How Do I Develop a Business Financial Plan?

The financial planning method refers to the planning method for corporate financial activities, such as the formulation of fund-raising plans, working capital requirements plans, fixed capital requirements plans, depreciation plans, foreign investment plans, cost plans, sales income plans, profit plans, and financial revenue and expenditure Planning, etc.

Financial planning method

Right!

The financial planning method refers to the planning method for corporate financial activities, such as the formulation of fund-raising plans, working capital requirements plans, fixed capital requirements plans, depreciation plans, foreign investment plans, cost plans, sales income plans, profit plans, and financial revenue and expenditure Planning, etc.

Chinese name

Financial planning method

Foreign name

Financial planning method

Meaning

Planning method for corporate financial activities

For example

Liquidity requirements plan, etc.

The financial plan is the planning, arrangement and arrangement of financial activities and results in a certain period in the future in accordance with the development strategy and business plan of the enterprise. The financial plan is prepared based on the information provided by the financial decision-making plan and financial forecast. It is the specificization of the financial forecast and financial decision and the basis for controlling financial activities. The broad financial plan includes many aspects, usually defining financial goals, formulating financial strategies and financial policies, stipulating financial work procedures and financial rules for a specific problem, and formulating financial plans and preparing financial budgets. The narrow financial plan refers to the financial planning and financial budget for a specific period. ^[1]

The implementation of a financial plan can be compiled into a financial budget.

(A) fixed method

The fixed method, also known as the static method, is a method of preparing financial plans according to a certain operating level during the planning period. The main feature of this method is that after the plan is compiled, it is generally unchanged during the planning period, except for special circumstances, and is relatively fixed. A fixed financial plan consists of a certain financial indicator system. Each financial indicator should be determined by an appropriate method according to its characteristics and content. The methods for determining the indicators usually include the balance method, factor method, proportional method, and quota method. The fixed method is relatively simple when preparing a plan, but there are many enterprises whose production and operation activities are affected by subjective and objective factors and often change. At this time, it is difficult for the fixed plan to correctly evaluate the work performance of the enterprise. This method is suitable for enterprises or non-profit sectors with relatively fixed levels of operating activities.

(B) the elastic method

The flexible method refers to the method of preparing flexible financial plans according to certain operating levels during the planning period. The advantage of a flexible plan is that it can always enable the implementer of the plan to have both short-term goals and long-term goals, which can effectively overcome the wrong tendency of focusing on immediate interests and disregarding long-term interests. The disadvantage is that the preparation work is more troublesome. This method is suitable for project expenditures that vary with business volume.

(Three) rolling method

The rolling method is a method of periodically revising the plan. Based on the preparation of the plan, after a period of time (one year, one quarter, etc.), the original plan is changed according to the changed environment and the actual implementation of the plan. Make adjustments to keep the original plan period unchanged, and advance the plan period sequentially for a period to make the plan continuously rolling and extending. For example, the annual plan is prepared once every quarter and rolled backwards each time; the five-year plan is prepared once a year and rolled backwards every year. When drafting a rolling plan, the principle of near-fine, long-distance, and coarse-grained is adopted, that is, a combination of a near-term thinner plan and a long-term thicker plan. The rolling method has the following advantages: making the plan more realistic, increasing the accuracy of the plan, and improving the quality of the planning work; linking the long-term, medium-term and short-term plans with each other, ensuring the guidance of the long-term plan; It reflects the flexibility of the plan, especially in a rapidly changing environment, and improves the organization's ability to resist change. However, the preparation of rolling plans is more complicated, especially those rolling plans that take a long time and have a greater workload.

(Four) zero-based method

The zero-based method refers to a method of preparing a financial plan on the basis of zero regardless of past planned items and income and expenditure levels. The basic characteristic of the zero-based method is that it is not affected by previous planning arrangements and implementation conditions. All planned income and expenditure are based on cost-benefit analysis, and financial plans are prepared according to needs and possibilities. The budget prepared by the zero-based method is conducive to improving employees' "input-output" consciousness, is conducive to the reasonable allocation of funds, and is conducive to the creativity of grassroots units in participating in the preparation of plans. However, since all work starts from "zero", using the zero-based method to prepare a budget has a large workload and a relatively high cost.