Budgeting and Forecasting
How To Build a Rolling Forecast in 6 Steps
The six tactical steps—and downloadable template—you need to build a rolling forecast that keeps your budget agile all year.
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The annual planning process is more than an exercise in managing expectations for the coming year. Annual planning is all about opportunity. For finance teams, the process is a chance to try new strategies and create advantages to surpass competitors.
But for annual planning to deliver on that potential, it’s important to approach the process strategically and thoughtfully.
When developing an annual plan, balancing priorities from the executive team and various departments can be challenging while ensuring goals strike the right mix of aspirational and attainable.
As annual planning season rolls around, we’ve compiled insights from five finance leaders to make your annual budgeting and planning process as smooth and effective as possible:
Melissa Howatson, Chief Financial Officer at Vena
Devendra Kalwani, Associate VP of Finance at Capstone Infrastructure
John Power, Chief Operating Officer at Fluence Technologies
Igor Stelea, Director of Strategic Finance, Analytics & Business Transformation at CFGI
Janelle Gorman, CFO of York IE
First, let’s lay out what the annual planning process typically involves, and how you can ensure you’re integrating it with the broader business.
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“At the end of the day, the financial plan is really about how you plan to operate your business.”
Melissa Howatson, CFO, Vena
The annual planning process is focused on translating data into a business strategy for the coming year and formalizing the upcoming year’s budget.
This process involves analyzing historical data, reviewing organizational and team-level goals, and gathering feedback from stakeholders or company leadership. Crucially, it’s the development of a strategic plan, rather than simply setting financial targets or goals. Without that strategic focus, the annual budgeting process can default to reproducing the previous year’s plan.
Additionally, annual planning is a multi-departmental process requiring coordination from stakeholders company-wide. It’s in FP&A teams’ best interest to initiate this collaboration early in the process.
“What I've seen is as part of the annual planning, you get going on what's considered the financial work streams, and sometimes it's looked at as if the strategic planning sits outside of that,” Melissa Howatson said during a recent episode of The CFO Show, in conversation with Igor Stelea, Director of Strategic Finance, Analytics & Business Transformation at CFGI.
“I really think you've got to be running these work streams to come together. Because at the end of the day, the financial plan is really about how you plan to operate your business.”
FP&A teams drive successful annual planning by positioning themselves as strategic orchestrators rather than financial gatekeepers.
Here's how the best finance leaders approach it:
First, they reframe the conversation. "I always try to set the stage right from the get-go: This is an annual operating plan, not a finance budget," Melissa says. "Because the notion at the end of the day, when people think 'well, those are finance numbers.' I'm like, 'there is no such thing as finance's numbers.' This is our budget, our operating plan, and it needs to be collective."
This mindset shift transforms finance teams from number-crunchers into strategic partners who provide guiding direction for the organization's future.
Next, they take on three critical responsibilities:
Data integration: Bringing together financial and operational data from across the organization
Scenario modeling: Testing different assumptions and outcomes to inform decision-making
Stakeholder alignment: Ensuring each department's goals support the broader strategic direction
Finally, they connect short-term plans to long-term vision. Since annual plans are, by definition, strategic blueprints for a single year, FP&A teams ensure these plans integrate seamlessly into the organization's multi-year trajectory. This forward-thinking approach makes finance teams increasingly vital to long-term organizational success.
While annual planning requires collaboration across the entire business, the finance team plays the most critical role in shepherding the process from start to finish.
We’ve put together a checklist to help you answer some key questions and guide the overall budgeting and planning process.
Using this framework, you’ll figure out what needs to be identified, the methods you’ll use to budget with various contributors, the approach you’ll take to compile the plan, who needs to be involved, and finally, what milestones or goals need to be reached, and when.
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Annual Planning Checklist |
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1. Plan the Plan |
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2. Select a Methodology |
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3. Execute and Align |
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4. Stick to a Timeline |
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Begin by making an honest assessment of your strategic goals from the previous year.
