Rolling forecast

A rolling forecast is a forecast that always covers a fixed horizon, usually twelve months, and is updated every month. When a month closes, its actuals replace the forecast, the remaining months are revised for what is now known and a new month is added at the end. Unlike an annual budget, it never goes stale, because it is never more than a month old.

It matters because an annual budget set in January is out of date by spring and stays that way, while decisions are made all year. A rolling forecast gives a BC owner a current view of where revenue, margin, profit and cash are heading, and separates two kinds of problem. The gap between budget and forecast is a planning problem. The gap between forecast and actual is an execution problem. Knowing which one you have changes what you do.

In practice, the rolling forecast is built on the same drivers as the budget, such as jobs per week, average ticket, headcount and lead volume, so that a change in one assumption flows through to every line. It takes an hour or two a month to maintain once built, it is the source for the cash forecast and the lender update, and it is reviewed in a monthly meeting that ends with decisions rather than with a report.