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Forecast Accuracy

Forecast accuracy is a measure of how closely financial or operational forecasts correspond to actual outcomes, typically expressed as an error percentage or absolute deviation. Forecast accuracy is a key indicator of the quality of an organisation's planning process: high forecast accuracy indicates that planning assumptions are grounded in reliable operational data and sound analytical methods, while persistent forecast error suggests that planning inputs, methodologies, or processes need improvement.

Why This Matters

Forecast accuracy determines how much management can rely on forward projections for resource allocation and strategic decisions. Persistently inaccurate forecasts erode confidence in the planning process, forcing management to add large contingency buffers or discount forecast outputs — reducing the value of planning as a management tool. Tracking and improving forecast accuracy is therefore a core objective of the FP&A function, not merely a retrospective reporting exercise.

Where This Fits

Exhibit Revenue — actuals and forward view
2025 actual Forecast 2024
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Source: Onetribe governed layer — actuals Jan–Aug 2025, driver-based forecast to year-end, prior year for comparison.

This term sits within the Planning & Projections area of Performance & Control.

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