Sales Revenue Forecasting Definition

Introduction to sales forecasting 5 at the most basic level sales forecasting is the process of estimating future revenue generated by your sales team for your business.

Sales revenue forecasting definition. Your bookings from sales typically do not appear on a balance sheet cash flow statement or income statement in the saas world. Sales forecasting is an educated guess about future sales revenue that uses historical data and common sense to project monthly quarterly and yearly sales totals for a business. They might look at revenue and compare it to economic indicators. Here we take the average of the last 3 yrs and set that as the forecast for the 3 months in 2019.

Sales forecasting and revenue forecasting metrics can help saas companies determine their monthly recurring revenue mrr annual recurring revenue and future financial health. In most organizations it is the responsibility of the sales manager or sales vp to project and monitor the sales forecast for each selling period. In other words it is the process that involves the estimation of sales in a physical unit that a company expects within a plan period. In accounting the terms sales and revenue can be and often are used interchangeably to mean the same thing.

Lets take a look at various forecasting methods to forecast sales. This forecasting method uses data on how long a lead typically takes to convert into a paying customer. Sales forecasting is the projection of customer demand for the goods and services over a period of time. Sales forecasting is a formal revenue estimation process used to project how much revenue will close in future periods.

Sales revenue is the income received by a company from its sales of goods or the provision of services. For example if an average sales cycle lasts four months and your sales rep has been working a prospect for two months there is a 50 chance that your rep will close the deal. For most business plans a forecast looking three years into the future is generally sufficient. A sales forecast is an attempt to predict future revenue from sales typically broken down month by month for at least the next 12 months and then by year for the next two to five years.

Your team should view the sales forecast as a plan to work from not a firm prediction. Sales forecasting methods length of sales cycle forecasting. Recommended content for you definition of sales report gartner sales glossary. This means the forecast for jan feb and march of 2019 will be the same and will be equal to the last 3 yrs average.