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Predict the Future with a Rolling Approach to Budgeting, Planning and Forecasting

 


Most companies put significant time - weeks or even months - into the preparation of annual budgets. But, unfortunately, in most cases, the budget is already outdated by the time it is complete. And in today’s continually evolving business climate, sticking to an obsolete budget could severely compromise decisions.

 

This is why any organization with a proactive mindset needs to transform its planning from static budgeting to dynamic forecasting, which combines actual information along with projections.

 Rolling approach to Budgeting, Planning and Forecasting

 

Now, the thought of doing quarterly, monthly, or even weekly plan updates can seem daunting, to say the least. But there are solutions that make regular updates feasible and practical. At Tagetik, we are seeing customers taking several different approaches as they move towards a forecasting logic. Following are two examples:

 

  • Some go through an annual reforecast exercise by updating their plans on a monthly basis. The update process is very detailed for end-of-quarter months, while, for middle months they take a more aggregated approach.

 

  • Others go the extra mile by adopting rolling forecasting. Not only are these companies interested in reforecasting their end of year financial situation, they also want to use actual data to extrapolate how the next month - or the next 6-12 months - would look. The key here is to use valuable predictive logic that, with no effort, allows you to populate coming months with new data. 

 


No matter what forecasting approach is the better fit for your organization, it is key to revise your annual plans by incorporating actual information and updating any open month with more accurate data assumptions. And even more so, it’s important to keep track of all your forecasting cycles.

 

Imagine how beneficial it would it be if you were able to compare end-of-year expected results from your initial budget, to the end-of-Q1 forecast, to today’s forecast. You’d still see overall end-of-year results, but you’ll also see how these results are likely to change based on incorporating actual data into planning logic.

 

We’d welcome your feedback on how budgeting and forecasting is done within your company and the challenges your team may still face.

 

Tagetik for Budgeting, Planning and Forecasting

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