Why Smart Prediction?
The Fathom Smart Prediction rule allows you to use linear regression to forecast the future values of your forecast. This linear regression draws a line of best fit through the data to forecast future periods. We built this functionality into Fathom, to allow you to leverage your business's historical performance, without leaning on methods, like last year's actuals, that are more fixed in nature.
The core principles of our Forecasting tool are auditability and transparency of forecast data. Which is why we have opted out of developing any black box machine learning methods that are often difficult to recalculate. Instead our Smart Prediction functionality uses mathematical formulas you can trust.
Smart prediction is just one value generation method that can be used to calculate your forecast. To read more about all of our value rule methodologies, please reference this article.
Smart Prediction short term
When applying a Smart Prediction value rule, you can tell Fathom how much prior period data to use in the linear regression model to predict your future values. You can select from the following date ranges in the short term:
- 3 months
- 6 months
- 12 months
- 24 months
We built in some flexibility to these rules in order to allow you to select the data that you believe to be most representative of your future periods. This can be handy when looking to forecast out future periods based on your most recent results - particularly relevant during volatile economic conditions, like those seen in 2020!
Smart Prediction long term
If you choose to use 24 months (2 years) of actuals data, Fathom is able to factor seasonality into the statistical model. This allows you to account for any numerical trends and changes to the chart of account line items, that are tied to seasonal conditions.