Financial Planning is a process of framing objectives, policies, procedures, programmes and budgets regarding the financial activities of a concern. This ensures effective and adequate financial and investment policies. It helps you determine your short and long-term financial goals and create a balanced plan to meet those goals. Usually, a company creates a Financial Plan immediately after the vision and objectives have been set.
The importance can be outlined as-
- Adequate funds have to be ensured.
- Financial Planning helps in ensuring a reasonable balance between outflow and inflow of funds so that stability is maintained.
- Financial Planning ensures that the suppliers of funds are easily investing in companies which exercise financial planning.
- Financial Planning helps in making growth and expansion programmes which helps in long-run survival of the company.
- Financial Planning reduces uncertainties with regards to changing market trends which can be faced easily through enough funds.
- Making sure your money will last during retirement or rolling over a retirement plan.
- Handling the inheritance of a large sum of money or another unexpected financial windfall.
- It helps in reducing the uncertainties which can be a hindrance to the growth of the company. This helps in ensuring stability and profitability in concern.
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