Your budget is not built for the current kind of shock!
In our previous article, we explored how oil volatility creates a secondary wave that moves through logistics, manufacturing, fertilisers, food, healthcare, and beyond, not just airlines. Though clutching your pearl and holding your breath are all sensible reactions. At the same time, we wait for the next “diplomatic breakthrough”, let’s steer our focus to a more important matter: building financial resilience.
The current “polycrisis” (a term economists use to describe a web of interconnected global emergencies) is not only a price story that can be solved with once-a-year planning.
Editor’s note: This article is the third of a four-part series in which we do not attempt to make geo- or even political comments about current events but rather focus on how they impact global businesses financially. To not miss out on real-life solutions and tactical tips on mitigating obnoxious decisions, subscribe to our newsletter today!
What this series will cover:
- Ensuring financial resilience without cutting unnecessary costs
- Master “what-if” scenarios and real-time visibility with Cloud EPM
Managing cash flow amidst a sea of volatility
Cash flow is the lifeblood of any organisation, but in an unpredictable economic crisis, it becomes notoriously difficult to pin down.
To manage cash flow in this environment, businesses must prioritise liquidity visibility. This means:
- Daily cash positioning: Moving from weekly to daily monitoring of bank balances and pending payables.
- Tightening AR/AP cycles: Incentivising early payments from customers while negotiating extended terms with key suppliers to create a “cash buffer.”
- Stress-testing working capital: Asking, “What happens to our cash position if freight costs rise another 20% while a key customer defaults?”
Reflection time:Poor Cash Flow, Overdue Payments Thwart Your Accounts Receivable Processes?
Annual budgets don’t fail because they’re “wrong.” They fail because they’re frozen
Financial resilience is the structural ability of an organisation to absorb shocks, adapt to real-time data, and pivot strategy without collapsing. To achieve this, organisations must move away from static, annual budget planning and embrace a dynamic ecosystem of continuous forecasting and cloud-based scenario modelling.
Typically drafted in October using a set of assumptions and finalised in December for a full period ahead (often a fiscal year), an annual budget is “dead on arrival” by February because the underlying market assumptions have already changed.
Fixed budgeting (or incremental budgeting) relies heavily on historical data. It assumes the future will look roughly like a 5% adjustment of the past. However, in a crisis, history is a poor teacher. Fixed budgets create a “use it or lose it” mentality among managers, leading to wasteful year-end spending and a lack of agility when new opportunities arise mid-year. Or in 2026, threats occurred mid Q1.
The process is mostly tolerable when the economy is stable with little to no drama. However, given that freight and insurance costs are repriced weekly or even daily and supply lanes are disrupted, leaving numbers unchanged for days on end is dangerous. It can severely impact decisions.
When the disruption involves multiple moving parts (fuel, freight, insurance, lead time), leaders need a method built for adaptation, not just control.
Stop budgeting for 2024 in a 2026 reality!
When ‘High-for-Longer’ is the base case, your annual plan is already obsolete. Step behind the scenes of our Agile Budgeting Masterclass to see how to build a plan that doesn’t break at $110 Brent.
Access the Resilience Blueprint →
The shift to rolling forecasts
A rolling forecast is designed to be updated regularly (e.g., monthly or quarterly) and to maintain a constant forward-looking horizon. It is a dynamic approach that adapts to changing results and helps decision-makers act in turbulent conditions.
If fixed forecasting is a “countdown” to the end of the year, rolling forecasting is an “open-ended” journey that keeps the business ahead of the curve by providing:
- Relevance: Constantly adding a new month to reflect current market conditions, the forecast remains a living document.
- Strategic alignment: It allows leadership to re-allocate capital every month or quarter toward high-growth areas rather than being locked into a plan made 12 months ago.
- Reduced “budgeting fatigue”: While it requires more frequent check-ins, it eliminates the gruelling three-month annual budgeting marathon, turning planning into a lighter, more streamlined activity.
