Skip to main content
Home
The Online Resource for Modern FP&A Professionals
Please register to receive the latest FP&A news, updates and tips Login

Main menu

  • Home
  • FP&A Insights
    • FP&A Trends Digest
    • FP&A Trends Research
    • FP&A Trends Insight Paper
    • FP&A Trends Survey
    • Short Videos
    • Our Contributors
  • FP&A Events
    • International FP&A Board
    • FP&A Trends Webinars
    • Digital FP&A Circles
  • AI/ML Committee
    • Introduction
    • Members
    • Resources
    • Meetings
  • FP&A Tools
    • FP&A Trends Maturity Model
  • About Us
    • Company Policy
    • Privacy Policy
    • Editorial Guidelines
    • Our Ambassadors
    • Our Sponsors & Partners
    • Contact Us
image
Ten Reasons to Adopt Rolling Forecasts
October 21, 2019

By John Stretch,  MD at Stretch Business Training

FP&A Tags
Rolling Forecast
Planning and Budgeting
Financial Planning and Analysis
Modelling and Forecasting

1. Variances are based on current, not outdated, information

In a rolling forecast, each business unit sets a monthly or quarterly target and reports actual performance against this target. Since these targets are based on current information, “excuse variances” are eliminated or reduced. 

2. Strategy is no longer an annual event but a continuous dialogue between head office and the business units

Shifts in strategy are communicated down the line immediately, and their financial effect is quantified and translated into rolling forecasts. With annual budgets, organisations have to wait until the next budget year before including the effect of strategy changes in their targets. 

3. Rolling forecasts avoid the effects of unrealistic and unattainable budgets

When a management team is judged and incentivised on their performance against a budget that has become impossible to achieve due to an external event beyond their control, they can easily become demotivated. Rolling forecasts have a significant motivational impact because they direct management’s attention towards the future, not the past, and help ensure that planning is ongoing instead of an annual exercise. 

4. Forecasts enable better anticipation of change, greater responsiveness and flexibility 

In earlier years, budgeting was the only opportunity for middle and lower management to compete for resources and senior managers to decide where resources should be allocated. Organisations were managed by developing and approving plans and then achieving planned results. The budget was cast in stone, and the job of managers was to respond to threats and overcome them. 
In today’s world of continuous change, rolling forecasts quantify the effects of change in prices, markets and drivers, and communicate the results to managers.

5. Rolling forecasts can reduce disruption, time taken, and thus the cost of the annual budget

For those companies that combine rolling forecasts with a detailed annual budget, high-level forecasts are already available for the next financial year when budgeting starts. These forecasts should have been developed using drivers supplied by line managers themselves and thus should be seen to be realistic and enjoy managers’ buy-in. The budget process then translates these targets into detailed line-item budgets. 

6. Improves the organisation’s ability to forecast and thereby manage investor and banker expectations

Forecasts are highly valued by the investment community and by bankers.  Rolling forecasts harness the organisation’s understanding of the future and provide an ideal platform for dealing with analysts. The share price can suffer when analysts and investors react to a significant mismatch between an outdated budget and actual results. Bankers’ appetite for lending can be influenced by forecasts.

7. Encourages managers to think more strategically and promotes a better understanding of the organisation’s value drivers

When managers understand the factors that drive results, they start to focus on the financial effect of these drivers rather than on each line of the budget. Rolling forecasts thus translate strategy into action in a controlled way. Forecasts are used to drive strategy implementation instead of being extrapolations of the past. 

8. Reduces game playing and padding of targets

When managers are required to deliver specified financial results, while many of the variables underpinning these results are beyond their control, they may be tempted to protect themselves by understating revenues and overstating costs or negotiating a lower bottom line.    

9. Existing budget systems are outdated; budgeting has become a badly run, stale and boring exercise

Many managers are frustrated by time-consuming, costly, unresponsive approaches to budgeting. They comment that the whole process takes too long to be meaningful. In a poorly managed budget exercise, managers budget by adding a percentage to the previous year’s figures. 

10. We have the technical capability

In the previous century, annual budgeting was the only feasible approach due to limitations in the speed of communications and computation.  Today, the pace of business change is extremely rapid, and thus a sluggish planning and budgeting process can be a competitive disadvantage.

Today’s FP&A practitioners are highly trained professionals with a greater ability to see the big picture, analyse and interpret data, and build predictive models. They are also experts in harnessing the power of information technology. They are able to create detailed cost and revenue databases that unlock patterns and trends in business behaviour and to build sophisticated and responsive forecasting models. We do rolling forecasts because we know they are better and because we can.

