Financial Planning is a method that depends on the use of future Planning to follow up the funds for individuals or enterprises, To ensure the face of future financial needs, and Financial Planning is known as a process that contributes to assistance to make appropriate decisions during dealing with money; This leads to achieving the goals for individuals or facilities. Other financial planning definitions are from financial management departments and are a means of identifying actions, policies, objectives, and financial budgets used to deal with money activities.
It is used to express the basic resource needs, such as materials, capital, and individuals. All contribute to a set of time-dependent goals and recognize the budget as a financial instrument contributing to expenditure estimates and expected income during a period, often in the future. One of the other definitions of the budget is a process used to calculate the number of funds obtained or saved over a certain period. The budget is based on planning to determine the method used to expend these funds.
Preparation of budgets:
Preparation of budgets properly contributes to the required results. The success of the practice of budgets depends on the application of a group of steps: Determination of available funding: The amount of monetary amount is likely to be used to finance the company’s operations, and it is essential to be available during the period associated with the preparation of the budget. Cost Points: The nature of the costs of working activities during the coming period includes determining the financial value of these costs and the type and level of activities to be borne. The establishment of the budget: is obtaining all the basic budget information for the previous year and then updated depending on the addition of all actual expenditures of the current year, with care to provide information on the nature of the expected funding during the next fiscal year. Obtaining expectations about revenue: are obtaining expected information on the company’s revenue ratio; By providing its sales manager, and then verify its reality through the Executive Director, distributed this information to the heads of administrative departments; To use as a basis to prepare the budgets of their partitions. Obtaining the budgets of the administrative departments: are access to all the financial information for the budgets of all partitions of the company. To study them to make sure they do not contain any errors, and then compare them with all other financial information statements. Review of the financial budget: is the meeting of all members of the management team; To review all financial budget items; To highlight the expected constraints, any restrictions appear as a result of the funding, and then the balancing is returned to the accountants’ team, who worked on its establishment; For appropriate adjustments. Download the budget: provides information on the financial programs; Which contributes to the financial budget depending on actual reports.
Types of Financial Planning:
Financial Planning is divided into a range of species and is classified in terms of the period for two types: Long-term financial Planning: is planning that helps to prepare economic policies with a long time, ranging from two years, and contributes to the company’s activity in determining time Which must be covered depending on the financial plan, often the long-term financial Planning is interested in the following matters: how to implement investment plans. New products research. Appropriate sources for money. Loan payment method. Ability to integrate with other companies. Short-term financial Planning: is planning that contributes to the preparation of financial statements involving the expected financial results, within a short period reaches around Sunday or less, and these financial statements are both income, and the balance sheet list, and the cash flow list and the Planning The short term financing is more accurate than long-term financial Planning; Because of the difficulty of determining the financial situation of many years; Any extended period compared to short-term financial planning duration.
Financial Planning Stages:
The success of the application of financial Planning in various companies depends on the implementation of a set of stages: identifying all primary and subsidiary objectives: is the first phase of financial Planning and contributes to the development of key and subsidiary financial objectives, which are interested in applying the best employment of capital; To contribute to enhancing the efficiency of productive factors, supporting resources available in the company. Preparation of fiscal policies: This is the second phase of financial Planning and is the leading guide for staff in financial management; It helps them make appropriate decisions. A group of matters necessary when preparing these policies, such as achieving the company’s interests and not appearing with other procedures for the various partitions of the company; It is critical to comply with public policies and objectives; Which contributes to its achievement and not postponed or impeded. Transfer of fiscal policies into detailed actions: This phase aims to enable budgetary policy effectively; By converting them to complex activities that help simplify administrative processes. Enhancing adequate flexibility for the implementation of financial procedures: the final phase of financial Planning depends on the role of management in providing appropriate adjustments or changes to short-term financial objectives and financial policies for the company; So consistent with changing circumstances affecting them.