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How to Create a Forecast

Learn how to create a rolling three-way forecast in Reach Reporting, keep it up to date as new actuals roll in, and use it to make informed decisions based on current business trends.

In this article:


What Is a Forecast?

A forecast in Reach Reporting is a living, rolling financial plan that replaces past budget periods with actual data as each month closes. Unlike a static budget, a forecast continuously reflects the most current state of your business — combining real actuals for closed periods with forward-looking projections for open periods.

Reach Reporting supports three-way forecasting, meaning it automatically integrates your:

  • Profit & Loss (P&L)
  • Balance Sheet
  • Cash Flow Statement

For a full overview of how the three-way integration works, see Mastering Budgeting with Reach Reporting's 3-Way Planning Tool.

Forecast vs. Budget: Key Differences

Understanding the difference between a budget and a forecast helps you use each tool effectively.

 

Budget

Forecast

Reference data for drivers

Pulls from historical data

Pulls from the most recent actuals available

Closed periods

Shows budget amounts

Replaced by actual data (highlighted in blue)

Receivables/Payables balance

Based on last year's data

Based on the last actual AR/AP balance

Net income on Balance Sheet

Based on budgeted figures

Adds forecasted monthly net profit/loss to current year actuals from the books

Cash position

Projected from budget assumptions

Sourced from actual bank account balances on the Balance Sheet

Rolling forward

Not applicable

Forecast month advances as each book month closes

When you roll a forecast forward, new actuals replace prior reference data. This means all driver calculations — trailing averages, linear trends, carry forward, and more — automatically update to reference the latest closed data.

Before You Begin: Starting Points

Option 1: Start from Scratch or Duplicate a Budget

You can create a forecast two ways:

  1. Build a new budget and convert it to a forecast (see Step 1 in the next section).
  2. Duplicate an existing budget to preserve your original budget, then convert the duplicate to a forecast. This is the recommended approach if you want to maintain both a budget and a forecast side by side.

To duplicate a budget, navigate to Budgets/Forecasts, click the gear icon next to the budget you want to duplicate, and select Duplicate. Then follow the steps below to convert it to a forecast.

Option 2: Use a QuickBooks or Xero Budget as Your Starting Point

If you have a budget in QuickBooks Online (QBO), QuickBooks Desktop (QBD), or Xero that you would like to use as the basis for your forecast, note that there is no way to import the budget directly into Budgets Pro, and Reach does not automatically pull Forecasts from these integrations. Instead, follow these steps:

  1. In QBO, QBD, or Xero, run the budget report for the full year, then export it to Excel.
  2. In Reach Reporting, create a new Budgets Pro budget for the same fiscal year.
  3. Open the budget in Reach and open the exported Excel file side by side.
  4. Copy and paste the monthly budget amounts from Excel into the corresponding rows in the Reach budget.
  5. Once the budget data is entered, proceed to convert it to a forecast as described in Step 1 below.

Note: For more information on creating budgets in Reach, see How to Create a Budget and Mastering Budgeting with Reach Reporting's 3-Way Planning Tool.

Step 1: Convert a Budget to a Forecast

  1. Navigate to Budgets/Forecasts in the left navigation bar.
  2. Open the budget you want to convert 
  3. Choose Convert to Forecast.
  4. Check the box to Convert to Forecast in the Budget/Forecast Settings > Forecast and click Save

Tip: If you want to keep your original budget intact, duplicate it first, rename the duplicate, and convert only the duplicate.This allows you to maintain both a budget and a forecast — one for your original plan and one that updates with actuals each month.

Step 2: Set the Forecast Month

After converting to a forecast, you will be prompted to select the Forecast Month — the first future month for which forecast projections will apply.

  • All months before the forecast month are considered closed periods; actuals will replace your budget figures for those months.
  • All months after the forecast month will continue to show your projected values.

Step 3: Understand How Actuals Override Budget Data

Once the forecast month is set, closed period data (highlighted in blue) automatically overrides your budget figures. Your full-year forecast totals update instantly to reflect actual performance in closed months plus projected performance in future months.

How reference data works in a forecast:

  • Accounts Receivable: Your existing AR balance is based on the last actual receivables balance, not last year's data.
  • Current Year Net Income on the Balance Sheet: Adds your forecasted monthly net profit or loss values to the current year actuals from your books. If you need to adjust for retained earnings (e.g., distributions or adjustments made during the year), you can type over a cell or use a formula to correct this.
  • Cash Position: Sourced from actual bank account balances on the Balance Sheet. The ending cash balance is calculated from the beginning actuals balance plus cash flow adjustments from forecasted P&L and Balance Sheet changes.

For a deeper look at how reference data is used across your forecast, see Budgeting with Reference Data.

Step 4: Customize Your Forecast with Row Drivers

Just like with budgets, you can adjust forecast values using a range of automated row drivers or manual inputs. In a forecast, these drivers automatically update as new actuals come in each month.

Key forecast-specific driver behaviors:

  • Trailing Average Driver: The date range updates automatically when you roll forward, so trailing average calculations are always based on the most recent available actuals.
  • Annual Target Driver (Responsive option): Adjusts future months dynamically based on actual data received, keeping your total at the target level. It also accounts for any manual overrides you've made.
  • Linear Forecast Trend Driver (Rolling 24 Months): When set to include current year actuals, it updates trend values based on a rolling 24-month window.
  • Linear Forecast Trend Driver (Use Prior 2 Fiscal Years): This will apply a linear trend growth rate over the past 2 fiscal years.
  • Carry Forward Driver (Balance Sheet): Automatically updates your forecast values based on the prior month's actuals.

