Financial Planning

Planning refers to pre-determination of what is to be done in future. A financial manager has to formulate plan regarding future financial requirement, its procurement and utilization. The process of estimating the funds requirement of a business and determining the sources of funds is called Financial Planning. It is the process of determining in advance the objectives, policies, procedures, programmes and budgets to deal with the financial activities of an organisation. The proper financial planning is necessary to enable the business enterprise to have right amount of capital to continue its operations efficiently. Financial planning involves taking certain important decisions so that funds are continuously available to the company and are used efficiently. These decisions highlight the scope of financial planning. Financial planning is evaluating the investing and financing options available to a business. Planning includes attempting to make optimal decisions, projecting the consequences of these decisions for the business in the form of a financial plan, and then comparing future performance against that plan