Definition of financial planning

In order and consonance with the realization of those objectives that have been proposed, the organizations and companies draw up plans in which they detail the actions to be carried out to achieve these objectives. This very important process within a company is designated by the name of planning or planning.

While and within this general process we find a part of it that is designated with the concept of financial planning and that will be the one that will allow a projection of the results that the company wants to achieve, since it deals with studying the relationship between projections of sales, income, assets, investments Y financing, based on alternative production and marketing strategies, to later decide what will be the best way to satisfy financial requirements.

The work of financial planning takes into account all aspects and that is why it also studies the relationships between different variables such as sales, assets, financing, income, investments. Because precisely from this global analysis you will be able to develop the best planning option, even taking into account possible outcome scenarios. The financial situation that the company has at that moment and future prospects also come into consideration. And most importantly, you should always have an alternative to the possible failure of the plan, that is, a viable alternative that allows recovery or does not make the fall hard.

Obviously there are infinite methods and ways to face this procedure and the ideal will be the one that responds to all the aforementioned questions, that is, that is adjusted to the reality of the company.

Minimize risks, take advantage of the commercial opportunities that arise, and the economic resources Those that are available are the objectives of the financial planning process.
Not only the general operation of the company will be positively affected by the financial planning that is executed but also that this procedure will be key when it comes to keeping the company alive and in action in question.

Specialists in the field consider that there are three pillars of this process that concerns us: in principle, the provision of cash is vital, of liquidity, because beyond the profits that the company can demonstrate, without the corresponding cash backing, it will predispose it to failure.
The second element consists of the planning of the utilities that will allow to know the probable income.
Both elements, cash and profits, will provide essential information that investors usually want to know.

Each company has a base of its business that will characterize it, as far as financial planning, With his sharpness and analysis, he will take care of providing a structure to that base that accrues results successful. The objective of this will always be to obtain profitability.

Through a accounting analytical and design of financial statements, the financial planning in question will take care of providing a structure according to the type of business in question and then, thus, the managers of the same will be able to quantify the proposals prepared by the marketing area and evaluate their costs.

Something like defining the direction of the company is what financial planning will have to do in order to achieve the proposed objectives and always through a harmonious action between the human Resources that compose it and its functions.
Its observation is decisive and important both externally and internally, as regards the granting of credits or the issuance or subscription of shares, among other issues.

Basically financial planning will seek to maintain the Balance economic at all levels of the company, whether in the operational part as in the strategic part.

The operation is made up of marketing and finance and then, marketing will be in charge of formulating the strategic alternatives of the business in question, while finance, on the other hand, will quantify the strategies proposed by the marketing.

For its part, the operational area, made up of sectors such as production, administration, logistics and commercial office, will also be prepared to specify all those policies corresponding to the strategic plan.

However, financial planning not only acts to improve returns, but also makes use of it when it is necessary to solve specific problems of the company.