How do you check for errors on forecast modelling?

[poiu]

Hi,

I come from an accounting background so I'm used to be able to reconcile all my reports back to the accounting systems. I'm now working on forecast modelling and I find it really hard to find errors in my work - there just isn't anything to 'flag up' any formula errors because I have nothing to reconcile against.

How do you get to the point where you feel 100% confident presenting the results of a forecast model to, say, a company director?

Thanks,

Poiu

 

[liiamra]

Hi Poiu,

When I used to work as Finance Manager, I always needed a benchmark to check my results. In the case of forecasting, I never did, because in the first place, there is no benchmark for such.

On the other hand, just to be relaxed with the results I get, I would generate forecasts (using the same method) for the previous year. In this case, I could check them against the real observed figures. Please note that I never did it the other way around, that is, creating a forecast that would be closest to last year (2 or 3 years), and then use it for the next year, but indeed the results of the last years were the base of my calculations. If you don't have the history of your operations, then you can get information about a similar company, or just a professional* from the field to get some good approximation.

Professional*: If you are working in a medical center, then a previous GM of a center in the same area could be this professional.

Hope this helps,
liimra