Financial planning is that function offinancial 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.
We are introducing financial planning on the basis of IlexFS channel video. In this video, video maker assumes financial planning just like the planning of planting sweet fruit tree. When you buy the sweet fruit plant from market, you can not know all other works which are hidden and also without doing, you can not get sweet fruit. Same will happen on your business, you can start business but without financial planning, you can not know what are decisions, you have to take, what is capital structure, you have to make. There are many things in financial planning and video maker explained all these things wonderfully with simple example of plant and its planning up to its becoming of a true full of sweet fruit.
1st Thing - Water = Budget Surplus
Budget surplus is just like water, without this water plant can not grow. Its means, all financial cost must be under budget and budget surplus will be helpful to grow your business. It also means that company has to make budget first before doing anything in financial planning.
2nd Thing - Water Tank = Emergency Fund
3rd Thing : Your Own Home or Kitchen Garden = Security for Your Funds
4th Thing : Pesticides - Tax Saving Plans
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.
We are introducing financial planning on the basis of IlexFS channel video. In this video, video maker assumes financial planning just like the planning of planting sweet fruit tree. When you buy the sweet fruit plant from market, you can not know all other works which are hidden and also without doing, you can not get sweet fruit. Same will happen on your business, you can start business but without financial planning, you can not know what are decisions, you have to take, what is capital structure, you have to make. There are many things in financial planning and video maker explained all these things wonderfully with simple example of plant and its planning up to its becoming of a true full of sweet fruit.
Budget surplus is just like water, without this water plant can not grow. Its means, all financial cost must be under budget and budget surplus will be helpful to grow your business. It also means that company has to make budget first before doing anything in financial planning.
2nd Thing - Water Tank = Emergency Fund
When you create a kitchen garden, you buy the water tank for continue supply water to your plant. Same thing is for business, you need emergency fund to operate your business. How much should it? It will depend on your expenditure pattern and income security. Now, question will be asked by you, how can it be created. Try to solve it with the help of your retained earning.
3rd Thing : Your Own Home or Kitchen Garden = Security for Your Funds
Suppose, you go to playing ground and plant a tree. What will happen? Some one will break your plant before becoming it tree. So, for security of plant, you need your own home. Same thing in financial planning, you must think security of your own fund which you have to invest. Even, you are earning just 3.5% on your saving account in govt. bank, but your money is safe. This is important point in financial planning.
4th Thing : Pesticides - Tax Saving Plans
You see some worms are very harmful for your all sweet fruits will not produce due to this, so it is very necessary to use pesticides. Same thing, will happen in your financial structure. Financial structure will be in such a shape that you can give more tax saving plans to your customers and also get only tax saving plans.
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