?
- Is printed output free of branding?
Where a tool will not help
It will not decide your price, your capacity or your payment terms, and those three decide the forecast. It will not know that a supplier wants payment on order while your customer takes a month, which is where most small businesses run out of money.
It also will not keep your records for you when that matters later. Retention obligations differ from what the software stores. For federal tax recordkeeping, consult IRS Publication 583, Starting a Business and Keeping Records; retention periods depend on the record and circumstances.
Your figures should trace to those records and to the unit costs in the product and service section.
Common questions
Is a spreadsheet good enough for a loan application?
Yes, routinely, provided it produces three statements that reconcile and an assumptions page. Lenders read spreadsheets all day.
Should I buy the module in the plan writing suite I already use?
Only after the three-statement test and the one-month test. These modules are commonly the weakest part of the product, and the financial section is the part that carries the decision.
What about tools that generate the forecast from a description of the business?
Whatever they produce, you are accountable for. A number you accepted is a number you asserted, and the first question about it will be where it came from.
Can my accountant just build it?
Often the best answer, particularly for the first version. Ask for the workbook rather than a report, so you can change an assumption yourself and see what happens.
