Principles of financial planning
|Principles of financial planning|
Principles of financial planning are based on analysis of financial data company and goals to be achieved by specific budgets.
The main principles of financial planning are:
- Maximization of enterprise value
- Maintaining financial stability, the financial condition, which would guarantee confidence and total control over the finances.
- Improving financial performance, which depends on the systematic monitoring of performance in the short term, taking into account overall guidelines and main goal.
- Preserving liquidity, which require fulfilling company's current financial obligations. It requires long term control over cash flow.
- Creating appropriate financial strategy tailored to the internal needs of the enterprise. This strategy determines the direction of a company in the field of finance, which would help in achieving its objectives,
- Controlling of company's finances based on proper control measures which should be planned and implemented.
- Optimization of costs by finding a level of costs that would avoid problems in the area of finance. It involves looking for new solutions in the field cost grouping and calculating but it is not limited only to reduce costs,
- The optimal organizational structure that provides the fastest and most accurate flow of financial information.
- Appropriate investment policy which should be prepared in accordance to company's financial capabilities.
Elements of the financial plan
Examples of cash flow planning:
- Planning of global enterprise revenues, and predicting their growth,
- Cost planning, by using proper methods of measurement of various inputs (labor, machine, energy, supply, etc.).
- Planning of due taxes and methods of obtaining tax benefits,
- Budgeting (planning of revenues)