What is a Rolling Forecast?

A continuously updated financial forecast that always looks a set number of months into the future, regardless of fiscal year.

Key Takeaways

•Rolling forecasts continuously look 12-18 months ahead, updated monthly or quarterly
•Replace or supplement static annual budgets that become outdated
•Focus on key drivers rather than detailed line items
•Enable faster response to changing business conditions

Rolling Forecast Definition

A rolling forecast (also called a continuous forecast) is a financial projection that's regularly updated to always cover a fixed period into the future. Unlike static annual budgets that end at fiscal year-end, a rolling 12-month forecast always shows the next 12 months.

How It Works

A 12-month rolling forecast updated monthly:

Update	Covers	Action
January	Jan - Dec	Initial forecast
February	Feb - Jan (next year)	Drop Jan, add Jan next year
March	Mar - Feb (next year)	Drop Feb, add Feb next year

Each month, the completed period drops off and a new month is added to the end, maintaining a consistent 12-month horizon.

Rolling Forecast vs. Static Budget

Aspect	Static Budget	Rolling Forecast
Time Horizon	Fiscal year (shrinking)	Always 12-18 months ahead
Update Frequency	Once per year	Monthly or quarterly
Relevance	Decreases over time	Continuously current
Focus	Detailed line items	Key drivers
Effort	Heavy annual process	Lighter, ongoing effort

The Problem with Static Budgets

By Q3, a static annual budget is based on assumptions from 9+ months ago. Markets change, strategies shift, and the budget becomes more about explaining variances than driving decisions. Rolling forecasts stay relevant.

Benefits of Rolling Forecasts

Better Visibility

Always see 12+ months ahead, enabling proactive planning rather than reactive management.

Faster Decisions

Regular updates incorporate latest information, so decisions are based on current reality.

Reduced Cycle Time

Eliminate the months-long annual budget process. Spread the work across the year.

Beyond Fiscal Year

Planning doesn't stop at year-end. Always see across fiscal year boundaries.

Implementing a Rolling Forecast

Define Key Drivers

Identify the 10-15 variables that drive your business: units sold, average price, headcount, key cost ratios. Build your forecast model around these drivers, not line items.

Choose Cadence and Horizon

Monthly updates with 12-month horizon is most common. More volatile businesses may need weekly cash forecasts. Strategic planning may need 18-24 month horizon.

Integrate with Close Process

Update the forecast as part of month-end close. Use actual results to inform near-term forecast and recalibrate further months as needed.

Keep It Actionable

Focus on what matters for decisions. Don't forecast 200 expense line items if 20 drive 80% of costs. Use benchmarks and ratios for less material items.

Include Scenarios

Build base, upside, and downside scenarios. What if revenue is 10% lower? What if key hire starts 3 months late? Scenario planning is more valuable than point forecasts.

Common Rolling Forecast Mistakes

Too Much Detail

Forecasting every line item defeats the purpose. Focus on drivers and material amounts. Let less important items flow from ratios.

Not Actually Rolling

Some companies just reforecast the current year, not adding new periods. That's a reforecast, not a rolling forecast.

Sandbagging

If forecasts are tied to bonuses, people underforecast. Separate forecasts (what we think will happen) from targets (what we're aiming for).

Not Using the Output

A forecast that doesn't drive decisions is wasted effort. Review regularly, discuss variances, and use insights for action.

Start Simple

Don't try to build the perfect rolling forecast immediately. Start with key drivers and a basic model. Improve over time as you learn what matters for your business.

Frequently Asked Questions

How often should we update a rolling forecast?

Monthly is most common, typically at the same time as month-end close. Some companies update weekly for key metrics like cash. The right cadence depends on business volatility—fast-moving industries benefit from more frequent updates. Whatever cadence you choose, be consistent.

Should we replace our annual budget with a rolling forecast?

Many companies keep both: an annual budget for board approval and compensation planning, plus a rolling forecast for operational decision-making. Others fully replace static budgets. Start by adding rolling forecasts alongside your budget, then decide if you need both based on experience.

How far out should a rolling forecast extend?

12-18 months is most common, always looking 12+ months ahead regardless of fiscal year. Some companies use shorter horizons (6 months) for operational forecasts and longer (24+ months) for strategic planning. Match the horizon to your business cycle and decision needs.

How do we make rolling forecasts less burdensome?

Focus on what matters: key revenue drivers, major cost categories, and cash. Use driver-based models that automatically update with a few key inputs. Don't forecast every line item in detail—use ratios and benchmarks for less material items. Technology like planning tools can automate much of the work.

Need Help with Forecasting?

A fractional CFO can help you implement rolling forecasts, build driver-based models, and improve your financial planning process.

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