Headcount Forecast

Staff are often a company's largest expense, especially in service and technology businesses. A headcount forecast shows how many people will be employed each month, when new hires will start and what salaries, benefits and taxes will add up to.

The forecast usually starts with current staff, then adds planned hires and expected departures. Each role is assigned a start date and an annual cost, including salary, employer taxes, benefits and other related costs such as equipment.

For example, a company planning to hire five engineers in March at a total annual cost of 90,000 each would add about 37,500 a month to staff costs from March onwards.

Headcount forecasts link directly to revenue plans, because more sales often require more staff, and to cash flow forecasts, because wages must be paid every month. They also help managers plan recruitment, office space and training. Because hiring often takes longer than expected, comparing planned with actual headcount is a regular part of financial reviews.