A look at the value of a rolling forecast


Focusing more on rolling views

Business conditions can change in an instant. A company’s key stakeholders require the means to adjust their focus, but they first need to develop the business processes that will allow them to react in time.

Accurate forecasting enables managers to recognize trends, patterns, and ‘breaks in the curve’ long before their competitors can, and thus improve the quality of their decision making. In order to yield maximum value, the office of finance can lead this proactive planning approach by focusing less on the annual budget (or even longer term perspectives) and focusing more on rolling views, generally looking 12-18 months ahead.

How does a rolling forecast work?

Rolling forecasts are useful because they continually extend the formal planning horizon, rather than having it stop abruptly at the end of a company’s fiscal year. With a rolling forecast, the number of periods remains constant. That is to say, as each month passes, it drops out of the forecast and another month adds to the end. This means that you will always forecast 12 months into the future.

Rolling forecasts should tell managers about their current progress in relation to their medium-term goals. They can then begin to manage any gaps that they recognize and determine whether further action is necessary.

Where do we start?

While technology alone will not guarantee the creation of a useful forecast, it can certainly help companies to build a framework and understand how forecasting fits within the overall management of the business.

Organizations need to determine what they want from forecasting and then ensure that they design their supporting processes in the context of these expectations. Taking this sort of measured approach will help to secure buy-in from executives across the organization and make forecasting a key management tool for managing the business at every level.

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