Financial Planning

Financial planning is that function of financial management in which financial manager makes the plan to get fund at very low rate and to use it in profitable project. So that, company can survive in competition and develop itself.

Financial Planner as Tool of Financial Planning

According to Wikipedia, " Financial planner is very advance tool in this modern age for  making cash flow planning, education planning, retirement planning, investment planning, risk management and insurance planning, tax planning, estate planning and business succession planning under financial planning system. It also include Investment and Planning Issues like Planning, creating and managing capital accumulation to generate future capital and cash flows for reinvestment and spending. Performing Financial Planning is critical to the success of any organization. It provides the Business Plan with rigor, by confirming that the objectives set are achievable from a financial point of view. It also helps the CEO to set financial targets for the organization, and reward staff for meeting objectives within the budget set."

Steps of Financial Planning

1. Establishing financial objectives

For making good financial planning, we take the first step in which we make the list of our all financial objectives. These objective can be divided into long term financial objective and short term financial objective. In long term financial objective, company makes the plan to buy the fixed assets at his limited budget and in short run financial objective, company can maximize his profits.

2. Formulating financial policies

For achieving financial objectives, financial manager has to take second step in which he has to make financial policies. These policies are general guidelines for company employees about how will they achieve their objectives at minimum cost.

3. Formulating financial Procedures

Financial procedures are very helpful to shape the practical form of theoretical financial policies after knowing the nature of company and type of funds. Suppose to fix the procedure to get loan from xyz bank is the example of financial procedure.

4. Flexibility and adjustments

Financial plannings are different from general management plannings because financial area is always changeable and growing and financial manager should have to make financial objectives, policies and procedures more flexible and adjustable according to changing environment of financial sector.