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Flying Blind Into Earnings? Rolling Forecasts Provide CFOs With Contagious Confidence

Who doesn't love Q2 earnings? Enough data on this year's performance to have a feel for trajectory and enough time to course correct….if you have the right instruments to empower action. Yes, this means ditching Excel for a cloud-based system that integrates operational drivers and financial performance data to analyze both leading and lagging indicators. This also means the Sales/Deal, Accounting, FP&A, and Investor Relations teams all have access to (and agree upon….) the same data, updated as close to real-time as possible.  

 

That "agree upon" bit relative to forecast data and methodology provokes a philosophical discussion about behavior and incentive. The traditional process of a 12 month forecast updated quarterly is one that promotes validation of targets rather than seeking truth in projections. Alternatively, a rolling forecast, in which the time horizon gets pushed out by the same number of weeks or months as the update, promotes and incentivizes accuracy above all else.   


CFOs rehearsing their earnings dialogue in the mirror over the past few weeks are focused on two things: 1) tracing the "why" behind reported numbers and 2) communicating data-driven rationale for any forecast re-direction. Both require an end-to-end workflow of financial information that leadership can trust. And in the quarterly season of investor scrutiny, confidence is contagious.  


https://www.cfodive.com/trendline/rolling-forecasts/56/



© Copyright 2022. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice. 

By no longer forecasting to the wall, as budgeting specialists call it, your decision-making can improve because your tactics aren’t influenced by an artificial time horizon

Tags

office of the cfo, finance, perspective, financial services

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