Financial Planning and Budgeting

Financial planning

planning to track individuals or enterprises' money. To ensure that future money needs are met, financial planning is defined as a process that helps to make the right decisions when dealing with money ; Leading to the achievement of the objectives of individuals or enterprises. Another definition of financial planning is a section of financial management . It is a means of identifying procedures, policies, objectives, and financial budgets used to deal with money-related activities.

Budgeting

Budget method is used to express the basic needs of resources, such as materials, and capital , and individuals, and contribute to all of them in achieving a set of adopted at a time phased goals, [4] defines the budget as a financial instrument will contribute to provide estimates on Expenditures, and projected income over a period of time, often in the future . [5] Other budget definitions are a process used to calculate the amount of money that can be obtained or saved over a given period of time. The budget is based on planning to determine the method used to spend this money.

Budget preparation

The proper preparation of budgets contributes to obtaining the required results. The success of the preparation of budgets depends on the implementation of a number of steps, the most important of which are:

• Updating budget assumptions: Review all assumptions related to the company's work environment that is the basis of the budget, and can be updated when needed.
• The definition of funding available is the allocation of a money that is likely to be used to fund the operations of the company, and it is important that it be available during the time period associated with the budget preparation.
• Cost Points: Determine the nature of the costs involved in the scope of work activities during the next budget period, including the determination of the financial value of these costs, and the type and level of activities that will be incurred.
• Budget creation: To obtain all the basic budget information for the previous year, and then to update it based on the addition of all the actual expenditures of the current year, while providing information on the nature of funding expected during the next fiscal year.
• To obtain revenue forecasts: to obtain expected information about the company's revenue ratio; by providing its sales manager, and then verifying its realness through the executive director, and distributing this information to heads of departmental departments; In their sections.
• Obtaining the budgets of the administrative departments: Obtain all the financial information related to the budgets of all the departments of the company; to study them to ensure that they contain no errors, and then compare them with all other financial statements.
• A review of the financial budget is the meeting of all members of the management team to review all items of the financial budget in order to shed light on the expected constraints and any restrictions that arise as a result of funding and then rebalance the team of accountants they have established to make appropriate adjustments on her.
• Budget Load: Providing budgetary information within the financial programs, which contributes to obtaining the financial budget based on actual reports.

Types of financial planning

Financial planning is divided into a group of species and classified in terms of duration of the financial plan into two types:

• Long-term financial planning is the planning that helps to develop long-term financial policies ranging from two to ten years. The company's activity contributes to determining the time period that should be covered based on the financial plan. Long-term financial planning is often concerned with the following:
  • How to implement investment plans.
  • Research on new products.
  • Appropriate sources to get money.
  • Method of repayment of loans.
  • Ability to integrate with other companies.
• Short-term financial planning is the planning that contributes to the preparation of financial statements that include expected financial results within a short period of up to one year or less. These financial statements comprise the income statement, balance sheet and cash flow statement. Term financial planning is more accurate than long-term financial planning because it is difficult to predict the financial situation of many years, ie, the long period of time compared to the short duration of short-term financial planning.

Financial planning stages

The success of applying financial planning in diverse companies depends on the implementation of a range of stages:

• Identify key and secondary objectives: The first stage of financial planning, and contribute to the development of the main and subsidiary financial objectives that are concerned with the application of the best capital recruitment; in order to contribute to enhancing the efficiency of productive factors and supporting the resources available in the company.
• The preparation of financial policies is the second stage of financial planning. It is the main guide for employees in financial management. It helps them make the right decisions. A number of things must be taken into account when preparing such policies, such as achieving the company's interests. It is important to be consistent with public policies and objectives; contributing to their achievement rather than postponing or hindering them.
• The transformation of financial policies into detailed actions: the stage aimed at enabling the implementation of financial policies accurately; by turning them into detailed procedures that help streamline administrative processes.
• Strengthening the flexibility to implement financial procedures is the final stage of financial planning and depends on the management's role in making appropriate adjustments or changes to the company's short-term financial objectives and financial policies to conform to the changing circumstances affecting them.

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