Financial planning allows to minimize the uncertainty of the market media and its negative fall-out for enterprise.
The main goal of the financial planning is the motivation of abilities of financing of economical, technical and social projects and the estimation of the efficiency with account of the final financial results.
The main tasks of financial planning are:
– definition of the volume, structure of the capital used in creation of the enterprise and of its functioning during the planning period;
– motivation of the optimal size and structure of expenses on production and on turn-round.;
– financial projections of the sources and sizes of moneys received and payments;
– motivation of rational flow of funds, synchronization of its receivement with payments in specific periods of time;
– definition of effectivity of different spheres, types of economical and financial activity, ways of maximization of profits;
– realization of continious control under fulfilment of financial tasks and correction of current plans in conditions changes in management.
Wide capabilities which are represented by financial planning allow to take effective economical and financial decisions. But this requires the correspondant organization of this process, in other words order of all managing actions connected with formation and fulfilment of financial tasks.
Financial planning is closely connected and based on marketing plan, business plan, production plan and other kinds of plans, it conforms to the mission and general business strategy of the company.
Financial planning is based on the following principles:
1. Priciple of correspondence.
Financing of current assets should be planned most at the expense of short-termed sources. At the same time long-termed sources should be attracted to carring out of modernization of basic means.
2. Principle of constant demand in own current assets.
The sum of current assets should be higher than the sum of short-termed acrued expenditures in the planning balance of the company. Distinct part of current assets should be financed from long-termed sources (long-termed credits and own capital). In this case the company has the lower risk to ocuur the deficit of current assets.
3. Principle of plethora of money.
In the process of planning you should have some margin of money in order to provide safe purchasing discipline in the case when somebody of the payers exceed a term of payment.
4. Principle of profitability of investments.
It’s necessary to chose well-priced ways of financing (financial leasing, investment credit).
5. Principle of equation of risks.
Especially risk long-termed investments advisably should be financed at the expense of own finance.
6. Principle of adaptation to market’s demands.
7. Principle of top profitability.
Illustrative business plan samples
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