by Mohamed Aly
Traditional Forecasts
Traditional Forecasting is considered a static process that sits idle once released until it is replaced or discarded by newer periods, usually quarters. It commonly takes around two months to finalize, which fails to reflect real-time market-changing situations, especially the post-pandemic fluctuations. Traditional Forecasting load actuals to date and only extends forecast scenario till the end of the current fiscal year.
Rolling Forecasts
Rolling Forecasts provide 12 forecasting months regardless of the Actuals loaded, which means better visibility into an extended timeline helping an organization to be effectively and properly prepared for upcoming periods. Rolling forecasts usually contain a minimum of 12 forecast periods, but can also include 18, 24, 36, or more.
Rolling Forecasts provide the means for better accuracy, quick tweaks, and critical adjustments with greater visibility on an extended horizon. Rolling forecasts allow the adjustment to the traditional forecast to accommodate current market trends providing better responses to time-sensitive decisions. The continuously updated outlook allows for better availability of long-term data needed by an organization to execute important business decisions.
Rolling Forecasts are more dynamic, allowing for predictions based on the latest metrics fed into the system to accommodate for any fluctuations to operational activities accounted for throughout the year, instead of just once. It provides the ability to add key business drivers to forecasting allowing the improvement of forecast quality.
One of the most appealing uses for rolling forecasts is the fact that it cuts down on the time to create an upcoming fiscal year’s budget as there are always at least 12 months of forecasting with accurate data corresponding to the latest market trends. This means that the time used to maintain the Rolling Forecast is going to be compensated for by cutting down on budget creation leading to reduced overall time consumption and increased profitability.
Benefits of Rolling Forecasts
- Improved accuracy and agility with driver-based forecast
- Better tracking of financial and operational performance
- Improved predictability and adaptability
- Time-saving with increased financial control
- Accurate strategic decision making with risk mitigation
- Staying ahead of the curve with continuous calculated timely adjustments
