Rolling forecasts are a method for continuous planning. Unlike budgets or “revised forecasts”, rolling forecasts look beyond the current financial year.
Rolling forecasts contain a minimum of 12 forecast periods but can include 18, 24 or 36 or more. Each time the model is “rolled” forward and updated with a period of actual results, the forecast is extended to maintain the required number of forecast periods.
- A rolling forecast that includes 6 periods of actual results will contain 6 periods of forecast data into the next financial year.
- An 18 period rolling forecast that includes 3 periods of actual results will contain 9 periods of forecast data into the next financial year.
Rolling forecasts eliminate the annual budget process because the forecast data for future periods becomes the new budget at the year end. Properly maintained rolling forecasts increase visibility and result certainty for owners and lenders.
In Visual Cash Focus the rolling forecast process starts with the annual budget. The budget model is then saved as a new name, rolled forward one period and updated with the first period’s actual results.
After each periods reporting is complete the model is saved as another name enabling the rolling forecast to be revised multiple times to include new information or what if scenarios.