Keeping track of finances is key to ensuring long-term financial success. This applies on a personal level, and above all on a business level. If as an individual you cannot neglect managing your money, much less as a company. Therefore, enterprise financial planning is a vital resource for smart organizations.
This planning consists of the development of a comprehensive financial plan that details and describes the financial strategy to be implemented by the company. It has to be adapted to the situation of every company and must have the financial objectives, as well as costs and deadlines.
Phases of enterprise financial planning
To understand the process of enterprise financial planning and implement a plan it is essential to be clear on which are its phases.
- Establishing objectives and their priority order.
- Defining deadlines for achieving the objectives set.
- Developing the financial budget.
- Measuring and controlling financial decisions.
It is important to understand that enterprise financial planning does not promise to reduce the risks of an organization to a minimum, but it helps to make better decisions regarding which risks to assume and which to reject. Therefore, this planning is a forecasting tool, although it also results in a very useful process for future projection.
Basic steps for creating a financial plan for your company
Taking the phases of enterprise financial planning into consideration, it is important that you know how to create a plan. These are the steps to follow.
- Analyze current financial statement of your business
The first thing you have to do is understand the current financial statement of your company. For that you need financial statements detailing income statement, cash flow and balance sheet (assets, liabilities, and capital).
- Set your objectives
You should ask yourself where do you want to take your business and what do you want for the future. Depending on your expectations, you should establish the objectives that you want to reach in the financial planning.
- Define your strategy
How will you achieve your goal? To do so, you must plan the actions you will carry out according to the goal. The strategy is an action plan that you must follow step by step.
- Evaluate results
You should draw up a procedure for evaluating results to predict possible errors and to be able to solve them on the spot.
A tool that can help you with planning is Prophix, a software designed to connect all the financial processes of the company. Good business financial planning helps reduce your company’s risks. In addition, it helps to make the best use of your resources. At Fusionworks we can help you implement this solution in your organization. Contact us!