What Is Financial Planning For A Business

What Is Financial Planning For A Business-73
In other words, no one is telling our reporters or editors what to write or to include any particular positive or negative information about these products or services in the article.

In other words, no one is telling our reporters or editors what to write or to include any particular positive or negative information about these products or services in the article.The article's content is entirely at the discretion of the reporter and editor.

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Financial planning is necessary for tapping appropriate sources at appropriate time as long term funds are generally contributed by shareholders and debenture holders, medium term by financial institutions and short term by commercial banks.

Financial plan suggests how the funds are to be allocated for various purposes by comparing various investment proposals.

(ii) Determination of sources of funds, i.e., the pattern of securities to be issued.

(iii) Determination of suitable policies for proper utilisation and administration of funds.

(a) The financial planning begins with determination of total capital requirement.

For this the finance managers do the sales forecast and if the future prospects appear to be bright and expect increase in sale, then firm needs to increase its production capacity which means more requirement of long term funds.Finance may be internally generated by the business or capital may have to be raised from external sources such as equity shares, preference shares, debentures, loans, etc.(c) Financial planning is broader in scope as it does not end by raising estimated finance. In financial planning finance manager analyses various investments plans and selects the most appropriate.Excess funding is as bad as inadequate or shortage of funds.If there is surplus money, financial planning must invest it in the best possible manner as keeping financial resources idle is a great loss for an organisation.The success or failure of production and distribution function of business depends upon the financial decisions as right decision ensures smooth flow of finance and smooth operation of production and distribution.Financial planning acts as basis for checking the financial activities by comparing the actual revenue with estimated revenue and actual cost with estimated cost. So financial planning is an integral part of the corporate planning of business.writes about products and services in this and other articles.These articles are editorially independent - that means editors and reporters research and write on these products free of any influence of any marketing or sales departments.Some of the important objectives and importance of financial planning for an organization are as follows: Financial planning means deciding in advance how much to spend, on what to spend according to the funds at your disposal.In the words of Gerestenbug financial planning includes: (i) Determination of amount of finance needed by an enterprise to carry out its operations smoothly.

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