Financial planning is an important element of corporate planning process. Every manager, regardless of his functional interests, should be familiar with the mechanics and meaning of the formulation, implementation and monitoring of financial plans, at least so far as it concerns his work.
The role of the financier. The most important objectives are the following. The optimal contribution of the financial plans of corporate goals. This means that financial plans are consistent with the corporate plan. Assumptions on which projections are based, clearly articulated, identifies elements relevant changes in the future. They take into account sometimes the conflicting interests those who take profit (equity holders, internal and external pressure groups). The financial implications of the proposals under the terms of profits, costs, sales prices, traffic, etc., are analyzed and clarified.
Plan the cash flow should be done so that the company would be able to meet projected demands. If the periods of financial difficulties are expected in the future, the financier shall notify senior management on alternative courses of action, in particular on the reduction of the proposed projects to a level that correlated with the existing financial capacity, or an increase in the additional necessary funds.
Analysis and evaluation of any proposals, forecasting possible consequences of the proposals and their alternatives, the choice of the best options, providing recommendations made in a form understandable and financiers.
It is obvious that financial planning requires special skills.
Financial planning provides preliminary control, formation and use of material, labor and cash resources, creates conditions to strengthen the financial condition of the enterprise.
Financial planning is impossible without business planning
activities. But financial planning should not be considered as recalculation of the
performance indicators.
Stages of planning:
- the costs of sales of products are determined;
- value of sales proceeds is calculated;
- money savings are estimated;
- contributions to the budgets, the various extra funds are calculated.
The main problems solved by financial planning:
- Provision the main economic activity of the enterprise of financial resources and cash;
- Definition of profit and the possible factors of its increase;
- Definition of financial relationship with the budgets and banks;
- The balance between revenues and expenditures of the company;
- Monitoring of financial condition and solvency enterprise.
The basis of any financial plan is to balance income and expenditure of the
enterprise. Work on its development includes several stages:
- Evaluation of the performance of the balance of revenues and expenses in the period
pre-planned;
- Consideration of projected performance for through the implementation of marketing research concludes potential output in the planning period;
- Direction the development of the financial plan for the coming period.
Plan will cover the quarter with a monthly breakdown.
There are three types of financial plans:
- The balance of income and expenditure planning;
- Preliminary (on the expected period);
- Executive (final).
There are also so-called trial balance income and expenditure, which is a chess statement (chessboard).
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