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Rolling Budgeting, Forecasting & Mid-Year Forecasts

May 24, 2022
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The current economic circumstances haven’t just resulted in financial uncertainty for millions of Americans. They’ve also helped reveal the problems inherent in conventional budgeting methodologies. If companies want to improve their ability to anticipate future successes and failures, they need to adopt new means of prediction.With rolling forecasts, businesses can gain better insight while aligning their sales and production goals with what’s actually happening from a financial perspective. The goal is to enable companies to create more flexible, agile strategies where they can react quickly to the ups and downs of the market. As a provider of cloud-based, modern FP&A solutions, we’re passionate about offering a wide range of companies a better way to forecast the financial health of their organizations. Read on to discover the benefits of rolling budgeting, rolling financial forecasting, and mid-year forecasts for your business.

What’s a Rolling Budget?

Companies need budgets to set realistic goals for the future. Also known as a continuous budget, a rolling budget is regularly updated to add new budgeting periods as the previous ones expire. It gets its name from the fact that expired budgets are rolled over into the next period, so the cycle is always moving. In this sense, companies consistently have budgets that stretch a year into the future.Rolling budgets come with a number of advantages, including the ability to better predict outcomes and plan for where your company is headed. However, developing a rolling budget is not without its challenges. Not only does creating rolling budgets require more managerial attention, as adjustments must be made each month or quarter, but the labor involved is also typically greater.Fortunately, software tools can help minimize the time and resources required, helping companies get the data they need with less frustration.

What’s a Rolling Forecast?

Like rolling budgets, rolling forecasts provide companies with future numbers for use in planning and management. To create a rolling forecast, businesses utilize historical data to predict results continuously over a given period. With a rolling 12-month forecast, previous months drop off as new ones are added. In this sense, businesses can always see a year out from their present position. Along with aiding in financial reporting, supply chain management, and budgeting, rolling forecasts play a key role in decision making.It’s worth noting that rolling forecasts offer more agility than traditional ones. Rather than providing numbers for a single period, rolling forecasts tell you what to expect next month and the one after. As a result, companies can always be planning for the future. This ability is especially crucial in the current economy, where circumstances on the ground are often changing rapidly.

Get Ahead of This Budget Season

With the right FP&A software, you can experience accurate forecasts, data-driven insights, detailed reports, and improved performance like never before.

The Importance of Doing Mid-Year Forecasts Now

As we approach the middle of the year, most companies are thinking about their future financial goals as well as issues that have gone wrong in recent months. To that end, it’s a great time to engage in mid-year reforecasting. Along with being a great opportunity to review the goals laid out at the end of the last year, reforecasting lets you examine how your company is performing in light of those objectives. For example, companies may determine that they’ve failed to meet key financial targets or deliver goods or services as intended. In some cases, missed goals are due to labor issues, while other times market changes are to blame. When completing mid-year forecasts, it’s important that budgeting and financial forecasting work hand in hand. After all, you can’t craft a budget with realistic spending and expenses information without a solid business forecast.Once companies determine where mistakes were made, they can take steps to correct them. Businesses may opt to hire new personnel or move team members from an area with more resources to one that’s currently lacking. Companies may also choose to set new goals based on the situation on the ground. Even if everything is working as intended, a mid-year forecast can enable companies to assess their goals for the next two quarters and determine if they have the resources and personnel needed to achieve them.

How Modern FP&A Helps Companies Achieve Their Goals

When it comes to financial planning, today’s companies need to be smarter and more agile than the competition in order to achieve their goals. Fortunately, modern software tools allow companies to plan for the future with ease and accuracy. Also known as FP&A tools, financial planning and analysis products offer a set of activities, including budgeting and financial forecasting, that supports a business in making decisions and maintaining fiscal health.A leader in financial forecasting services for small and mid-sized businesses, Centage offers a cutting-edge business budgeting software known as Planning Maestro. A modern financial forecasting planning software, Planning Maestro gives you the data you need to see where your company is headed and to course correct where necessary. Here are some of the features that come with modern FP&A tools like Planning Maestro:

  • Generating Statement of Cash Flows and Balance Sheet, P&L Statement, and more management reports
  • Allowing for collaboration across multiple plan and budget owners
  • Enabling faster response times to real results
  • Determining risks, opportunities, and variances

Additionally, businesses can forecast multiple scenarios and determine how and why actuals differ from the plan. Doing this enables companies to act before disaster strikes and take advantage of opportunities when they come their way. Utilizing rolling forecast budgeting software, companies can create forecasts that extend beyond the typical 12 months. They can also generate variance reports of budget, actual, and forecasted numbers. The goal is to help companies gain all the information needed to make the best decisions now and in the future.

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