Predictive Accounting

1. Department of commerce(UG)
Topic : Predictive accounting
Prepared be : Priyanka. s
Roll no:23COMD46
1st SEM B.COM ‘D’
Academic year :2023-2026

3. CONTENT
1.MEANING
2.PROCESS
3.FEATURES
4.ADVANTAGES
5.DISADVANTAGES
6.CONCLUSION

4. Predictive accounting
meaning:
Predictive accounting is a
way of estimating future
accounting results based on
current data from different
sources. It helps you to plan
and analyze your business
performance better.

5. The working process of predictive accounting is as
follows:
•When a sales order is created, predictive accounting
checks if delivery and/or invoicing is possible for the
order.
•The system simulates the follow-on processes, such
as goods issue and invoice, and calls the same
interface and modules to create predictive journal
entries as available from the actual world.
•The predictive journal entries are stored in a special
extension ledger, called the prediction ledger, which is
separate from the base ledger that contains the actual
postings.
•The prediction ledger also triggers subsequent
financial processes, such as revenue recognition and
the splitting of costs of goods sold.

6. FEATURES OF PREDICTIVE ACCOUNTING
Predictive accounting is a feature that allows you to use the most up-to-date data from
various sources to forecast your future financial results. It can help you to plan ahead,
identify opportunities and risks, and optimize your business performance. Some of the
features of predictive accounting are:
•It simulates the follow-on processes of sales orders, such as goods issue and
invoicing, and creates journal entries in an extension ledger. These journal entries
reflect the expected revenue and costs of the sales orders, as well as the related
accounting processes, such as revenue recognition and cost of goods sold splitting.
•It provides you with reports that show the predicted data along with the actual data
from the base ledger. You can see the forecast of your income statement, balance
sheet, cash flow, gross margin, and other key performance indicators.
•It enables you to analyze the predicted data at different levels of detail, such as by
product, customer, region, or profit center. You can also drill down to the line items and
documents that make up the predicted data.

7. ADVANTAGES OF PREDICTIVE ACCOUNTING
Predictive accounting is a new approach that uses data and
analytics to forecast future outcomes and provide insights for
decision-making. Some of the advantages of predictive
accounting are:
•It can help forecast upcoming revenue based on sales orders,
predicted receivables, and profit margins.
•It can help optimize working capital by analyzing expected
expenditures and cash flows.
It can help reduce risks by providing early warnings and scenarios
for mitigating potential issues.

8. •DISADVANTAGES OF PREDICTIVE
ACCOUNTING
•Predictive accounting is not risk-free. It
involves taking calculated risks based on data
analysis and machine learning, which can have
positive or negative outcomes. Predictive
accounting can help businesses to avoid fraud,
optimize marketing campaigns, and enhance
operational efficiency. However, it can also
expose businesses to cyber threats, ethical
issues, and legal challenges
. Predictive accounting requires careful
management and monitoring to ensure its

9. CONCLUSION OF PRECDITIVE
ACCOUNTING
Predictive accounting is a powerful tool that
can help you to optimize your business
performance and achieve your strategic goals.
It enables you to anticipate the future
outcomes of your actions and take proactive
measures to ensure your success.

10. THANK YOU