Viktor Ostrovka
National University of Food Technologies
Current processes and the main stages of financial planning
Significant reduction of solvency, sales volume and profitability of
businesses leads to the need to improve organizational forms of business
management, ensuring optimal development and effective use of all types of
resources, finding ways to strengthen the stability of businesses structures.
Namely financial planning is an effective process for business management.
However, we note that today there appears a problem for businesses of
improvement of financial planning system, due to the need for ensuring high
flexibility, mobility and control of its implementation under the conditions of
rapid changes in the external environment and increasing volumes of financial
risks [1, p. 3].
Under uncertain economic conditions the efficiency of domestic enterprises
is largely dependent on the intercompany planning status. The higher the level
of uncertainty resulting from instability in society, the more important
becomes planning.
Planning as an important business management function is an objectively
necessary process of setting activity goals for a certain period and the means
of achieving the desired goal. Namely planning unites business units through
general corporate objective. This allows to use available resources most fully
and effectively, to solve a variety of management tasks professionally [2, p.
23].
Financial planning system is designed to facilitate the establishment of
such a production structure of the company and such proportions of its economy,
which would provide the most complete satisfaction of its needs at the least
cost of material, labor and financial resources per unit of output. So we can
say that financial planning is the process of developing a system of financial
plans and planned (normative) indexes for providing company development with
necessary financial resources and improving the effectiveness of its financial
performance in the future [3, p. 408-409].
The main objectives
of financial planning in the company are:
- providing
production and investment activity with necessary financial resources;
- determining the funds volume that the company may have at its disposal,
their receipt sources and sufficient means to carry out set tasks;
-
identifying and mobilizing of reserves of increasing profits;
- control over formation and use of payment instruments;
- providing real balance of planned expenses and revenues of the company on
the principles of self-sufficiency and self-financing [4, p. 359-360].
Regarding the types of financial planning in the company, we can
distinguish three main types:
-
perspective financial planning;
- current
financial planning;
-
operational financial planning (budgeting).
Each of these types involves certain forms of financial plans, their contents
and clear period boundaries for which these plans are developed [3, p. 408].
All types of financial planning are interrelated and are carried out in
certain sequence.
Stage 1 - forecasting financial activity that defines the objectives of
current planning. Under financial strategy of the enterprise the formation of a
system of long-term goals of financial activity and selection of the most
effective ways of achieving them must be understood. This is a masterplan of
actions for providing the enterprise with funds.
Stage 2 - current planning of financial activity that consists of
developing a system of financial plans from certain aspects of financial
activity of the company for the coming year, broken down by quarters. This
planning will help to determine all sources of funding for the future period,
to form a system of income and expenses, to ensure permanent company’s
solvency, to determine the structure of its assets at the end of the planning period.
Stage 3 - operational planning of financial activity. It consists
ofdeveloping the budgets system – short-termed operational financial plans (up
to one year), reflecting the receipt and expenditure of funds from certain
aspects of financial activity, certain business operations, investment
projects.
Thus, financial planning covers the whole group of actions both of
formation of planned tasks and of their implementation.
References
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