How to Implement Quarterly Rolling Forecasting and Quarterly Rolling Planning – and get it right first time

Quarterly Rolling Forecasting (QRF) is the ‘hot topic’ at present as many accountants around the world are recognizing the flaws with annual planning and monthly re-forecasting. Re-forecasting the year-end position every month is flawed on a number of counts, it never looks further than year-end, each month the forecast changes creating number noise, the opportunity to set realistic reporting targets for the on-coming quarter is not utilized, the forecast model frequently is based in error prone Excel, and seldom do budget holders buy-in to the forecast as they were not involved in the forecasting process.

The good news is that, implementing Quarterly rolling forecasting is simple if you base it on solid foundation stones.

Quarterly rolling forecasting, typically going out 18 months at a time, can be a quick process.  Less than 5 working days if it follows the “fast, light touch “ philosophy developed from “winning finance” teams from around the world. This white paper will show you “how to implement quarterly rolling forecasting – and get it right first time”. In addition the white paper will show how QRF evolves into quarterly rolling planning(QRP), a process that will revolutionize any organization whether public or private sector!

It is being increasingly recognised that a planning tool is required for a forecasting and planning process.  The stalwart Excel has now been extended beyond its intended boundaries with management accountants building monsters that are beyond any quality assurance programme, littered with logic errors hidden in the formula and designed without the big picture view.

Many implementations of planning applications have failed to deliver with seven figure sums being wasted as the forecasting model is rebuilt within 18 months of the original. This “planning tool implementation” carnage is well documented.  Whilst there was an excuse before, “it was new territory”, now this is not the case. We must learn and apply the better practices that are becoming standards.

Why you need this whitepaper:

• To understand why QRF is the most important management tool of this decade and why the rolling forecasts of the past are a different beast to the 21st century QRF.
• To build a model based on better practice in a modern planning tool or change an existing model to succeed.
• Understand the foundation stones of quarterly rolling forecasting
• Understand how QRF evolves into QRP
• Apply the checklists and templates designed to help you to implement QRF
• Avoid the common implementation pitfalls
• To help sell change to your management.

Table of Contents:

1.       What is a quarterly rolling forecast (QRF) process?

1.1.    The process quarter by quarter for June year-end organisation

2.       The time is right for QRF and QRP

2.1.    Definitions

2.2.    Recent study findings

3.       The ten foundation stones of a rolling forecasting process

3.1.    Separation of targets from forecasts

3.2.    A bottom-up process performed quarterly

3.3.    Forecast past year-end (e.g., six quarters ahead)

3.4.    The monthly targets are set, a quarter ahead, from the QRF

3.5.    A quarter-by-quarter funding mechanism

3.6.    The annual plan becomes a by-product of the QRF

3.7.    Detail does not lead to a better prediction of the future

3.8.    The QRF should be based around the main events / key drivers

3.9.    A fast light touch (an elapsed week)

3.10.   Based on a planning application – not Excel

4.       The better practices in a QRF

4.1.    Recognise that it involves all Budget holders

4.2.    Accurate revenue forecasting

4.3.    Bolt down your strategy beforehand

4.4.    As much pre-work is done as possible by the forecasting team

4.5.    Hold a briefing workshop instead of issuing instructions

4.6.    Expand your forecasting help team

4.7.    Only need to forecast categories monthly for the first two quarters

4.8.    Establish a Forecasting committee

4.9.    Have one page summary for each budget holder

4.10.   Have trend graphs for every category forecasted

Exhibit 4.5  Quarterly updated forecast, one page.

4.11.   Accurate forecasting of personnel costs

4.12.   Provide automated calculator for travel and accommodation costs

4.13.   Beware of the dangers of scenario planning

4.14.   QRF roll-out 18 months not 12, 13 or 15 months

4.15.   Quarterly forecast process not monthly

4.16.   Complete the forecast for the next quarterly before it starts

5.       Some earlier “planning tool” forecasting case studies

5.1.    Case study #1:  A steel manufacturer

5.2.    Case study #2: A distributor

5.3.    Case study #3: A diverse multinational

6.       Making the planning tool sale to the SMT

6.1.    Benefits of a QRF

7.       Implementation issues

7.1.    Implementation road map when a planning tool has to be purchased

7.2.    Barriers to implementation

7.3.    Lessons learned from implementing rolling forecasts

7.4.    Hold a one day focus group workshop

7.5.    Selecting the planning tool

8.       Forecasting reporting templates

8.1.    Reporting to the SMT

8.2.    Reporting the QRF to the Board

8.3.    The redesigned month-end report

9.       Steps to complete for each quarterly rolling forecast

9.1.    The checklist

9.2.    The timings

10.     QRF immediate steps

11.     Writer’s biography

12.     Appendix one: How a QRF can be laid out in a planning tool.

13.     Appendix two: Prospective project team members checklist

14.     Appendix three: Implementing QRF checklist

15.     Appendix four: Performing a quarterly rolling forecast - checklist