What is a Rolling Forecast?

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Rolling forecasts are becoming a popular add-on or alternative to the traditional approach of annual budgeting in organizations. 

The idea is that instead of managing the business based on a static budget that was created in the prior year, rolling forecasts are used to revisit and update budgeting assumptions throughout the year.  This enables organizations to adapt plans and resource allocations based on changes in the economy, the industry, or the business.

In their purest form, rolling forecasts allow organizations to project future results based on a combination of actual YTD financial results and the original budget, or updated revenue and expense forecasts for future periods.  The future forecast period can extend to the end of the fiscal year, but in most cases the rolling forecast period typically extends out 4 to 6 quarters into the future.  See example below.

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The technique relies on an add/drop approach to forecasting that creates new forecast periods on a rolling basis. Businesses establish a set period, such as quarters or months, to update their forecast. At the end of every period, a new period is added to the forecast, so businesses can regularly adapt their financial plan to reflect recent trends.

This approach provides organizations with the agility to re-allocate resources based on changing business conditions.  It also provides the organization with a head-start on budgeting for the next fiscal year since the work is done in advance and considers the latest results and assumptions about the business going forward.  In some cases, organizations that have adopted and executed a rolling forecast process have eliminated the need for an annual budget.  This concept is promoted by the Beyond Budgeting Roundtable, which is led by industry guru Steve Player.

Learn more in this free white paper.

Get the Rolling Forecast White Paper

 

Posted by on June 1, 2017
John O'Rourke

John O’Rourke is Vice President of Strategic Marketing at Host Analytics. With a background in accounting and finance, John has over 30 years of experience in the software industry and 20 years of experience in EPM product marketing at Hyperion Solutions, Oracle and Host Analytics. He has worked with many customers and partners on financial reporting and planning initiatives and has spoken and written on many topics in EPM. John has also held positions in strategic marketing and product marketing at Dun & Bradstreet Software, Kenan Systems, and Decisyon. John has a BS degree in accounting from Bentley University and an MBA from Boston College.

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