Rolling Forecasts – Why, What and How?

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Rolling forecasts

Rolling forecasts are becoming more popular because organizations are becoming more interested in knowing where and when revenue is earned.

What a crazy statement! As I wrote that sentence, I thought, don’t be ridiculous! That is such a ridiculous assertion - but it’s true! It’s because companies start small and the future is easy to predict with your gut – sell stuff and survive. As they grow, they continue to use gut instinct to make strategic and tactical decisions. Sure, they’ll use historical data, but often they either don’t use forecasts or they use forecasts smashed together by the wrong people with the wrong tools.

Why use a rolling forecast?

In my experience, organizations who have implemented a rolling forecast have accepted that gut instinct alone isn't enough anymore. Sure they use their historical data to measure how they went but the future is becoming more important.

Rolling forecasts really do help companies hit targets and because they include everyone who has control over revenue or costs, those people are accountable. Employees can’t sit back at the end of the year after missing the budget and say “Well, I didn’t agree to that budget” when they entered the data themselves, had a conversation with their manager, agreed, and then in the next week or month are able to create a new forecast (within reason). It keeps people close to their numbers and mindful that their action or inaction, and both good and bad decisions, will be constantly reviewed by their managers. It also gives them room to move and this is a good thing. Why? Well if you are forecasting constantly and you have visibility of your last few forecasts compared to actuals on the same page, you become really good at forecasting really fast.

How do you implement a rolling forecast?

Slowly. Pick an easy forecast with an area of your company who is ready to participate first.  Ideally it’s the team (often Finance) who want to implement a rolling forecast.  Get it right in your team first, make mistakes and learn, then move outward to other departments.

It’s really important to use a tool like CALUMO, with web pages people can enter data into and see their results instantly. When you start to move to other departments, they aren’t as savvy with Excel as you and the web interface ensures consistency and is simple for the end-user. Using the web also eliminates the traditional Excel template preparation before the forecast, and consolidation work needed afterwards before anyone can see the result.

Using the web with a tool like CALUMO, all stakeholders can review their area of responsibility at any time. Assumptions and explanations are entered in the system alongside the numbers and metrics providing total clarity and improving the understanding of actual results against the plan, as the reasons for the plan are clearly laid out. Along with immediate feedback you can also monitor progress with CALUMO, see the consolidated results instantly and have everyone collaborating in no time at all.

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