“The first thing you would do is be brutally honest with a review of the current plan and performance,” says Igor.
Then, he continues, the next item on the docket is “integrating your strategic goals into the planning cycle”. It’s likely that those goals, and the metrics by which their success is judged, have changed since the prior year.
From there, consider the link between the annual budget for each department and the broader strategic plan. Think about how each dollar being spent within a given budget is supporting or serving the organization’s larger goals.
“You need to have a high-level plan and strategy for your leadership, and the entire company, to get behind,” says Janelle Gorman, CFO of York IE, on an episode of The CFO Show. For instance, if Janelle tasks her finance team with growing annual recurring revenue (ARR) to $3 million for the year, “that’s going to mean something for a lot of different folks.”
“Your product team needs to know what that means for them for product development, the marketing team needs to know what it means for them, your sales team, and so on,” Janelle says. “So, aligning around those high-level strategic goals will allow everyone to focus on what they need to do on a detailed basis that will help the company get to its high-level outcome.”
Accordingly, defining some objectives and key results, or OKRs, to bridge those strategic and financial priorities ensures that departments are all rowing in the same direction. Those could include objectives such as reducing non-strategic spending or growing certain revenue streams.
The right methodology can make or break your annual plan. Your approach should align with your company's maturity, resources, and strategic needs—what works for a Fortune 500 company won't necessarily work for a Series A startup.
In this phase, you'll evaluate three core methodologies for your budget creation: bottom-up (building from departmental details), top-down (cascading from executive goals), and hybrid approaches that blend both. You'll also discover when to implement driver-based models that focus your planning around the key levers that truly move your business.
Consider your organization's size, age, and scope to determine which methodology fits best. For instance, if you're an early-stage startup, you can't rely on historical data to predict the future—you'll need a different approach than established companies with years of performance data to analyze.
“It depends on the stage and where your company is at when it comes to picking which approach is going to work best for you,” Melissa shares during Vena’s livestream, “Budget Season: How To Focus Your Planning on the Year Ahead.”
“What makes sense with where we are, what we did last year, and where we need to go?” Melissa asks.
Bottom-up planning starts with individual departments building detailed budgets based on their specific needs and operational realities. Department heads analyze their drivers, forecast quarterly performance, and submit comprehensive budget requests that roll up into the company-wide plan.
This approach works well for startups and early-stage companies because it:
Leverages frontline knowledge of what's actually happening in the business
Ensures budgets reflect operational realities rather than executive assumptions
Creates department-level buy-in since teams build their own plans
When using bottom-up planning, work with department heads to dive deep into their drivers and ask:
What did we learn in the last quarter?
What does it mean in terms of budget updates?
How can we use these insights to refine our budget projections further?
Top-down planning begins with executive leadership setting overall financial targets and strategic priorities, which are then cascaded down to individual departments. Each department receives spending limits and revenue targets that align with the broader corporate strategy.
This approach benefits mature companies because it:
Ensures all departmental plans support overarching business objectives
Provides clear guardrails and prevents budget creep
Speeds up the planning process by establishing constraints upfront
Bottom-up builds the plan from operational details, while top-down builds it from strategic objectives. Your company's stage, data availability, and leadership structure should guide which approach fits best.
A hybrid approach to annual planning could also prove fruitful. The hybrid approach incorporates elements of both a bottom-up and top-down approach, and can help pinpoint areas for adjustment—whether it's cutting costs or finding investment opportunities.
In practice, it starts with defining leadership’s goals, then shifting to a bottom-up approach to align with traditional methods, and identifying differences or hiccups as you go. That helps with figuring out where and when to make adjustments.
For instance, Melissa, on Vena’s livestream, says that she likes to use a hybrid approach when the broader goals are defined, and the thinking shifts to aligning those goals to specific business drivers.
