Financial planning is the selection of goals based on the reality of their achievement with available financial resources depending on external conditions and the coordination of future financial flows, expressed in the preparation and control over the implementation of plans for the formation of income and expenses, taking into account the current financial state, goals expressed in monetary terms and means of achieving them.
In a market economy, financial planning of one's own activities can be carried out by an individual, family, organization, the entire state or their association, at enterprises it is an integral part of financial management. The balance sheet, profit and loss statement and cash flow statement are not forms of financial planning, since they reflect data from primary documents on the already completed activities of the enterprise.
The task of strategic financial planning is to create and maintain a balance between goals, financial capabilities and external conditions, for which financial activity is forecasted for a long period. In a planned economy, financial and economic planning of the activities of large economic entities is carried out by the state, which distributes financial resources between areas and industries in accordance with the long-term goals and objectives of the state.
Normative. The essence is to determine how many resources the company needs, as well as their sources, using pre-defined standards.
Balance. This method correlates the actual need for resources and their available amount in the organization.
Calculation and analytical. Using a certain indicator calculated or achieved by the company, as well as with known changes in this indicator in the planning period, it is possible to calculate the planned need for resources.
Method of optimization of planning decisions. Develops 2 or more different plans, from which the most suitable one for the organization is selected.
Factor method.
Economic and mathematical modeling.
Usually, generalized financial forecasting in a market economy takes into account:
investment and credit opportunities;
existing experience in financial and economic activities;
future incoming and outgoing financial flows known in advance with a high degree of probability, characteristic of certain tasks.
Imagine a ship setting out on a long journey. Without a map, a compass, and a clear route plan, even the most experienced captain risks getting lost, encountering unexpected difficulties, and ultimately failing to reach his destination. The same is true in business: strategic financial planning is the map and compass that help a company confidently move forward and achieve its ambitious goals.
Determining the direction of development: Financial planning is not just counting numbers. It is a process that allows a company to define its long-term goals (e.g. increasing market share, launching a new product, going international) and develop specific steps to achieve them. It answers the questions: "Where do we want to go?" and "How do we get there?"
Efficient allocation of resources: Any company has limited resources - be it money, time, or human capital. Strategic financial planning helps to allocate these resources as efficiently as possible, directing them where they will bring the greatest return. This avoids waste and allows you to focus on the most promising areas.
Risk and uncertainty management: The business environment is constantly changing, and unforeseen events can occur at any time. Financial planning helps to anticipate potential risks (e.g. changing market conditions, economic downturns, competitive pressures) and develop strategies to minimize or overcome them. This gives the company resilience and the ability to adapt to challenges.
Attracting investment and financing: Investors and lenders want to see a clear vision of the company's future and confidence in its financial stability. A well-developed financial plan is a convincing argument when attracting external financing, be it loans, investments or grants.
Improving operational efficiency: Financial planning is closely linked to operational activities. It helps to set budgets, control expenses, optimize pricing and improve the overall efficiency of business processes. This directly affects the company's profitability.
Making informed decisions: Having a clear financial plan allows management to make balanced and informed decisions. Instead of acting intuitively, managers can rely on data and forecasts, which reduces the likelihood of errors and increases the chances of success.
Motivation and engagement of the team: When employees understand the company's financial goals and see how their contribution affects the overall result, this increases their motivation and engagement. The financial plan becomes a kind of "road map" for the entire team.
In summary, strategic financial planning is not just a formality, but a vital tool for any company striving for sustainable growth and prosperity. It allows you not only to survive, but also to actively shape your future, turning ambitious goals into reality. Without it, even the most brilliant idea may remain unrealized, and the company's potential - untapped.
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