It is easier said than done. How can businesses seamlessly transition from the traditional method to rolling forecasts? But before that, is a rolling forecast suitable for YOUR specific company? Check out TRG’s other resources on this topic:
Of course, you need a real-life forecasting example from an industry that experiences the most frequent changes. Read how the Insurance sector copes with this article.
But how do businesses measure the success of their resilience efforts?
As a leader trying to navigate murky waters, and as you are adopting new tactics, you should also move beyond traditional variances (budget vs actual) and look at agility metrics:
| Metric | Definition of Success |
| Forecast Accuracy Trend | Does the variance between the rolling forecast and actuals decrease over time? |
| Decision Cycle Time | How many days does it take to re-allocate capital after a major market shift (e.g., a 10% spike in oil)? |
| Scenario Breadth | Is the team modelling 3+ distinct “What-If” scenarios per month, or just one “likely” case? |
| Opex Flexibility | What percentage of the budget is “variable” or can be paused within 30 days without breaking the business? |
You’re still with us? Wow, mad kudos to you! We will share a downloadable checklist for adopting rolling forecasts, along with the recommended update frequency. You’ll want to bookmark this article as well as this checklist.
Download our rolling forecasts checklist now →
Scenario planning while awaiting a “diplomatic breakthrough”
Leadership teams often fall into “waiting mode,” assuming diplomacy will normalise things. But insurance pricing and route behaviour can lag de-escalation.
Scenario planning prevents “single-point hope” by creating multiple plausible futures with pre-approved decisions. EPM in crisis emphasises the advantage of what-if modelling, real-time monitoring, and faster forecasting cycles.
How many days does it take your team to re-forecast after a major market shift?
[ ] 1 Day (You’re a Resilience Pro)
[ ] 1 Week (You’re at Risk)
[ ] 1 Month+ (You need a Decision Engine)
See how Cloud EPM closes the gap→
The role of Cloud EPM (Enterprise Performance Management)
Modern Cloud EPM solutions, such as Infor EPM, allow finance teams to move beyond simple spreadsheets (which are prone to “version control” chaos and human error). Cloud EPM integrates data from ERP, HR, Sales, and other business-critical systems to provide a “single source of truth”.
Mastering “What-If” scenario modelling
Financial resilience is built on the ability to play out various “What-If” scenarios. Instead of hoping for the best, EPM allows you to plan for:
- Scenario A (the diplomatic breakthrough): Trade barriers are lowered, and freight costs normalise. How quickly can we scale production?
- Scenario B (stagflation): High inflation continues, but growth slows. Where can we cut non-essential overhead without damaging core operations?
- Scenario C (supply chain severance): A major supplier is cut off due to conflict. What is the financial impact of switching to a secondary, more expensive supplier?
Additionally, leveraging cloud-based platforms can enable these models to be updated in minutes rather than days. When a news alert hits about a new tariff or a change in oil production, a resilient finance team can immediately run the numbers to see how it affects their 12-month outlook. They are no longer waiting for the crisis to pass; they are managing through it.
Important techie term made simple:From Data Overload to Pivotal Action: How OLAP Powers Smarter Decisions Across Industries
Make scenarios actionable: Add “decision gates”
Each scenario needs defined “gates”:
- Gate A: Insurance premiums normalise below threshold for X weeks → Begin releasing buffers, unwind emergency cash posture.
- Gate B: Carriers resume routes + lead-time volatility stabilises → Reduce expedites, renegotiate spot-heavy contracts.
This transforms scenario planning into a governed decision system, not a speculative exercise.
Nobody can predict with 100% confidence when the crisis will end, and ships continue to sail freely through the Strait of Hormuz. However, the world is set to “hard mode” and is becoming increasingly volatile. The financial system of your company needs to adapt at the same speed.
Financial resilience is a combination of the right mindset, the right processes, and the right technology. Businesses and leaders need to accept that there is no “business as usual” (since the global health pandemic). Uncertainty is now the permanent state.
The businesses that thrive in the next decade won’t be those that predicted the crisis perfectly, but those that were agile enough to respond to it in real time.
Stop being a ‘Gatekeeper’ of data and start being a ‘Maker’ of strategy. Give your team the tools to build their own reporting pathways today!
