The advantages of rolling forecasts

Annual planning, as businesses use it today, is one of the greatest mistakes organisations have made since 1494, the year Pacioli wrote about double-entry bookkeeping in Summa de arithmetica, geometria, proportioni et proportionalità. The first writers to put annual planning to the sword were Jeremy Hope and Robin Fraser in their classic book Beyond Budgeting. The reason the annual planning process should be replaced. Read more

How to get it approximately right, not precisely wrong

In the past accountants have tried in vain to budget at an ever more detailed level to somehow see into the future. It was and is now still a pointless exercise. We need to acknowledge that it will be wrong so let’s get it wrong quicker! Albeit as close as possible to the future actuals. In planning, many processes are carried out, year-in and year-out, because they were done last year. All the previous ‘givens’ associated with forecasting should be challenged and all the inefficient processes abandoned as Peter Drucker preached.

Just as a house is built on a solid foundation, forecasting financial numbers should be built on best practice ‘foundation stones’. Forecasting at a category level rather than at account code level Forecasting at a detailed level does not lead to a better prediction of the future. A forecast is rarely right. Looking at detail does not help you see the future better. In fact, I would argue that it screens you from the obvious. Read more

Time to get rolling

They take far too long, cost too much and lack dynamism, so why not ditch your annual plan and embrace quarterly rolling forecasting, Read more  Time to get rolling

Beware of the spreadsheet

David Parmenter argues that the use of large spreadsheets for reporting, forecasting and planning should be abandoned because of their susceptibility to error.  Read more Beware of the spreadsheet

One day focus group workshop on quarterly rolling forecasting

The workshop is important for a number of reasons:

  • there are many pitfalls in such a project and many have failed to deliver
  • a wide ownership is required and a focus group can have a huge impact on the selling process
  • the foundation stones need to be understood and put in place early on in the project
  • the focus group will give valuable input towards how the implementation should best be done to maximize its impact