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Cash flow forecasting tips: achieving successful rolling forecasts

Rolling forecasts are essential in achieving ‘as accurate as possible’ cash flow forecasts. No cashflow stream has an end date, they just keep rolling along. Rolling cash flow forecasts are a natural part of business. Successful rolling forecasts need to:

  • be part of the culture of the organisation this requires senior management support and all parties need to understand that it is not a measurement, but a management tool that does not follow accounting structures
  • use periods that fit the dynamics of the business flow, e.g. six months, three months, 18 months, see Statoil experience with using several different forecasting periods
  • be developed and maintained by staff who can ‘see the big picture’ and can model the cash flows
  • be based on dedicated tools for modelling and forecasting NOT Excel  
  • use processes that are quick and easy to ensure that the key people can participate and contribute in the generation of the cash flow forecast 
  • be timely so that changes to forecasts can be developed quickly, e.g. in a few minutes rather than in days/weeks
  • be aligned with your planning processes: strategic planning, where everything begins; business planning, where most FP&A people are working; and operation planning, which provides input to the business plan
  • bring together all key, relevant people across your group to ensure that the rolling forecast reflects the realities of the business.

See WEBchat Cashflow forecasting: new opportunities for significant improvement with Dean Sorenson which reviews different aspects of rolling forecasts.

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