Rolling Forecasts

Annual budgets quickly lose their accuracy and relevance as the fiscal year progresses. A rolling forecast is a tool many companies have implemented to maintain an accurate financial picture of the future and to continuously promote strategic thinking. Some companies replace traditional budgets with rolling forecasts and other processes.

Rolling forecasts provide better readiness for a changing business environment, improved cash flow planning, and more meaningful variance reporting.

The best practice use of rolling forecasts begins by clarifying the roles of budgets and forecasts. Specifically, forecast accuracy is increased by separating it from performance management and compensation processes. The efficiency needed to perform forecasts throughout the year is achieved through driver-based forecasting. Eliminating traditional budgeting also frees up resources for rolling forecasts.

Rolling forecasts have many benefits, but they won't solve all your problems. They may create some new challenges for you.

Learning Objectives

By the end of this course, participants will be able to:

1. Explain the limitations of traditional annual budgets and describe the strategic value of rolling forecasts.
2. Clarify the distinct roles of budgets and forecasts, including how separating forecasts from performance management and compensation improves accuracy.
3. Build driver-based forecasts to achieve the efficiency needed to forecast throughout the year.
4. Identify the key implementation decisions and steps involved in adopting rolling forecasts.
5. Evaluate the pros and cons of building rolling forecasts using spreadsheets, business intelligence software, or dedicated forecasting software.
6. Anticipate common challenges associated with rolling forecasts and apply strategies to mitigate them.