Why is a Rolling Forecast better than working within a Planned Budget?

The static budget takes time to prepare and implement, causes personnel friction and frustration, is generally out-of-date upon completion and is an old-fashioned process.

With a rolling forecast approach (inputting actuals monthly or quarterly and adding a month or quarter to plan you can maintain a one or two year planning horizon), you are staying current and focused and adjusting plan to coincide with what is happening based upon actuals and real-time activities and developments.

Many of my clients have a 3-year plan, so they roll in actuals monthly in year one and adjust plan for the balance of the first year, and then make any adjustments necessary for the remaining 2 years. At year-end they add a new year of plan to begin the 3-year cycle over again. Most also keep several years of actuals in the model to have a historical and trend perspective as well as an easy reference to past events.

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