10 Steps to Build Rolling Forecasts Effectively

August 2, 2023

As the Chief Financial Officer of your organization, you understand the importance of accurate financial forecasting in making informed business decisions. However, creating a rolling forecast can be daunting, especially if you don't have a standardized process in place. In this blog, we will provide 10 steps to help you create rolling forecasts effectively.

  1. Set out your expectations
    Based on your business needs, clearly define the duration of your forecast, the frequency of updates, and the necessary level of detail for accurate decision-making.
  2. Build a forecast model
    Develop a financial model that captures your organization's operational drivers and key performance indicators (KPIs). This model should be dynamic and flexible enough to accommodate changes in assumptions.
  3. Gather Data
    Collect and analyze historical data required for your business's forecast.
  4. Collaborate with Other Departments
    Encourage input from other departments, especially Sales, Marketing, Production/Operations, and Human Resources, to develop projections for their respective areas.
  5. Identify Risks and Opportunities
    Analyze the risks associated with the forecast and identify opportunities to improve upon financial performance.
  6. Monitor Assumptions
    Regularly monitor, and update assumptions based on market conditions and trends.
  7. Compare Actuals vs. Forecast
    Regularly compare actual financial results to the forecast. Identify variances and understand the underlying reasons.
  8. Review and Adjust KPIs
    Revisit your forecast model regularly and adjust your KPIs to ensure that they remain relevant and aligned with your business goals.
  9. Communicate Changes
    Keep stakeholders informed of any significant changes to the forecast. Provide data analysis and updated projections to support the justification for these changes.
  10. Continuously Evaluate Your Forecasting Process
    Regularly review your forecasting process and adjust based on insights gleaned from actual results and stakeholder feedback.

In conclusion, rolling forecasts improve financial planning and decision-making by standardizing the methodology for financial forecasting and providing insight into KPIs. By implementing these 10 steps, you will create an effective forecast model that can support a dynamic business environment. Keep in mind that every company's situation is different, and these steps may require adjustments based on your organization's unique needs.