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Let It Roll

Why more companies are abandoning budgets in favor of rolling forecasts.

Russ Banham, CFO Magazine
May 1, 2011

Can Software make Rolling Forecasts Easier?

Proformative Feature Article from May 2012: http://www.proformative.com/articles/rolling-forecasts-good-bad-ugly If so many CFOs are saying rolling forecasts are so important, why do most of us still update our forecasts only to year-end? In part, it?s a culture thing?it?s hard to focus on next year when everyone is hell-bent on making this year?s numbers. Plus, incentives and bonuses are often tied to the fiscal year, so why should anyone really care about next year? The Beyond Budgeting movement failed in large part because it mandated that companies ?abandon the budgeting process completely.? Most people in their right mind know better to advise management to kill the budget; that?s just not going to fly. But the few of us who really do rolling forecasts, know that it?s not just a culture thing? It?s in large part about the software. Spreadsheets, as flexible as we think they are, just aren?t suited for the purpose, nor are most planning software packages that focus on budgeting with lots of users adding in lots of detailed budget information. Many software vendors agree that rolling forecasts are important; most claim that their solution enables rolling forecasts. However, when we interview the users of these software solutions, we find that less than 10% of companies deploying budgeting software have actually made the move to a rolling forecast. Most the budgeting software vendors have financial models aimed at selling as many seats as possible which is great in a collaborative budgeting environment. However, more seats does not mean more value when it comes to rolling forecasts. There?s a myth that if you throw more people at the rolling forecast, it will get done faster; in fact, the opposite is true! Given rolling forecasts often need to be at a higher level of detail than the annual budget, we need to ask ourselves: ?should the rolling forecast even be in the same file as the annual budget model?? If you are looking to make the move to a rolling forecast, what functionality should you look for in a software package? How will you roll time periods as actuals flow in? How will you spread formulas and run rates into new time periods? Will you be able to compare forecasts at any level of detail side by side?

Posted by Ben Lamorte | May 09, 2012 03:17 pm

Rolling forecast

I agree with the author on Rolling forecast.However, most co's prefer to stick to Budget as it is linked to sales commission / Bonus and other incentives.Because cos refuse to accept reality or Honesty,most managers keep some reserve in terms of sales/cost/margin to protest their seat. Many times we find revenues during Q1 is reported less due to delay in finalising incentives for performers. Gurunathan-Chennai

Posted by Gurunathan Gurunathan | May 12, 2011 10:53 am

Rolling forecast

I agree with the author on Rolling forecast.However, most co's prefer to stick to Budget as it is linked to sales commission / Bonus and other incentives.Because cos refuse to accept reality or Honesty,most managers keep some reserve in terms of sales/cost/margin to protest their seat. Many times we find revenues during Q1 is reported less due to delay in finalising incentives for performers. Gurunathan-Chennai

Posted by Gurunathan Gurunathan | May 12, 2011 10:52 am

Rolling Forecast

Fully agree with comments of Mr.Chandrasekar

Posted by Ramakrishnan Subramanian | May 05, 2011 07:03 pm

Leveraging the old and the new

A budget when prepared in a disciplined manner by the people involved can be an excellent starting point to integrate corporate objectives in a democratic manner. A rolling forecast is clearly a need of the times we live in. Businesses have to function amidst uncertainty and it is prudent to keep updating the forecasts periodically to be in sync with ground realities and thrive regardless.

Posted by Chandrasekar Venkataraman | May 03, 2011 08:28 pm

Leveraging the old and the new

A budget when prepared in a disciplined manner by the people involved can be an excellent starting point to integrate corporate objectives in a democratic manner. A rolling forecast is clearly a need of the times we live in. Businesses have to function amidst uncertainty and it is prudent to keep updating the forecasts periodically to be in sync with ground realities and thrive regardless.

Posted by Chandrasekar Venkataraman | May 03, 2011 08:28 pm

Demand

This article is right on point. The companies that we work have really changed their view and philosophy on the annual budgeting/planning exercise. As a result, demand for Finance professionals that can provide an accurate real time view of future scenarios are in demand. Today's Finance professional must understand their company's business and underlying challenges , constraints and variables outside of Finance. As stated in the article, the Finance professional most in demand today, are able to stand on the bridge of the ship looking forward and make adjustments.

Posted by Jim Wong | May 03, 2011 11:45 am

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