Objectives and methods of financial planning and forecasting
The modern system of financial management company based on forecasting and planning of financial flows that mediate both production and business activities, providing control over the creation and use of material, labor, financial resources. In domestic management practices mentioned financial forecasting and planning unnecessarily humiliated. A significant number of companies are using this method to enhance the functioning of the company. To some extent, this attitude to financial planning caused a high degree of uncertainty in the market environment. The changes taking place in all spheres of public life, difficult to predict and predict their consequences. No stable and well-defined regulatory framework of entrepreneurial activity, there is no full market infrastructure.
In a crisis payment of high interest rates on the credit market, most companies do not have significant amounts of financial resources for the implementation of major investment projects that would require planning system implementation.
However, due to financial planning company can anticipate and manage the solvency, liquidity balance control, and choose justify increasing sources of funds and on this basis to strengthen its competitive position.
With financial planning company can effectively carry out the following tasks:
1) designed to realize strategic objectives in the form of specific financial indicators;
2) ensure the reproductive process necessary sources of financing;
3) identify internal reserves to increase revenues and ways to mobilize;
4) align performance production plan with the available financial resources necessary for its implementation;
5) to justify the most profitable areas and projects of investment funds;
6) take care of the interests of investors and shareholders in the distribution of profits;
7) justify the financial relationship with the budget, banks and other entities;
8) monitor the financial condition and solvency of the company.
On the content of financial planning covers cash management, accounts receivable and accounts payable, credit resources, dividend policy, investment activities, emission activities, management of assets and capital structure.
Financial planning includes:
• Financial forecasting;
• current financial planning;
• Early financial planning.
Financial forecasting - the research and development of possible ways of development finance companies, alternative implementing financial strategies that ensure a stable financial position of the company in the future.
The current financial planning - the process of determining future income of the enterprise, directions spending money and study measures to ensure the solvency, profitability and financial stability. Thus, the current planning - a component of long-term plan, which it specifies and implements performance.
Budgeting - a planning process of the company, its business units by developing a system of interconnected budgets and installation of all types of financial costs, the sources of their coverage and the expected results. Budgeting belongs to the current planning, but you can make budgets and for longer periods of time than one year.
Operational financial planning can be considered as time synchronization of receipts and expenses sequencing implementation of all calculations and design measures to prevent deviations from the schedule of receipts and payments.
If financial forecasting identifies major proportions and rates of expanded reproduction, considering possible alternatives to develop a financial strategy that provides a stable financial position of the company in the future, the current planning carried out in shorter terms and marked specificity problems and ways of their implementation.
Thus, financial planning purposes is subject development strategy. The first stage provides for detailed analysis and evaluation of both internal and external sources of information that may affect the financial performance of the company.
By inside information underlying the development of financial plans include:
• production program of the company;
• Calculations needs industrial inventory, workforce and estimates the associated costs;
• Plan sales;
• calculations of payments to the budget and extrabudgetary funds;
• Plan technical development and investments;
• Plan social enterprise development and so on.
The external information include:
• information on changes in the monetary, tax and fiscal policy;
• forecast market conditions;
• State of the insurance and foreign exchange markets;
• the investment climate and so on.
Planning as a process of developing future scenarios for the company based on the use of methods. The main ones include the following:
Equity method based on the development of a coherent plan of income and expenditures (balance of income and expenditure).
Cash-analytical method involves the calculation of the targets by adjusting the financial performance of the reference period for the changes envisaged in the plan period and determine the effect of various factors (inflation, output, changes in credit conditions, etc.). These figures.
Normative method based on the use of financial rules, regulations for payments needs for financial resources and identifying the sources of their formation (tax rates, depreciation rates, rates, etc.).
The method of economic-mathematical modeling allows a certain probability to determine the dynamics of change based on factors that influence the development of financial processes in the future. Construction of models based on the use of extrapolation methods, regression analysis, expert evaluations.
Coefficient method or the method of percentage of sales, - determining setting relationship between the volume of turnover and financial performance. Since the turnover affects the amount of stocks of raw materials, the amount of money, the amount of loans, etc., determined the percentage relationship between the various asset and liability volumes and turnover.
Next, the amount of funds you want to attract from external sources.
The choice of planning method is determined by many factors such as the duration of the plan period, output information base, goals and objectives, skills, financial management, availability of software and hardware management.