You can also use:

  • Custom spreadsheet formulas referencing your actuals
  • Data Sheet links to connect custom inputs and external data to your P&L and Balance Sheet
  • Google Sheets or Excel connections for collaborative planning inputs

For a complete guide to all available drivers and how to apply them, see Row Drivers in Budgets/Forecasts.

For details on connecting external planning data, see Budget/Forecast Data Sheets.

Step 5: Configure Balance Sheet Automation

Reach Reporting's three-way forecast automatically links Balance Sheet changes to your Cash Flow Statement. As you update P&L projections, the corresponding Balance Sheet accounts (AR, AP, Inventory) and cash flow projections update accordingly — with no manual formulas needed.

Your ending cash balance is calculated automatically from:

  • Beginning actual cash balance (from the Balance Sheet)
  • Plus/minus cash flow adjustments from forecasted P&L and Balance Sheet changes

To learn more about AR, AP, and Inventory planning, see Planning for Accounts Receivable, Accounts Payable, and Inventory Turnover.

Step 6: Set the Forecast as Default

Once your forecast is complete, set it as the default forecast for your company.

  1. Go to Company Settings > General Settings.
  2. Select the forecast as the Default Forecast.

Setting it as default will:

  • Automatically pull the forecast into your template dashboards and reports
  • Allow you to instantly visualize deviations from your original planning strategy
  • Keep your reporting current as new actuals flow in each month

Maintaining and Rolling Your Forecast Monthly

A key advantage of a rolling forecast is that it stays current as your business data updates. Here is how to maintain it effectively.

When to Roll the Forecast Month Forward

Roll the forecast month forward only after the book month is fully closed and no further actuals adjustments are expected. This ensures your cash position, AR, AP, and driver calculations are based on finalized data.

To roll the forecast forward:

  1. Open the forecast in Budgets/Forecasts.
  2. Click the current forecast month, highlighted in blue
  3. Advance the Forecast Month to the next period.
  4. Save the forecast.

Once rolled forward, the newly closed month's actuals will replace the prior forecast figures for that period, and all driver calculations referencing actuals will update automatically.

Refreshing Row Drivers After Rolling Forward

When you roll the forecast month forward, driver calculations that reference actuals do not update automatically — you need to manually trigger a refresh. To learn more about refreshing the row drivers, see Budgeting with Reference Data.

If Actuals Are Adjusted After Rolling Forward

If your bookkeeping data is adjusted after you have already rolled the forecast month forward:

  1. Allow the company to sync and pull in the updated actuals.
  2. Re-save the forecast. This will cause the reference data to refresh based on the corrected actuals.

Note: You do not need to roll the forecast month back — simply re-saving after a data sync is sufficient to update the reference data.

Multi-Year Forecasts

You can use the same steps in the Multi-Year Budget Creation Guide to create a rolling forecast that spans multiple fiscal years.

New Account Warning

If new accounts are added to your chart of accounts during the fiscal year, a warning icon will appear at the top of the forecast. Review and map these new accounts so they are properly included in your forecast calculations. This works the same as with budgets.

Hiding Unfinalized Actuals in Metrics and Statements

If you want to hide actuals in your metrics and statements that have not yet been finalized for the current book month, you can enable this in Company Settings:

  1. Go to Company Settings > General Settings.
  2. Enable Hide Actuals After Book Month.

This will hide actuals for months beyond the current book month so that unfinalized data does not appear in your reports or dashboards. Many report templates already include this feature automatically.

For more information, see the Hide Actuals After Book Month article.

Troubleshooting

Cash balance is not calculating correctly. 

Make sure the forecast month has only been rolled forward after the book month is fully closed. If adjustments were made to actuals after rolling forward, re-save the forecast after the data sync to refresh the reference data.

Row driver calculations are not updating after rolling the forecast forward. 

Drivers do not refresh automatically. Go to Advanced Settings and trigger a refresh, or use the manual refresh icon in the P&L or Balance Sheet. Always save the forecast after refreshing.

Forecast values look incorrect after I added new accounts mid-year. 

Check for the warning icon at the top of the forecast. New accounts must be reviewed and mapped before they will calculate correctly.

The Annual Target driver with Seasonality is not calculating correctly. 

Check for negative values in the prior year data. The seasonality calculation cannot process negative growth rates and will return zero instead. Click into Row Settings > Preview to check for negative values. If found, manually enter the corrected value for that month (equal to the difference between the annual target and the total shown). See Row Drivers in Budgets/Forecasts for more detail.

My forecast shows "View Only."

If you are in a classed forecast, you will need to change the P&L dropdown to the specific class and update each class individually.

Best Practices

  • Duplicate before converting. Always duplicate your budget before converting it to a forecast so you preserve the original annual plan.
  • Only roll forward after the book month is fully closed. This ensures all reference data — cash, AR, AP, drivers — is based on finalized actuals.
  • Set the forecast as default once approved so it automatically flows into all template reports and dashboards.
  • Use the Responsive Annual Target option for revenue or expense accounts with annual goals — it will automatically adjust remaining months as actuals come in.
  • Add comments to document your assumptions, especially for manual overrides, so team members understand the rationale behind forecast decisions.
  • Share via the Client Portal to give clients view-only or edit access to the forecast. See Budgets and Forecasts in the Client Portal.

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