Difference Between Financial Forecasting and Financial Modelling

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Many at times you would have heard management folks using these terminologies, financial forecasting, and financial modeling. But what is the actual difference between these two? Let’s understand a bit more about this.

In simple language, financial forecasting is the process in which a company thinks about and prepares for the future and financial modeling is the act of forecasting, calculating, or estimating a company's financial numbers.

Financial Forecasting

When a company do the exercise of its financial forecasts, it seeks to arrange for the incomes needed for expression of its goals and priorities to ensure they are internally reliable. This exercise also helps a company identify the assets or debt needed to achieve its goals and priorities.
One of the best example for a financial forecast is the forecasting the company's sales. Since most of the financial statement accounts are related to sales, sales forecasting help a company make other financial decisions that support achieving its goals.

Financial Modelling


Financial modelling is the process by which a company constructs its financial representation. The model created is mainly used to make business decisions. Financial models are mathematical models made by a company in which variables are linked together; the company can modify these variables to see how the changes could affect the business.

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Location: Kerala, India

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