It is a basic fact that sales are the lifeblood of all companies.Sales forecasting is basically the process of estimating future sales.Accurate sales forecast always enables companies to make informed decisions regarding their company. It is important to take note of the fact that accurate sales forecasting also enables companies to predict the short term and the long term performances of the company.
Companies could always base their forecasts on the past sales information, industry wide comparisons and the economic trends. Forecasting sales is one process that enables firms to identify strengths and weaknesses before they set their budget and the marketing plans for the next financial year. By getting to know their weaknesses and strengths before they come up with the budget and marketing plans for the next financial year, companies would be able to optimize their purchasing and even expansion plans. The article below highlights the merits of sales forecasting.
The very first benefit that comes with sales forecasting is the fact that it helps firms to maintain their cash flows. When a company knows if their revenues would grow or shrink in the coming future, they would not get into so much spending but would conserve the cash in order to survive all forms of recessions. You should know that sales forecasting would also enable firms to take advantage of special needs and the various expansion opportunities that normally come by knowing that in future, they would have cash that would enable them to support their business.
The second merit that comes with sales forecasting is planning. The good thing about sales forecasting is that it enables a company to know more of the revenues that would be generated from sales and that information would help them immensely when it comes to taking advantage of the future economic changes. Sales forecasting enables companies to plan for the future. This is because sales forecasting brings about certainty.
Eventually, sales forecasting brings about purchasing power that is just of the right quantity. You should know that it is normally a disaster when a company purchases too much or too little inventory. Sales forecasting enables firms to know what to buy and in what amounts. In other words, sales forecasting enables companies to adjust their budget when it comes to purchases so that they would be able to buy what they can afford.It is vital for companies to embrace sales forecasting so that they will know the position of their business at the current times and also in future.