Contents
Differences
Microforecasts and scenarios are both planning and strategy tools in Fathom, and it can be difficult to determine when you should use one over the other.
There are several differences to keep in mind:
| Microforecast | Scenario |
A microforecast is a component of a forecast or scenario | A scenario can be an entirely new version of a forecast | |
Microforecasts sit on top of the baseline | Scenarios enable you to change the baseline | |
A microforecast's start and end dates can be changed quickly and easily | Scenarios have the same start and end as the main forecast | |
Microforecasts can be included in reports but not compared easily | Scenarios can be included in reports and compared easily | |
You can have a maximum of 50 microforecasts for a company or group | Unlimited scenarios |
📝 Note: This article compares microforecasts and scenarios. For more detailed instructions on how to create microforecasts and scenarios, please see our 'Microforecasts' and 'Scenarios' articles.
Scope & Baseline Interaction
A forecast's baseline is generally used to predict how the business would perform if everything continued as usual. Value rules, timing profiles, drivers, and schedules & journals are used to forecast the baseline in Fathom.
Microforecasts are singular decisions or events being explored as part of a forecast. Common examples of microforecasts include new hires, equipment purchases, loans, and large projects or contracts.
Microforecasts do not change the underlying baseline rules in a forecast but occur in addition to the baseline.
Example: A creative agency uses the rolling average of the past 12 months of actuals to forecast the baseline. Microforecasts are used to forecast any large potential new projects or contracts.
The overall figure for an account is summed from the baseline and any microforecasts that impact that account. The microforecasts are separate from the baseline but contribute to the overall account and forecast total.
Scenarios enable you to create an entirely new forecast while maintaining your main forecast. The main forecast and a scenario may only differ by one factor or nearly every rule.
The baseline rules and assumptions can be changed in a scenario without impacting the main forecast. You can change the following baseline rules in a scenario:
💡 Pro Tip: Scenarios have an additional 'Baseline adjustment' value rule. This rule is really helpful for exploring questions like 'What if this expense account increased by 10%?' because it enables you to take the original baseline and apply a percentage or monetary increase or decrease to it.
Example: A lumber supply company struggles with cash flow. The company is considering changing customer payment terms from 90 to 60 days to improve cash flow.
They create a scenario and change the timing profile on their main revenue accounts to model the change in payment terms.
The timing profile, or baseline rule, is changed in the scenario but not in the main forecast. Stakeholders can now see how the company is predicted to perform with the suggested payment terms compared to the current ones.
Microforecasts may also be configured differently in a scenario. A microforecast can be turned off in the main forecast and turned on in a scenario or vice versa. A microforecast can also have a different start date in a scenario compared to the main forecast or other scenarios.
💡 Pro Tip: To document the decisions you make in your main forecast, scenarios, and microforecasts, we recommend using assumptions. You can include these assumptions notes in a report.
Timing
Microforecasts and scenarios can be turned on or off easily. Because microforecasts are singular decisions or events separate from, rather than intertwined with, the baseline, the timing of microforecasts can quickly be changed.
The Business Roadmap lets you grab and drag a microforecast along the forecast timeline. The main forecasting grid will reflect any changes in the Business Roadmap.
Microforecasts are ideal for modelling decisions for which the timing may not be exact. They are also helpful for determining when a decision or event should happen.
Example: A pest extermination business is considering purchasing a new vehicle. The business owner is unsure of when the vehicle should be purchased.
They create a microforecast that models the purchase of the vehicle. On the business roadmap, they move the microforecast while keeping track of their Cash on Hand figure with the Quick Metrics bar at the bottom of the screen.
They discover that the vehicle should be purchased in 5 months to reduce the strain on cash for the business.
Scenarios have the same date range as the main forecast, and each scenario has its own version of the Business Roadmap. So, you can experiment with the timing and combination of microforecasts in a scenario without impacting the main forecast.
Reporting
While you can report on scenarios and microforecasts in a Fathom report, scenarios can be more easily compared.
The scenario comparison chart can be added to a report to compare scenarios across a metric visually.
Creating scenarios can help you compare outcomes in reports for microforecasts. You can have a microforecast turned off in your main forecast, and a scenario with all the rules and assumptions of the main forecast and the microforecast turned on.
Additional knowledge & common questions