5 Steps to Implement a Rolling Forecast

August 11, 2023

As a CFO, you're tasked with overseeing the financial health of your organization. One way to stay on top of things when it comes to financial analysis is by implementing a rolling forecast. A rolling forecast is a method of financial forecasting that can help your organization stay agile and adapt to changes in the market. Instead of relying on a once-a-year budget, rolling forecasts allow you to update your financial projections regularly, giving you better insight into potential risks and opportunities.

Here are the five steps you can take to implement a rolling forecast for the first time

  1. Understand the Why
    Before you start implementing a rolling forecast, it's important to understand why you need one. Conducting research and holding discussions with stakeholders about the business landscape will help you understand why there is a need for change. Documenting the rationale for change will also help you plan, prioritize tasks and identify obstacles in advance.
  2. Choose a Software
    The next step to implementing a rolling forecast is to choose the right software. There are various tools available to help you manage your financial forecasting tasks, but not all of them may fit your business needs. Look for a tool that integrates with your current finance systems, is user-friendly, and allows you to customize it to fit your requirements.
  3. Prepare your Team
    A rolling forecast can only be successful if everyone involved knows what it is and how it works. This is where team preparation comes in. Host training sessions so that everyone in the team gets to know about the software, the forecasting techniques, and the overall approach.
  4. Start Small
    Rolling forecasts are a significant change from the traditional budgeting approach, so it's best to start small. Start by forecasting quarterly and keep it simple by looking at revenue and expenses. Review actuals in comparison to forecast and take some time to gain experience in working with the new forecasting approach.
  5. Refine and Improve
    Finally, the last step to implementing a rolling forecast is continuous improvement. A rolling forecast is a new approach to forecasting and therefore needs continuous refinement. Consistently evaluate the effectiveness of the forecast and seek feedback from other stakeholders. Make changes as needed and adjust to capture more information, assumptions, and insights.

Implementing a rolling forecast takes time and effort. It's important to understand the why, choose the right software, prepare your team, start small, and refine and improve the approach. Once, it is in place, a rolling forecast will provide you with a better view of your organization's financials and ultimately enable you to make more informed and timely decisions.