What Is a Rolling Forecast?

这篇文章被更新以反映新的信息;n on July 11, 2022.

Many financial planning and analysis (FP&A) professionals have a love-hate relationship with forecasting. The rush to reconcile data from multiple sources, the scramble to pull together hundreds of spreadsheets, the hope that all the numbers line up—all to check whether the business is on track compared to the annual plan. Creating responsive and dynamic plans, budgets, and forecasts is difficult with manual, spreadsheet-based tools.Rolling forecastscan help.

Rolling forecasts provide a continuous forecast over a specific time horizon (usually 12-24 months), moving actuals forward each month on a rolling basis and making it easier for decision-makers to see what’s happening in real time. Whereas budgets capture thousands of line items, rolling forecasts reflect specific business drivers such as risk, profit, and working capital. Static, point-in-time forecasts simply cannot keep up with today’s rapid-fire business environment.

Rolling forecasts are an integral part of a continuous planning process—giving stakeholders the information they need to make data-backed decisions in response to the current business environment.

Why Continuous Planning Improves Forecasting

Static planning processes are spreadsheet-driven, manual, and time-intensive. Legacy planning also keeps stakeholders—even finance—in the dark about how the company is really doing. The role of forecasts is to shed light on performance against budgets and plans, but if those forecasts contain stale information, they’re ineffective.

Static planning:

• Limits a company’s access to the latest financial data.
• Creates forecasts that are out of date before they’re reviewed.
• Plans from a disjointed and static view of the business.
• Delays decision-making due to incomplete models and limited data.

An active, orcontinuous planning, process, on the other hand, enables frequent check-ins through rolling forecasts, so business leaders can see whether the company is on track with its key performance indicators (KPIs). Continuous planning puts real-time reports in the hands of decision-makers and empowers the finance team to create continuous, rolling forecasts.

Continuous planning empowers organizations to:

• Use rolling forecasts to give teams the time to respond when circumstances change.
• Spend less time grappling with manual spreadsheets and more time measuring progress against projections.
• Access accurate forecast data when and where companies need it.
• Adjust and adapt to time-sensitive business challenges and opportunities.

How Workday Adaptive Planning Supports Rolling Forecasts

Surviving in a rapidly changing business environment requires more than an annual plan that's static and inflexible.Workday Adaptive Planninggives finance teams the tools they need to incorporate rolling forecasts and implement an active planning process that enables:

• Precision decision-making.Forecasts have to be flexible enough to show the impacts of models and what-if scenarios.
• Rolling forecasts.Frequent forecasts with updated data equips decision-makers with the strategic tools they need to respond quickly to changes in the marketplace.
• Aligned business units.Organizational alignment is easier with cross-functional access to real-time, easy-to-use tools and self-service reports.

Rolling forecasts can close the gap between data and decisions by increasing forecast accuracy and streamlining the forecasting process. With Workday Adaptive Planning, companies can accurately forecast using real-time, comprehensive financials from the cloud.

Continuous planning allows decision-makers to:

• Access forecast data easily and on demand.
• Avoid wasting time generating manual spreadsheets and resolving formula errors.
• Improve collaboration among finance, operational units, and other stakeholders, so everyone in the organization can view and understand forecasts.
• Run flexible, robust reports using real-time data, not year-old information.
• Continuously forecast to keep the business on track withKPIsand overall company goals.

How to Get Rolling With Rolling Forecasts

Here are the five steps to launch rolling forecasts successfully:

1. Use a dedicated application.Multiple versions—required for good rolling forecasts to create different scenarios—are extremely difficult to perform and manage with manual processes.

2. Model key business drivers.The annual budget lists thousands of line items, but to follow rolling forecast best practices, organizations should be creating forecasts at a higher level. Focus on significant business drivers such as risk, profit, and working capital.

3. Sound out multiple what-if scenarios.Look for a tool that allows the business to change a few key assumptions and drivers and instantly see their effects on the overall plan, such as the impact a price change has on headcounts and cash.

4. Scrub the forecasting process of bias.Rolling forecasts are a strategic management tool, not an evaluation tool. Let managers forecast based on real business demands and the real business environment.

5. Choose the right forecasting horizon based on the industry.A best practice is to forecast at least four to eight quarters past the current quarter’s actuals. But there’s no hard-and-fast guideline for the time interval included in a rolling forecast. It depends on the industry, the business needs, and how long it takes to make decisions.

Be prepared for business disruptions. Read our eBook“五个年代teps to Getting Your Business On Board with Rolling Forecasts.”