Rolling Pin - XLerant

Rolling Forecast – a 3 Part Series

The question I get most frequently is “Do you believe in Rolling Forecast… is that what we should be doing?”

A good, comprehensive answer to that question is addressed in an upcoming thee part blog series. Part one will look at the common problems of corporate planning and budgeting. That’s important because you want a solution to address the problems you do have, not the ones you don’t have. In part two we’ll describe Rolling Forecasts and how it works. An in part three we’ll bring it all together to assess to what degree (or not) Rolling Forecast addresses real world problems.

First, I need to make this point. Every organization I have ever worked for, or worked with as a consultant, produced an annual budget. Then when the year began, and actual results started to flow in, they would do a balance-of-year forecast. Some organizations would do this once or twice a year, others would do it every month or whenever something material happened.

That’s balance of year forecasting, and almost everyone does that today. In fact, I can’t think of a single company or organization where the budget is put to bed, then locked away in a drawer and forgotten about.

I mention this because the proponents of rolling forest say that you should not just produce an annual budget and forget about it until next year. You should revisit the assumptions, see what if anything had changed, and then incorporate “what’s new” in an updated projection.

Sure, of course.

But the question of rolling forecast comes down to whether that projection should bleed into next year. For example, an 18 month rolling forecast suggest that every month, the company produce an 18 month forecast.

We will not debate the question of whether or not an organization should produce a forecast. Of course they should. Our examination of Rolling Forecast will instead focus on the value of that forecast spilling over into next year – at some point before the annual budget cycle would otherwise produce it.

We’re looking forward to this and the controversy it will surely kick up, and to your comments.


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