“The business wants to have an idea of what the stakes in the ground are going to look like,” Melissa says. “From there, I like to look at a hybrid approach, which is, ‘we know where we want to go and what that looks like, now, bottom-up, let’s build this up and understand from the business what that builds up to.’”
In other words, she likes to use a top-down approach to establish guideposts, and then a bottom-up approach to figure out, on a granular level, how to hit goals.
But keep the bigger picture in mind, too, says John Power from Fluence Technologies on Vena’s livestream.
“You don’t plan how many training sessions you’re going to send people on, or how much you’re going to spend on Op-Ex.” Instead, John says to focus on “the big-ticket items that really drive the plan and move the needle on revenue or costs.” This helps determine which OKRs bridge larger strategic and financial priorities.
John, as a COO, also sees himself as “a bridge between the top-down process and bottom-up process.” He adds that in his role, he embodies, in some ways, the hybrid approach. Some companies need to make assumptions or estimates about what they can achieve, and when the actual production data comes through and reality sets in, targets may change accordingly. John says that in those cases, a hybrid approach and mindset are useful.
“I see my role as being that bridge and arbiter that sits at the table and helps set the targets, but then I’ve got to go out and figure out the detailed stuff, and work with the teams to roll up those numbers.”
“[A] hybrid approach is, ‘we know where we want to go and what that looks like, now, bottom-up, let’s understand from the business what that builds up to.”
Melissa Howatson, CFO, Vena
John also says that successful companies often adopt a driver-based model for annual budget planning. A driver-based model identifies key factors—or drivers—that have an outsized impact on a business’s performance. The model then seeks to quantify those drivers and builds a plan based on what will impact or influence those key levers of the business.
Drivers, OKRs or other metrics by which you’re measuring business activity can also be roped into the modeling, budgeting and planning processes. In fact, some finance teams may want to base their FP&A planning around certain drivers as a way to align different teams across an organization.
For instance, John says that the successful companies he has observed usually use driver-based models to align their sales and production teams, and can even use sales numbers to inform customer support or automation efforts.
Finally, putting it all into action requires some extended planning and cross-functional alignment.
That means there’s a larger, longer-term plan in place for the business’s trajectory, and all business units, teams, or departments are aligned in their individual goals that help the organization achieve those longer-term goals.
“Working in silos definitely makes budgeting a much harder process,” says Devendra Kalwani from Capstone on the livestream. “All companies have strategic goals, and if you can align your strategic goals with your department heads and their goals, and have your budget as a measurable target, that would go a long way to solving collaboration and coordination challenges.”
Having the right technology in place can go a long way to provide the seamless collaboration your organization needs.
That can include communication and collaboration tools, such as Microsoft Teams, Zoom, and Slack. What’s more, your team will inevitably have multiple spreadsheets, enablement documents, data systems and data access governance to consider. It goes without saying: It’s a lot.
For that reason, it’s a good idea to consider a broad, holistic software or FP&A platform that integrates many of those tools within it, like Vena. Vena is also an Excel-native platform, which allows finance teams to leverage their existing skillsets and reduces the learning curve for teams outside of finance, since many will have at least some experience working with Excel.
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“All companies have strategic goals, and if you can align your strategic goals with your department heads and their goals, and have your budget as a measurable target, that would go a long way to solving collaboration and coordination challenges.”
Devendra Kalwani, Associate VP of Finance, Capstone
Start pre-planning well before the end of the year. The middle of the third quarter is “an ideal time to start budgeting when you need to collaborate with different departments,” says Melissa.
To help guide the initial pre-planning phase, consider how next year’s budget and annual plan ultimately feed into the company’s extended vision. That can mean evaluating final goals, product roadmap and go-to-market motions.
Then, Igor says, think about how all of those variables may end up shaping next year’s specific goals, how they can be achieved and which business units are best suited to them. Considering those variables “can be a critical component of strategic planning,” emphasizes Igor. “You have growth goals that can be achieved through different avenues,” which include new product creation, product growth, volume changes or other OKRs.