The article was first published in Unit 4 Prevero Blog.

The full text is available for registered users. Please register to view the rest of the article.
  • Log In
  • or
  • Register

Related articles

FP&A Trends E-Book: Rolling Forecast. Issue #1
October 8, 2019

FP&A Trends E-Books is a series of publications consisting of articles on FP&A-related subjects. The issues...

Read more
Best Practices in Rolling Forecasts
April 18, 2018

Many businesses have yet to discover the full benefits of evolving their planning process to include...

Read more
Budget Tracking with Rolling Statistical Forecasts
April 30, 2018

For organizations with annual expense budgets, it is important to have procedures for monitoring expenditures and...

Read more
Driver-Based Planning Maturity: Creating Value With More Effective Rolling Forecasts
December 4, 2018

Mature driver-based planning models are an essential component of effective rolling forecast processes in complex, global...

Read more
+

Subscribe to
FP&A Trends Digest

We will regularly update you on the latest trends and developments in FP&A. Take the opportunity to have articles written by finance thought leaders delivered directly to your inbox; watch compelling webinars; connect with like-minded professionals; and become a part of our global community.

Create new account

image

Event Calendar

Pagination

  • Previous
  • May 2025
  • Next
Su Mo Tu We Th Fr Sa
27
28
29
30
1
2
3
 
 
 
 
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Transforming FP&A Together: Human & AI Synergy
 
18
19
20
21
22
23
24
Moving from FP&A to Extended Planning and Analysis (xP&A)
 
Five Critical Roles for Building a World-Class FP&A Team
 
25
26
27
28
29
30
31
FP&A Business Partnering and AI: A New Era
 
All events for the year

Future Meetings

The Face-to-Face Amsterdam FP&A Board
The Face-to-Face Amsterdam FP&A Board Transforming FP&A Together: Human & AI Synergy

May 15, 2025

The Face-to-Face Milan FP&A Board
The Face-to-Face Milan FP&A Board Moving from FP&A to Extended Planning and Analysis (xP&A)

May 20, 2025

The Face-to-Face Frankfurt FP&A Board
The Face-to-Face Frankfurt FP&A Board Five Critical Roles for Building a World-Class FP&A Team

May 22, 2025

BPAI
The FP&A Trends Webinar FP&A Business Partnering and AI: A New Era

May 28, 2025

The Face-to-Face London FP&A Board: Data Management & Analytics: Unlocking FP&A Value
The Face-to-Face London FP&A Board Mastering Data in FP&A: Smarter Analytics, Better Decisions

June 5, 2025

FP&A Trends Webinar The Evolving Role of FP&A: From Number Cruncher to Strategic Advisor
The FP&A Trends Webinar Making FP&A Teams Fit for the Future

June 11, 2025

The Face-to-Face New York FP&A Board
The Face-to-Face New York FP&A Board From Insight to Impact: FP&A Business Partnering in Action

June 17, 2025

The Face-to-Face Sydney FP&A Board
The Face-to-Face Sydney FP&A Board Modern Financial Planning and Analysis (FP&A): Latest Trends and Developments

June 26, 2025

The Face-to-Face Singapore FP&A Board: Modern Financial Planning and Analysis (FP&A): Latest Trends and Developments
The Face-to-Face Singapore FP&A Board Modern Financial Planning and Analysis (FP&A): Latest Trends and Developments

July 8, 2025

AI/ML FP&A
AI/ML FP&A
Data and Analytics
Data & Analytics
FP&A Case Studies
FP&A Case Studies
FP&A Research
FP&A Research
General
General
Integrated FP&A
Integrated FP&A
People and Culture
People and Culture
Process
Process
Technology
Technology

Please register to receive the latest FP&A news, updates and tips.

info@fpa-trends.com​

              

Foot menu

  • FP&A Insights
  • FP&A Board
  • FP&A Videos

Footer countries

  • Amsterdam
  • Austin
  • Boston
  • Brisbane
  • Brussels
  • Chicago
  • Copenhagen
  • Dubai
  • Frankfurt
  • Geneva
  • Helsinki
  • Hong Kong
  • Houston
  • Kuala Lumpur
  • London Board
  • London (Circle)
  • Melbourne
  • Miami
  • Milan
  • Munich
  • New York
  • Paris
  • Perth
  • Riyadh
  • San Francisco
  • Seattle
  • Shanghai
  • Singapore
  • Stockholm
  • Sydney
  • Tokyo
  • Toronto
  • Washington D.C.
  • Zurich

Copyright © 2025 fpa-trends.com. All rights reserved.

0