What are the relative costs and benefits in moving to rolling forecasts from annual budgets?

There are many benefits of rolling forecasts. Conditions of modern business are rapidly changing, and businesses need to be flexible whenever possible. Rolling forecasts allow businesses to keep up with these volatile market conditions. Also, moving from annual budgets will save lots of resources and time. There will no longer be a need for the often intensive annual budgeting process. Rolling forecasts simply continue to move forward, with only the most up to date predictions being thoroughly reviewed. Rolling forecasts also provide a more accurate handle on future cash flows, which is critical in the current economy.

There are two problems that can occur with the rolling forecasts. The first is failure to update them. Rolling forecasts are only effective when they are being updated monthly. The second is failure to let go of the traditional budgeting process. As long as a business continues to have an annual budget in addition to rolling forecasts, they will not be able to fully take advantage of the forecasts.