Some organizations are able to run their businesses the same way they did ten or even fifteen years ago. But for the vast majority of companies, the speed of business has increased to breakneck speeds. All areas of the business are changing their operating models not only keep up but find a way to get and stay ahead.
Organizations are looking for ways to be able to rapidly respond to market conditions and meet changing customer expectations. For many companies, that means adopting rolling financial forecasts.
Rolling forecasts provide a number of advantages over an annual business budgeting process, including reducing long-term assumptions, building agility into the planning process and creating responsiveness to handle business climate changes.
Getting off on the right foot with rolling forecasts is important, and below you’ll find five tips to get you started.
Decide on a Timeframe for Business Budgeting
Rolling financial forecasts occur more frequently than annual budgeting, but how much more frequently is dependent on the needs of your organization. Companies that need some flexibility but otherwise have steady business conditions might opt for a semi-annual forecast. Others may be facing day to day changes in their space, and as a result, monthly forecasting puts the organization in a better position.
Train Bottom Up
With an annual budget, business leaders gather needs from their reports but assemble them into an all-encompassing end product, resulting in a very top-down budgeting model. However, rolling forecast updates are done at the front lines, in a bottom-up model. So, it’s important to make sure your managers and line-of-business leaders are well versed in the process. Take the time to train members of the team who will be performing the hands-on updates to the forecasts. It will make it easier for them to complete the task and will ensure a more accurate forecast for the company.
Use Progressive Adoption
Converting to rolling forecasts is a big undertaking and successful adoption requires careful planning and the availability of your internal experts to help managers and other leaders new to the process. Consider rolling out forecasting gradually by piloting the program with a few teams or a department. This will allow you to be available for questions and help while building a group of evangelists that can also answer questions as more of the organization moves to rolling forecasts.
Commit to Updating
Annual business budgeting can take significant time to complete and approve. One of the benefits of rolling forecasts is they take less effort, but that effort is required more frequently. If your organization is committing to rolling forecast, make sure that all of the individual owners are allowed time, and allocate that time, to regularly updating the forecast numbers.
Ensure You Have the Right Technology
If you’ve got a very small company, you may be able to manage rolling forecasts on an Excel spreadsheet, the way many companies manage their annual business budgets. However, for any company of significant size, a spreadsheet will rapidly cause problems as multiple people try and update it, or multiple spreadsheets are merged. Spend time evaluating an appropriate software suite with specific capabilities for rolling financial forecasts and multiple, role-based users.
To keep up with today’s business changes, you need budgeting solutions that are flexible and agile. Organizations of every size rely on Centage Corporation’s Maestro Suite of solutions which includes Budget Maestro™ to help them keep track of and manage their cash
flow. Budget Maestro improves the efficiency and effectiveness of business budgeting and planning, financial forecasting, financial consolidation and reporting processes. For more information, take a tour of Budget Maestro, contact Centage, or call 800-366-5111 now.