Planning & reporting
Rolling forecast
A rolling forecast is a forecast that always looks the same number of months ahead, extended by one period each time a period closes.
When a month closes, its actuals replace the forecast for that month and one new month is added at the far end, so the horizon never shrinks.
Worked example
| 12-month rolling forecast made at the end of January | covers February to next January |
| February closes | February’s actuals replace its forecast |
| Next February is added at the end |
The forecast now covers March to next February: still 12 months ahead, where a calendar-year budget would have 10 left.
Why it matters
An annual budget goes stale as the year runs out, and by autumn it says almost nothing about next year. A rolling forecast keeps the next year in view all the time, so hiring, spending and cash decisions are made against a current picture.
Common mistakes
Where it misleads
Rolling the dates forward without re-examining the assumptions, so the forecast is new in form but old in substance.
Replacing the budget with the rolling forecast, which loses the fixed target you measure performance against.
Forecasting every account in detail, which makes the monthly update so slow that it stops happening.
Related terms
Keep reading
- Budget vs actualBudget vs actual compares what happened in a period with what was planned, line by line, to show where the business is ahead of or behind its plan.
- Driver-based forecastingDriver-based forecasting builds a forecast from the few operational numbers that cause the results, such as leads, conversion rate or price, instead of typing in each line.
- Cash burn and runwayNet burn is how much more cash a business spends than it takes in each month; runway is how many months its cash would last at that rate.
Stop calculating it by hand.
Dear CFO keeps your statements, forecasts and metrics current from the systems you already run.