In order to meet the aims and objectives, the companies or organizations make detailed plans. There are many types of plans and financial plan is one of those. Financial planning, which seeks to maintain the economic balance at all levels of the company, is present in both the operational and strategic area. The operational structure is developed based on their involvement in the strategy.
The strategic area is formed by marketing and finance. Marketing is in charge of formulating the strategic alternatives of business, while the finance sector quantifies the strategies proposed by marketing. Instead, the operating division consists of sectors such as production, administration, logistics and business office. All these divisions are responsible for concrete policies and strategic plans.
Financial planning, therefore, is responsible to provide a basis consistent with the company’s business structure, through the implementation of cost accounting and design of financial statements. With financial planning, managers can quantify the proposals made by marketing and evaluate its costs.
In other words, financial planning sets the course you have to keep an organization achieve its strategic goals through harmonious action of all its members and functions. Its implementation is important both internally and to third parties who need to make decisions related to the company (such as granting loans, and the issuance or subscription of shares).To be sure, financial planning can not only make reference to certain financial projections that yields the financial statements and balance sheets of a given indicator, it also includes a series of activities taking place at various levels: strategic level, functional level and operational levels of a company.
HOW TO DEVELOP THE FINANCIAL PLANNING
In a process of planning actions that aim to improve or solve any problems that may be made through the company; this requires that the work of the various constituent parts meets. Financial planning is in charge of moving terms economic, the strategic plans and operations of the company, given a time and space that they will develop. Through this type of planning you can view the strategy of the enterprise based on three very critical issues: the investment (I know how to take accurately the resources that are available),equity or loans (having a full understanding of the capital structure it has) and the shareholders (to know what can be offered to those who wish to join the company, knowing what to expect in case of financial difficulties).
Within the financial planning process, there are several branches, each of which is responsible for developing a specific work. For example, the process of budget planning is responsible for addressing issues that have to do with the money you have and know how to choose where and when to invest properly in a long period of time. Meanwhile, the process of management of the cash flow is in charge of investing money in the very short term, purely operational and immediate sense.
The development of the financial program begins with a long-term planning which is trying to realize the objectives of the company, what it is to be achieved and the vision we have in the future.