4 Tips to Get a More Accurate Revenue Forecast in NetSuite OpenAir

NetSuite OpenAir is a powerful automation tool that aims to redefine how businesses manage and track projects from beginning to end. Among the many functions it performs, OpenAir is useful in efficiently achieving accurate forecasts and can do this with the correct setup.

In order to create project forecasts in OpenAir, multiple features have to be used correctly. So, if you can forecast your revenues in OpenAir and do that with reasonable accuracy, you’re using the product well. Having said that, forecasting essentially involves looking into the future and basing your current decisions on the projected outcome, which ‌is a highly complex task. Your forecasts must be accurate, or else the success of your project is compromised. So, how can you get a more accurate revenue forecast in NetSuite OpenAir?

In this article, we cover four tips on just how to do that.

Account and Project Setup in NetSuite OpenAir

The first and perhaps the most important step towards realizing accurate revenue forecasts is how you set up your OpenAir. The prerequisites of typical forecast reporting in the system are users and projects. So, while setting up the account, pay close attention to user rate or cost amounts, rate cards, and services or activities. This is because users could have costs considering future forecast project margins or default bill rates. So, setting up rate/cost amounts or rate cards ensures these costs are taken into consideration.

The role of the OpenAir system is to assist in project management. So, the project forms another critical prerequisite of the system. When you create a project, ensure the project being forecasted has billing rules based on how you intend to bill your customers (e.g., time-based or fixed fees). Alternatively, and as far as the central purpose of this article is concerned, if you’re using the tool for revenue recognition, set rev rec rules aligning with the type of revenue recognition method you’re using. Although several other approaches to forecasting exist, these prerequisites serve as the basis for accurate revenue forecasting.

Having the above setups in place is critical in determining the basis of judging the future. There are multiple options you can take advantage of, including bookings, task assignments, key dates, and milestones. For instance, bookings or the allocation of resources to a project can provide a view of the future for resource availability. Alternatively, task assignments based on your project structure, timelines for your entire project, or project’s life cycle or customer milestones can also provide valuable insight for planning future needs and help to better manage your business.

Notably, when executing your forecast, it’ll all depend on how you set up your OpenAir. So, if you created billing rules, you can run billing forecasts, if you set revenue recognition rules, your projections can be based on these rules.

Determining Revenue Recognition Rules

As mentioned earlier, setting up revenue recognition rules is critical to increasing the level of accuracy of revenue forecasts. But what are these rules and what are their roles? Revenue recognition rules can be tricky in trying to generate future-dated information. These rules, as included in the OpenAir system include:

• Percentage complete rules which are based on hours plan and f/c hours
• As billed rules that replicate billing rule projections
• Fixed amount on date or milestone
• Fixed amount on percentage complete which is computed based on planned hours and f/c hours
• Incurred vs. forecast
• Expense
• Purchases
• Time billing

Each of the rules above applies to different aspects and scenarios of revenue recognition, so the choice will depend on the prevailing circumstances of the forecasting process.

The Choice of Forecasting Method

The decision on what forecasting method you should use is pretty easy since two primary methods exist in OpenAir–charge-based projections and straight-line forecasting. Charge-based projections are common and use revenue recognition rules or billing rules coupled with resource bookings or task assignments to provide a forecast. So, the method offers bottom-up calculations.

The straight-line forecasting method is more straightforward. However, it requires you to have certain project information such as a project timeline (the inception to completion date) and a budget. So, in the event you lack such details, charge-based projections would be ideal. Nonetheless, it’s important to note that these methods aren’t mutually exclusive; there are instances they can be used together or at different stages of the project.

Besides the two primary methods, a third option exists–using a project budget.

Project Budgets Forecasting

Forecasting based on project budgets involves a cost planning feature with some billing elements. A budget essentially helps you track costs incurred in a project from start to completion. It’s a pretty new feature that allows you to compare future-dated budgets and actual budgets at either project or task levels. So, while using this feature, it’s important to pay attention to dates and adjust them accordingly in order to get an accurate forecast.

Conclusion

NetSuite OpenAir is an incredible professional services automation (PSA) tool providing businesses with powerful project management capabilities. Among these capabilities is the ability to forecast revenues as covered in the article. The key to accurate forecasting is doing it right, which basically involves understanding the mechanics of the OpenAir system regarding forecasting. These tips are a good place to start. Top Step is here to help contact us with any questions on this topic or others.