Sales Forecasting
Use Sales Forecasting to enable Sales people to record and forecast opportunities, and Sales leaders (and everyone who needs to know), understand and track the Sales pipeline.
Sales Forecasting - need to know
Sales forecasting consists of two elements, the Sales Forecast report, and one or more Sales Opportunity Documents.
Sales Opportunity Documents are used by Salespeople to:
Record opportunity detail at the Line Item (SKU) level.
Set the probability and weighting (see below).
Submit their forecast ‘up the line’.
Track their progress against a period target
Sales Opportunity Fields
Opportunity
A name to identify the Opportunity
Forecast Status
A drop-down field. How far the salesperson estimates the deal is from closing.
The values are:
Committed - Confident the business will close in this period.
Closed - The business has been closed.
Omitted - This Sales Opportunity should be omitted from any forecast.
Lost - The business has been lost.
Close Date
The date the business is expected to close, set by the salesperson.
Opportunity Stage
A drop-down field. The current stage of the opportunity.
Qualified: Quote terms have been accepted.
Requirements Agreed: Product or service specifications agreed.
Proposal submitted: Quote submitted to the client.
Negotiating: Further discussions.
Definite: Opportunity is near to closing.
% Probability
A percentage indicating the salesperson’s estimate of the progress, relative to the Close Date, where definite would be = 100%.
Note: All these fields can be customized according to your sales team’s prerogatives.
Sub-Total (Weighted): This field cannot be changed as it is automatically populated. It is used to calculate the Weighted Sub-total; this is the normal Sub-total (i.e. pre-tax value) of the business, multiplied by the % value. This figure is a statistical estimate of the true value of the potential business.
Create Sales Opportunity
You can create a Sales Opportunity from:
Customer>Action>New sales Opportunity
Prospect Action>New sales Opportunity
Sales Opportunity>List Sales Opportunities>+
Sales Quote>Action>New sales Opportunity
Sales Order>Action>New sales Opportunity
The new Sales Opportunity will retain an ‘Our Ref’ link to the originating Document/Trading Partner.
Create a Sales Document from a Sales Opportunity
For the purposes of expediency, you can create these Documents from a Sales Opportunity:
Sales Quote
Sales Order
Sales Invoice
Cash Sales
The new sales Document will retain an ‘Our Ref’ link to the originating Sales Opportunity.
The system allows three levels of forecast reports:
Company
Team
Personal (Individual Sales person)
Create Sales Forecast
Sales Forecasting>Sales Forecasts>+
Sales Opportunities update these fields in Sales Forecasts
Standard
The sum of the closed and committed Sales Opportunities during the specified period.
Closed
Committed
Total
Weighted
The weighted sum of the closed and committed Sales Opportunities during the specified period multiplied by the stage probability. Example: $3,186.40 x 100% (Stage is definite, which equals 100%) = $3,186.40.
Closed
Committed (Weighted)
Total (Weighted)
Pipeline
The total committed revenue even if the Opportunities do not lie in the specified period.
Pipeline
Pipeline (Weighted)
Sales Forecast analysis
The Sales Forecast Document has tabs that allow you to view:
All opportunities
Opportunity by Owner
Opportunity by Customer
Cash Flow Forecast input
Opportunities on the Sales Forecast appear in the Cash Inflows section of the Cashflow Forecast. See ‘Using Cash Flow Forecast’. The Cash Flow Forecast is located here:
Cash Flow Forecast users can customize this report to omit/include Sales Forecast inputs, Banking>Cash Flow Forecast>Action Bar>Customise>Cash in tab>Sales Forecast.
Submit Sales Forecast
To submit a Sales Forecast:
Sales Forecast>Submit Forecast
Once a Sales Forecast is Submitted, it cannot be edited and no new Sales Opportunities can be added/removed.
Setup Opportunity Stage
Setup>Configuration>Sales Forecasting>Sales Opportunity>new Opportunity stage.
Stage name, i.e. engaged
Description, i.e. ‘actively seeking information and attention’
% i.e. 40
About Opportunity stages
Opportunity Stages apply the weighting to the entire Sales Opportunity.
Opportunity stages represent the sales funnel stages and their respective probability. The basic idea is, as an opportunity progresses through a series of stages its probability of converting to a sale increases by a percentage.
For example, a stage describing the prospect as being ‘engaged’, meaning they are actively seeking information and repetitively asking for your attention might indicate a probability of 50%, therefore the deal is weighted at 50%, and the deal value is forecast at 50% of its total value.
If you have a wide range, or high flow of Sales Opportunities at every stage of your sales funnel and you need a simple method to forecast potential sales, then using weighted forecasting is probably the best approach.
Each stage would be defined by the information you uncover and confirm. The more you know, the easier it can become to predict the outcomes. For example, “at this stage, if this happens, or we have this information” then in 4 out of 10 cases, the deal closes. In other words, at this stage, the probability of this deal, in these circumstances at this time is 40%.
Regardless of whether you have a high or a small number of Sales Opportunities, if you closely examined the probability of each one, you would probably discover a pattern of stages.
This analysis can be time-consuming, it’s all about recording, measuring and testing assumptions. To do this efficiently you need a sales forecasting system. As we all know, what gets measured gets managed.
Either begin with some simple opportunity stages (you can evaluate the stage’s merit over time) or just transfer your current process into stages.
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