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What is the best way to align rolling forecasts with your strategic goals?

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Rolling forecasts are a powerful tool for corporate accounting, as they allow you to adjust your plans and expectations based on changing market conditions, customer demands, and internal factors. However, to make the most of rolling forecasts, you need to align them with your strategic goals and ensure that they are consistent, realistic, and actionable. In this article, you will learn how to do that by following these steps:

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Tomi Akinwale ACCA, ACA, ACTI, B.TECH, FMVA, AAT.

Tax | Deloitte | Financial Reporting & Modelling |
Hafiz M. A. Khan

Corporate Finance | FP&A | CFO | GBS | Unlock your 'A Game' with Finance Function Excellence | ACA, ACCA, MBA, Six…
Farid Ahmad Noori, CFE, CAT, CAMP

Audit Manager at Moore Afghanistan

1 Define your strategic goals

Before you start creating your rolling forecasts, you need to have a clear vision of what you want to achieve in the long term. Your strategic goals should be specific, measurable, attainable, relevant, and time-bound (SMART). They should also reflect your mission, vision, and values, as well as your competitive advantage and market position. You can use tools like SWOT analysis, balanced scorecard, or OKR to define your strategic goals and track your progress.

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Farid Ahmad Noori, CFE, CAT, CAMP

Audit Manager at Moore Afghanistan
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Aligning rolling forecasts with strategic goals requires a well-defined strategic framework, the identification of relevant KPIs, robust forecasting models, effective communication and collaboration, and a commitment to continuous improvement. By following these best practices, organizations can optimize their financial planning and ensure that their forecasts are aligned with their overall strategic objectives.

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2 Set up your forecasting process

Once you have your strategic goals, you need to design a forecasting process that supports them. This means choosing the right time horizon, frequency, level of detail, and data sources for your rolling forecasts. You also need to decide who will be involved in the forecasting process, what roles and responsibilities they will have, and how you will communicate and collaborate with them. You should document your forecasting process and establish clear guidelines and standards for quality and accuracy.

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Hafiz M. A. Khan

Corporate Finance | FP&A | CFO | GBS | Unlock your 'A Game' with Finance Function Excellence | ACA, ACCA, MBA, Six Sigma Black Belt
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The key purpose of the Rolling forecast is to enable business decision makers with updates in decision factors of market pulse. Having said it's critical the data gathering is real-time and without errors. The process must incumb upper and lower threshold of data for well articulated foresighted forecast.

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3 Align your forecasts with your goals

The next step is to align your forecasts with your strategic goals and ensure that they are not just numbers, but scenarios that reflect your assumptions, risks, and opportunities. You can use tools like driver-based forecasting, sensitivity analysis, or Monte Carlo simulation to link your forecasts to your key performance indicators (KPIs) and identify the factors that influence your outcomes. You should also create different scenarios for best case, worst case, and most likely case, and compare them with your strategic goals and benchmarks.

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Tomi Akinwale ACCA, ACA, ACTI, B.TECH, FMVA, AAT.

Tax | Deloitte | Financial Reporting & Modelling |
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You have to align and Incorporate drivers impacting strategic goals into your forecasting models. Analyze how changes in market trends, competitor actions, or internal initiatives affect key metrics aligned with your strategy.

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Alan Zimmerman

CEO at IdeaJuicer with Executive experience in Creativity, Finance, and Product Development.
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You really need to align the actions/external events with your goals. The forecast should just be the measurement device. Everywhere I worked, when there was a mismatch between goals and forecasts, the solution was to massage the assumptions to get the forecast to work. What is really needed is not a lot of MBA BS and buzzwords, but instead to be brutally honest in all parts of the process. No impossible goals, no sandbagging, and no fudging of assumptions. Unfortunately, honesty is not very highly regarded (vs. just tell me what I want to hear) in many companies. If you honestly say, "Given the parameters we have to work within, I can't get the numbers to work," then someone up the food chain will say, "Then I'll find someone who can."

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4 Review and update your forecasts

One of the benefits of rolling forecasts is that they are dynamic and flexible, allowing you to adapt to changing circumstances and update your plans accordingly. However, this also means that you need to review and update your forecasts regularly and consistently. You should monitor your actual performance against your forecasts and analyze the variances and deviations. You should also gather feedback from your stakeholders and incorporate new information and insights into your forecasts.

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5 Communicate and act on your forecasts

The final step is to communicate and act on your forecasts. You should share your forecasts with your senior management, board, investors, and other relevant parties, and explain how they align with your strategic goals and what actions you recommend or expect. You should also use your forecasts as a basis for decision making, budgeting, resource allocation, and risk management. You should align your incentives and rewards with your forecasts and goals, and celebrate your achievements and learn from your failures.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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What is the best way to align rolling forecasts with your strategic goals?

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1 Define your strategic goals

2 Set up your forecasting process

3 Align your forecasts with your goals

4 Review and update your forecasts

5 Communicate and act on your forecasts

6 Here’s what else to consider

Corporate Accounting

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