The pandemic demonstrated just how important business resilience can be for an organization. A key element of optimal business continuity is agility. If your finance team’s looking to improve agility in its day-to-day operations, rolling forecasts can help. Companies implementing rolling forecasts see 20-30% better financial performance when adapting quickly to changing market conditions compared to organizations using traditional forecasting methods.
Towards the end of 2021, the world’s central banks were calling inflation “transitory” – a temporary problem that was nothing to worry about – and a mere six months later, the world entered its worst inflationary cycle in decades.
Moreover, in the last few years alone, organizations have faced other concerns, such as Brexit, trade tariff standoffs and protectionism, supply chain gridlock, and the Russian invasion of Ukraine. Now, in 2025, the world’s financial markets are experiencing high volatility, interest rates are rising, and most economists predict a coming recession.
These are all external events that are causing uncertain market conditions, over which organizations have little to no control. However, these factors can severely curtail performance and even become an existential threat.
For this reason, organizations must proactively take charge of what’s in their domain of control, taking steps to make their operational processes and infrastructure as agile as possible, to support resilience and business continuity. One method of supporting enhanced agility is by transitioning to rolling cash flow forecasts. While there are challenges in doing so, they can put a company in a much stronger position, with far more precision, relevance, and market awareness ‘baked into’ their strategic planning.
What's a Rolling Cash Flow Forecast?
The ‘rolling’ method sees a financial department periodically update their cash flow outlook. Finance teams typically don't set a maturity date for rolling forecasting. Instead, they constantly update the forecast, such as on a weekly or monthly basis.
In this way, a rolling budget is a “live” document because finance teams regularly update it to reflect changing market or business conditions and developments.
Rolling Forecasts vs. Traditional forecasts: What’s the Difference?
A traditional cash flow forecast is a predictive analysis of an organization’s cash inflows and outflows to measure future performance, such as monthly, quarterly, or yearly. It’s a “set-and-forget” document that organizations use to assist in financial planning and organizational strategy.
Criteria | Rolling Forecast | Static Forecast |
|---|---|---|
Frequency | Updated regularly (monthly, quarterly, etc.) | Created once per period (annual or semi-annual) |
Accuracy | Consistently refined, providing more current data | Prone to outdated assumptions over time |
Adaptability | Highly flexible, can pivot quickly | Relatively rigid, difficult to change mid-period |
Time Horizon | Continuous extended window (like 12 months rolling) | Fixed time span (e.g., a fiscal year) |
What are the Challenges of Traditional Forecasting?
The primary disadvantage of the traditional method of forecasting is that, if business conditions or performance differ from what’s predicted, the forecast immediately becomes inaccurate and out of date.
For instance, if an expected large cash inflow fails to materialize because of debtor payment default, the resultant cash balance becomes incorrect, which then impacts the rest of the forecast.
If multiple events occur that differ from the prediction, the forecast quickly becomes out of date. Organizations may still use a forecast that’s out of date or inaccurate, or fail to use it because they don't feel it's useful anymore, which means they must strategize and execute without the crucial foundation that an accurate forecast provides.
What are the Benefits of a Rolling Forecast?
A rolling forecast model helps a company to: FP&A analysts spend two-thirds of their time gathering and managing data rather than conducting analysis, preventing finance teams from focusing on strategic activities that drive business value.
A rolling forecast model helps a company to:
Identify cash flow shortfalls with more recent business and market intelligence.
Plan for future growth with more accurate insights at hand.
Identify areas of the business that generate suboptimal performance.
Provide early notification of upcoming funding gaps and pivot accordingly.
Avoid outgoing payment defaults and highlight commercial opportunities.
All of these benefits are also possible with a traditional cash flow forecast. However, the core benefit of the rolling variety is that it provides much greater precision and market relevance because it’s more up to date. Therefore, organizations work with more reliable insights, whereas a traditional forecast may no longer provide accuracy.
In fact, the traditional type of forecast may even damage an organization by guiding company executives with a completely out-of-date cash flow outlook, which can differ greatly from reality.
Steps to Create a Rolling Forecast
Follow these steps to build a dynamic rolling forecast model:
Gather relevant data from across the organization, ensuring it's accurate and up-to-date.
Set the forecast horizon and update intervals, such as monthly or quarterly.
Incorporate scenario analysis to address market changes and potential risk factors.
Review actual performance against the forecast and adjust regularly.
How to Transition from Traditional Forecasts to Rolling Forecasts
When deciding to move on from traditional financial forecasting to a rolling forecasting process, there are several factors to consider.
1. Potential resistance to change
Corporate finance leaders have traditionally focused on standard cash flow forecast processes. Moreover, stakeholders in the wider financial ecosystem also tend to work with, and expect, the standard variety, such as investors. The first step in switching to rolling forecasts is to communicate its benefits among the company’s decision-makers, investors, and advisors.
2. Automation and data technology
You can support the finance department by investing in the right automation and data management technologies. Building out a robust tech stack can markedly reduce workload for data gathering, entry, and analysis.
3. New workflow process design
Changing to rolling forecasts usually increases your finance team’s workload because they move from a once-and-done approach for a set period, such as a year, to a periodic update approach, such as monthly.
This might necessitate further recruitment, although investing in the right technologies, as mentioned in point two, can alleviate workload in other ways. A full understanding of how to commit to rolling forecasts and redesign the finance team’s workflow will help them make the transition and highlight any possible bottlenecks.
Best Practices to Maximize Rolling Forecast Performance
To optimize the effectiveness of your rolling forecast process, here are some best practices to follow.
1. Define your rolling forecast goals
What exactly do you want rolling forecasts to help your company with? What’s different about them compared to the traditional static forecast model? It’s important to write these goals down so you can measure performance against your ideal outcome.
2. Identify data sources and define your collaborative process
Data is essential to the accuracy and efficacy of your rolling forecasts. Defining data sources and how to manage it—its capture, storage, analysis, and interpretation—is key. Moreover, the right software that enables efficient collaboration across departments is also an essential prerequisite to support rich data management and financial forecasting precision.
3. Upgrade from spreadsheets
Relying on spreadsheets can significantly hamper a financial department. While they might still serve some purposes, dynamic, data-driven technologies like FP&A software give you automated data entry, end-to-end data management, and rolling forecast support.
4. Decide the period of time for updates
Every business and industry is different. Depending on your company’s needs and cash flow profile, it might be best to update your rolling forecasts fortnightly, monthly, or quarterly. Your financial department should have clear dates to produce an updated forecast, such as the first of every month.
5. Review performance
At the end of each rolling period, an appraisal helps your organization see how accurate—or not—each forecast update was, by comparing predicted cash inflows and outflows against real performance. This step lets you address problem areas accordingly.
Driving Optimal Corporate Agility with Rolling Forecasts
Finance teams use rolling forecasts to be more agile and strategic. While there's more work involved, the trade-off is that your forecasting is likely to be more accurate and up to date with recent changes to market and business conditions.
Since the pandemic began in 2020, improving business continuity credentials and resilience are key goals for company executives. In a volatile global corporate environment, transitioning to rolling forecasts helps your company become more robust and future-proof against potential negative events that could impact cash flow.
Greater precision in the forecasting process also supports your organization with optimal financial management strategy design.
Final Thoughts on Rolling Forecasts
Rolling forecasts offer a powerful way to continuously align your financial outlook with current market realities. By updating projections regularly, finance teams can plan ahead more effectively and safeguard the business against unexpected changes in the economic environment.
