Overview
Scenario modelling is a key component of forecasting and business planning. By modelling the impact of potential events before they occur, you can make more informed decisions and implement strategies to prepare for different outcomes. Castaway supports scenario modelling in two ways:
- Through another element - apply a what-if condition to a specific element by modelling its impact through a linked element
- Via the Forecast Data Template - upload different sets of forecast data to generate separate three-way forecasts for different scenarios
Method 1: Through Additional Element
This method applies a what-if condition to a specific element by creating a second linked element to model the scenario impact. This keeps your base forecast intact while the scenario element captures the additional effect.
Example: You anticipate that rent may double due to market conditions and want to understand the financial impact without changing your base forecast. This requires two Cost elements:
Office Rental - your base forecast rent expense
- Enter your forecast rent expense as normal.
- Click Save and Close.
What-If - models the effect of the scenario, in this case a 100% increase in rent
- Change the Expense Method to % of Expenses.
- In the Element Selector, link to the Office Rental element, and click OK.
- In the element editor, enter 100% in the Link % row for the relevant months.
- Click Save and Close.
Once modelled, review your reports in Analysis to assess the impact across your financial statements. If the impact is significant, you can begin planning contingencies for this potential outcome.
What-if elements can clutter your CoA and reports. Consider grouping them under a dedicated sub-section so they can be collapsed and minimised when not needed. Refer to: Structuring your Chart of Accounts (CoA)
Method 2: Via the Forecast Data Template
The Upload Forecast Data Template is a flexible tool for scenario modelling. By saving separate versions of the template for different scenarios and uploading each one, you can generate a corresponding three-way forecast for each scenario. To revert to your original forecast, simply reimport the original template.
Example: A manufacturing business wants to understand the impact of increasing its labour force, purchasing additional machinery, or both. Each scenario can be modelled as a separate template and uploaded to generate the respective three-way forecast.
If you need any assistance please contact our support team at: support@castawayforecasting.com