Business – 8.1 Marketing analysis – Sales forecasting | e-Consult

Cash flow: If sales are over‑estimated, the business may expect more cash than actually arrives, leading to shortfalls that could force it to draw on overdrafts or delay payments to creditors.

Inventory management: An inflated forecast can cause the company to purchase or produce too much stock, tying up capital in unsold goods and increasing holding costs. Conversely, an under‑forecast may result in stock‑outs and lost sales.

Staffing: Over‑forecasting may lead to hiring excess staff or scheduling overtime unnecessarily, raising labour costs without corresponding revenue. Under‑forecasting can leave the firm understaffed, reducing service quality and limiting the ability to meet actual demand.