The concept of the Financial Plan
The financial plan refers to the projection of future financial course of action to be carried for the efficient execution of operating plans and effective accomplishment of the corporate objective. The financial plan begins with the preparation of strategic plans that in turn guides the formulation of operating plans and budgets. The financial plan provides roadmap for guiding, coordinating and controlling a firm’s financial activities in order to achieve the objectives. Financial Planning is the process of estimating the capital required and determining its competition.
“The purpose of financial planning is ultimately to make life more enjoyable, now and in the future. With that in mind, the articles in this series are designed to assist your understanding of general concepts. It is the process of meeting your life goals through a systematic and disciplined arrangement of your personal finances.”
Therefore, a plan that spells out the future course of action, budgets and capital expenditures required for the execution of operating plans are known as the financial plan. It is the process of framing financial policies in relation to procurement, investment, and administration of funds of an enterprise.
Once a pattern of financing is selected then it becomes very difficult to modify it a financial plan also spells out the policies to be pursed for the floatation of various corporate securities, particularly regarding the time of their floatation.