Rolling Financial Forecasts: The Technique
The key to setting a successful rolling forecast process is to ensure that you are modeling in a driver-based environment – whether excel or a modern FP&A software application. First, you need to define a specific time horizon. In most cases you will want to do this for at least a 12 month period, with a 3 to 5 year window as your maximum.
At the close of each month, the FP&A team should perform a budget to actuals variance analysis. Based on the deltas, the team should re-forecast the forecast period of the model.
The rolling forecast requires an interlinked financial model with integrations into the key financial and operational data sources, for example, Quickbooks (QBO) and Salesforce.