Optimise your forecasts based on today’s reality
The use of rolling forecasts ensures that your business can show expected results at all times, in light of changes that occur in the market or other financial conditions. In contrast to traditional financial management, where the budget is central – rolling forecasts will be able to change quickly in relation to the plans and activities that are available.
A traditional budget is static for a set time frame and is based on historical data. Expected future results “shrink” as time goes on. The budget thus becomes short-sighted and rigid and can quickly become outdated.
If sales of a product should increase significantly in relation to the budget, this will not be reflected until after the set time frame for the budget has expired. With rolling forecasts, the increase in turnover can be taken into account, and the set time frame “rolls” forward from the end of each period.
The prerequisite for a good forecasting model is an understanding of the company’s value drivers, which provides insight into which parameters are crucial for developing the business.
Benefits of rolling forecasts:
- Less time spent on budget processes
- More accurate forecasts
- Focus on value drivers
- Identifies business goals
- More dynamic control
Let’s strive to get better!