The evolution towards an intelligent rolling forecast model

When the Finance Department uses a rolling forecast model, scenario-based financial planning and predictive analytics, it supports more efficient decision-making. 

It also facilitates an agile adaptation to change. If we also add to this model the digitalization of the department, it will transform it into an intelligent rolling forecast model. 

Rolling forecast improves the PBF process (Planning, Budgeting and Forecasting)

A survey by FSN – The Modern Finance Forum on the future of automation compares the performance of the Planning, Budgeting and Forecasting process in companies with a rolling forecast model compared to those with quarterly forecasting. Some comparative data between the two groups are as follows: 

• 70% vs. 63% revise profit forecasts in less than a week.  
• 14% vs. 12% ensure reliable information in their annual forecasts. 
• 42% make revenue forecasts and 49% profit forecasts with +/- 5% accuracy compared to 38% and 35%, respectively. 
• 71% can make small daily changes to the budget. And 58% can make small daily changes to any report compared to 57% and 38%, respectively. 

Approximately 60% of the best performing companies use an intelligent rolling forecast model.  

Benefits of rolling forecasts

The annual planning and budgeting process is tedious and complex. In today’s volatile and competitive environment, the assumptions used change frequently. As a result, planning and budgeting become outdated, increasing the chances of making the wrong decisions.  

Therefore, it is very important to streamline management and have consistent real-time information in the Budgeting, Planning & Forecasting process. A rolling forecast model re-calibrates forecasts and resource allocation on a monthly or quarterly basis based on what is actually happening in the business.  

By providing feedback, the model helps to improve reporting. Therefore, it is a very effective tool to support decision-making about: 

• Allocation of resources to departments, business units, etc. 
• Strategic priorities according to their performance and output.  

In addition, it brings transparency to financial reporting because it is not linked to temporary financial targets and, therefore, to manageable incentives. 

Evolution towards an intelligent rolling forecast 

To fully benefit from this financial model and evolve towards an intelligent rolling forecast, the CFO needs to rely on CPM (Corporate Performance Management) management software.  

Thus, Talentia CPM streamlines the finance function and integrates it with corporate performance management: 

• Consolidation & Close  
• Budgeting, Planning & Forecasting processes.  

In this way, the CFO obtains accurate and timely information on cash flow and other analyses, but also makes projections with 100% reliable data.

In other words, it allows you to implement a rolling forecast model, eliminating effort and inefficiencies and maximizing your ability to generate business value.