Finally, make sure your department heads are all on the same page. Hold planning sessions regularly, and get feedback and input from every facet of the organization.
This way, by the start of the new year, management is aligned because they have already weighed in, and the board is aligned because they’ve received a sneak peek—everyone’s informed and invested. “It can be a powerful intrinsic motivation that you’re a part of something, or working toward the greater good,” says Devendra.
To get the ball rolling, there are several key considerations to keep in mind to ensure the annual planning process runs smoothly. It all starts with making sure your departments are aligned and working together.
Align departmental goals with strategic, company-wide ones and use the budget as a measurable target. But again, make sure those goals or drivers are clear.
For example, if a strategic goal is to increase sales by 5% in the Americas, ensure that the regional head for the Americas and the Sales head share the same goal. This alignment is crucial for ensuring that the budget is not just a financial document, but a strategic roadmap.
Then, delineate strategic goals into micro goals for employees across the organization to encourage accountability at every level. Collaboration and effective business partnering from your FP&A team is key here, as you’ll be the conduit for different parts of the business to respond to changes happening in other teams.
That rolls into another important factor in creating departmental buy-in: Planning with and for specific departments. This can involve conducting budget walkthroughs with budget owners for each department, particularly early in the process, to prevent last-minute revisions and instill a sense of accountability. It may also involve building department-specific templates or other productivity-enhancing workflows to help streamline operations.
For example, build smart budgeting templates that take away mundane tasks. Devendra says his teams use foolproof templates that consolidate data from previous years and invite budget owners to add data and commentary to specific segments.
In an FP&A platform like Vena, you can standardize templates, reports and budgets to make it easy for budget owners to provide input and feedback exactly where it’s needed.
Devendra says that his company, prior to using standardized templates, was spending roughly 10 business days to get through its monthly close process. But after adopting them, cut that in half.
Taking things even further, there are more advanced techniques that can help create an even greater advantage over competitors when creating an annual plan.
Identify factors outside of your control (such as changes in interest rates or exchange rates) and model multiple scenarios. “Be ready and able to update your inputs quickly and on the fly,” says Igor. “Scenario planning, what-if scenarios, become key—even past your annual operating plan.”
You can link the various scenario outputs to your resource plans or budgets to establish contingency plans. This helps adapt annual plans to longer-term planning and makes them more dynamic.
Your budget is the financial articulation of all your operational plans. If you lay the groundwork properly and thoughtfully, your budget builds itself. Ultimately, it’s not about altering the budget; it’s about altering the operations of your business to drive a different outcome.
Rolling forecasts are a great way to make the budgeting and forecasting process more dynamic. They allow an organization to be more agile and lean into the decision-making process, rather than being frozen by it, offering a degree of competitive advantage. By having the right data at your fingertips, decisions can be made with confidence and clarity, rather than concern.
So, while you can start with a larger annual planning strategy, which either informs or is informed by your budgeting and forecasting approaches, rolling forecasts help you incorporate new data and measure along the way to make sure your team isn’t caught unprepared—unlike some of your competitors.
The technology you use to build your annual plan plays a massive role in whether you can deliver on all the strategies we’ve just covered.
Budgeting technology that provides you with unified templates and a centralized data repository does a great deal of the pre-work for you when budget season rolls around. With Vena’s AI Planning Agent, you can speed up the planning process even further with driver-based planning, predictive forecasting and intelligent scenario modeling generated instantly. In closed beta, the Planning Agent has already cut budgeting cycles by over 60% for private preview customers.
Improve your operating expense planning with our free Rolling Forecast Template.
Download NowSam Becker is a writer and journalist focusing on business and finance, based near New York City. He is a native of the Pacific Northwest, and a graduate of Washington State University, and has written for CNBC, Fast Company, BBC, Fortune, and others. He also works with numerous brands in the financial space to sharpen their editorial reach, including Stash, Acorns, Goldman Sachs, SoFi, Vena, and more.
