Connections for Success



How Rolling Forecasts Can Provide More Clarity
Joyce Carlson

Some of the greatest economic concerns brought on by the pandemic have been financial instabilities and volatility.  These pressing issues have forced a stark lesson in pre-planning and have put the spotlight on the weaknesses of traditional budgeting and forecasting methods. In this new unstable environment, annual budgets quickly become cumbersome to prepare. Sudden economic fluctuations have forced the manufacturing industry to develop new tools for budgeting to remain dynamic and adaptable to change.  The Rolling Forecast Model is quickly becoming the tool of choice. 

Related Read: Five Planning Strategies in Uncertain Times

Static vs. Rolling

The traditional static budget is viewed as a once-a-year process that may not give a clear understanding of missed goals or a plan for future success.  Once the annual budget is set, managers may not compare actual to forecasted performance until year end. Other complications arise if the budget takes longer to complete and is based upon assumptions that turn out to be wrong after the fact.  Many times, after the company has already fallen short of its goals, it is too late and costly to re-vamp and re-look at variances caused by changed conditions. 

With a rolling forecast, rather than setting a one-year budget and forgetting about it, management revisits the budget periodically — quarterly or monthly, for example — and adjusts the numbers to reflect changing circumstances. A rolling budget allows updates in increments relevant to the company creating faster, easier to assimilate models.  If your budget is for a 12-month period, as each month ends, a new month is added showing a continuous 12-month expectation.   A monthly process is created, and data is viewed and evaluated continuously. A quarterly review would work the same – after the first quarter, revisit and review and add a new first quarter to the end of the budget.

Rolling Benefits

Benefits of rolling forecasts include:

  • Improved Accuracy
     By comparing actual to forecasted performance more frequently and updating the numbers in real time, budgets are much more reliable.  Mistakes can be quickly addressed instead of letting them compound over a year, allowing greater reliance and actual use of the budget as a tool.
  • Increased Agility
    Updating your forecasts regularly allows you to spot trends early and make necessary adjustments for unexpected events or evolving market conditions before it is too late.
  • Contingency Planning
    Some manufacturing processes rely heavily on a particular raw material or component part. Creating “what if” scenarios can assist in planning for contingencies if a sudden price increase or shortage would affect performance.  The rolling budget allows companies to increase focus on how the business is operating.
  • Ease of Implementation
    Annual budgets occupy a large amount of time, talent and research, which ties up resources.  A rolling forecast is fluid, evaluating over the entire year in manageable increments with the ability to make better judgements based on new and relevant data.

Automate the process

You may be concerned that switching to rolling forecasts will make the budgeting process more costly and time-consuming. However, once rolling forecast processes are put into place, most manufacturers find that they are less disruptive than a once-a-year budgeting process. Budget and forecasting software is available to automate the process. Contact your financial advisor to determine if a rolling forecast is right for your business.

Related Read: Four Signs of an Unreliable Budget

For more information on implementing a rolling forecast, contact Joyce Carlson at [email protected] or 312.670.7444. Visit to learn more about our Manufacturing and Distribution Group.

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