How can Rolling Forecasts help align your financial performance to your organization's goals?

1 What are rolling forecasts?

Rolling forecasts are a form of dynamic budgeting that update your financial projections on a regular basis, typically monthly or quarterly, by adding new periods and dropping old ones. For example, if you use a 12-month rolling forecast, you will always have a full year of forecasted data, but the time horizon will shift as you move forward. This way, you can incorporate the latest information and assumptions into your planning and adjust your expectations and actions accordingly.

2 How do rolling forecasts differ from traditional budgeting?

Traditional budgeting is a static and rigid process that sets your financial targets and allocations for a fixed period, usually a year, based on historical data and assumptions made at the beginning of the cycle. Once the budget is approved, it is rarely revised, even if the market conditions or the organization's goals change significantly. This can lead to inaccurate forecasts, missed opportunities, and wasted resources. Rolling forecasts, on the other hand, are flexible and responsive, allowing you to update your financial plans as new information and scenarios emerge. They also enable you to compare your actual results with your forecasted ones and identify any gaps or variances that need to be addressed.

3 What are the benefits of rolling forecasts?

Rolling forecasts can help you align your financial performance to your organization's goals, offering improved accuracy and reliability, enhanced agility and adaptability, and increased collaboration and alignment. These forecasts reduce the margin of error and uncertainty in your financial projections, as they are based on more current and relevant data and assumptions. They also enable you to respond to changing market conditions and customer demands more effectively, explore different scenarios and contingencies, and foster a culture of continuous planning and communication. Rolling forecasts ensure that everyone is working towards the same vision and direction by allowing you to monitor progress, make timely corrections or adjustments if needed, gain more visibility into the future, and align financial goals with operational and strategic ones.

4 What are the challenges of rolling forecasts?

Rolling forecasts can present some challenges when implemented in a business, such as resistance and skepticism from those used to the traditional budgeting process. Additionally, complexity and workload may increase due to the need for more frequent and detailed data collection, analysis, and reporting. Alignment and consistency may also be difficult to achieve with other financial and non-financial plans and reports. To ensure success, you must overcome resistance, streamline processes, allocate resources, and integrate rolling forecasts with other planning and reporting tools.

5 Here’s what else to consider

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