Rolling Budgets

Rolling budgets are one approach to preparing budgets.

Rolling budgets

 A budget (usually annual) kept continuously up to date by adding another accounting period (e.g. month or quarter) when the earliest accounting period has expired.

Suitable if:

• accurate forecasts cannot be made. For example, in a fast moving environment.  
• or for any area of business that needs tight control.

Illustration - Rolling budgets

A typical rolling budget might be prepared as follows:

(1) A budget is prepared for the coming year (say January - December) broken down into suitable, say quarterly, control periods.

(2) At the end of the first control period (31 March) a comparison is made of that period's results against the budget. The conclusions drawn from this analysis are used to update the budgets for the remaining control periods and to add a budget for a further three months, so that the company once again has budgets available for the coming year (this time April - March).

(3) The planning process is repeated at the end of each three-month control period.

Advantages and disadvantages of rolling budgets

Rating :	Ratings & Comments  (Click the stars to rate the page)

Tags:	Rolling budgets;budgeting