We at Questica believe that there should be multiple options for your budgeting and forecasting needs. Many organizations stick with a traditional annual budget — done once a year, presented and updated as needed, and then the cycle starts all over again the next year. Other options however are a Rolling Forecast Budget. This is a topic for you especially if you find your budget needs changing. So should you use a rolling forecast budget over a traditional one? Read on to find out more!
What is a rolling forecast budget?
Let’s start with the basics. When I say rolling forecast budget (RFB), I mean a budget that is continually updated after it has been created. Traditional budgets are done once a year, and usually it is a pretty stressful time. The budget attempts to forecast where the company will be standing financially at the same time the following year. The budget is updated slightly during the year in the event of major earth shattering events, but mostly it is static. At the end of the year, the company reviews how the actual numbers compare to the predicted ones, and a new budget is made all over again.
A RFB is different. The budget is made to project ahead 12 months. After the first month of the projection is finished, it is cut from the budget and a new month’s forecast is added onto the end. This means you are making projections throughout the entire year instead of all at once. Yes, some of you undoubtedly flinched reading that sentence, contemplating a never-ending budget season. Isn’t once a year bad enough already? Well, the good thing about a RFB is that, apart from its initial creation, you’re not making projections for an entire year. Just once a month, which is much more manageable for your time!
The other great thing is that constantly updating your budget allows your organization the freedom of flexibility. Let’s say the market unexpectedly shifts in a new direction the top analysts never saw coming. You want to take advantage of that. On a regular static budget, you would pretty much be out of luck. It would just take too long to adjust the budget for the year to fit the new idea. By the time you finish the adjustment, the opportunity passes or someone else takes advantage of it before you do. With a RFB, it’s much easier to take that chance because it’s much easier to adjust the months in the budget down the line. This allows you to plan ahead with greater accuracy.
Plan ahead with Questica
We hope you see the benefits to a rolling forecast budget. If you would like to take advantage of Questica’s budgeting software, visit our website where you can request a demo for yourself. Questica has innovative, easy to use software to make your budgeting — whatever form it may take — as easy and stress-free as possible. Make sure you’re always planning ahead!