There are some opportunities, which provides financial planning, gives grounds to consider it a starting point for effective economic and financial decisions. Financial planning helps to minimize the uncertainty of the market environment and its negative consequences for the enterprise. However, the requires appropriate organization of the process, i.e., streamlining of all administrative activities related to the formation and execution of financial tasks.
Financial management is a management of the process of development, distribution, redistribution and using of financial resources of the enterprise, which are implemented in the detailed financial plans. The main purpose of financial planning is to justify funding opportunities, which anticipate economic, technical and social projects and assess their effectiveness, taking into account their final financial result.
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This is the main tasks of financial planning:
• Determination of the volume, capital structure, which is used to create the company and its operations in the planning period;
• Justification of the optimum size and structure of costs of production and circulation;
• Predict the size and sources of receipts and payments;
• Support sustainable cash flows, the timing of their income with payments at certain times;
• Determination of the effectiveness of different spheres of economic and financial activities, ways to maximize profits;
• Permanent control over the execution of financial tasks and adjusting the current plans of changing economic conditions
It is necessary to streamline all administrative activities related to the formation and execution of financial tasks.
Financial planning is closely related to and builds on the marketing, production and other plans of the company, subject to the mission and overall business strategy. General rules of the organization involve primarily the definition of objectives of the actions planned, the mission of the enterprise, and then sequencing these actions, methods, tools, intended methods of analysis and evaluation of progress and corrective action.
It should be borne in mind that a small study period couldn’t identify common patterns. One shouldn’t plan on too long period, since any economic laws are unstable and may change over time. It should be used for strategic planning of the annual financial performance over the past 3-5 years and for this year – quarterly data for 1-2 years.
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