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Variance analysis
Timing versus permanent variances
A timing variance reverses in a later period (a delayed invoice, an early payment); a permanent one does not (a lost customer, a price cut). Only permanent variances change the full-year forecast.
Owned by: AnalystTest band: Analyst
In practice
Ask of every variance: does this come back? The answer decides whether the forecast moves.
The kind of thing the test asks
- A large customer paid in the first week of July instead of the last week of June. The June variance is…