Rolling forecasts - a guide for finance
Many finance directors are using or thinking about implementing rolling forecasts, alongside traditional budgeting. Here Paul Clarke discusses how to make the most out of yours.
There seems to be little doubt that the concept of the rolling forecast has captured management attention. In one survey(1) of budgeting practice in UK corporations, 40% of the finance managers who responded had already implemented a rolling forecast or were giving it some careful thought. This article attempts to explain what a rolling forecast is and how it can be used as a powerful tool for change in organisations.
A rolling forecast is a forecast for sales or costs that always extends a set number of financial periods into the future. The term 'roll' refers to the regular update that takes place - typically monthly or quarterly: the forecast horizon is extended so that the number of periods included remains the same; figures are entered for the new periods at the horizon; and all the figures already in place from earlier forecasts are updated.
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