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Forecast

A forecast is a projection of expected future financial performance based on current information, operational assumptions, and known commitments, updated periodically to reflect changes in the business environment or revised operational expectations. Unlike a budget — which represents a fixed annual commitment — a forecast is a regularly updated estimate of where the business is expected to land, providing management with a current view of likely outcomes and enabling timely corrective action when performance is expected to deviate from plan.

Why This Matters

A forecast that is never updated is not a forecast — it is a budget with a different name. The value of forecasting comes from its currency: management needs to know not only what was planned at the start of the year but what is actually expected to happen given current conditions. A well-maintained forecast enables management to identify expected shortfalls early, assess whether corrective actions are likely to close the gap before year-end, and make informed decisions about resource reallocation in response to changed circumstances.

Where This Fits

This term sits within the Planning & Projections area of Performance & Control.

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