The 10 benefits of quarterly rolling forecasting process
By David Parmenter
The benefits include:
- Rolling forecasts allow for more accurate and versatile financial forecasting that will remain true to a company, even amid fluctuations in the industry, economy, or marketplace.
- Businesses can continually adapt future forecasts to reflect industry, economic, and business changes, enabling them to reduce risk and allocate resources more optimally in pursuit of their financial objectives
- Businesses can be more opportunistic in their decision-making because they’ll have the ability to tweak their business assumptions, alter budget allocations, and adjust their spending more quickly, enabling them to better respond to industry and consumer demands.
- The funding of budget holders is now done on a quarterly rolling basis, once their forecast has been approved, rather than annually.
- Monthly budgets to be used for month-end reporting are set only one quarter ahead.
- Managers have a better understanding of their operations
- An updated annual forecast P/L as a by-product, every quarter, and not a separate monthly exercise as part of the financial report
- The next financial year is always in view
- Because it is done 4 times a year at a higher level it is a massive time and thus cost saver compared to the time for annual planning and forecasting updates.
- Helps create a better understanding of the cost drivers leading to full recover of raw material cost fluctuations.
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