Planning is a process of development and adoption of targets with quantitative and qualitative data (what to do) and identifying effective measures to achieve them (how to do).
With the emergence of new economic relations, plans ceased to be policy, they are indicative in nature. Now companies of any ownership form their own plan, if they need it. It gives rise to difficulties of transition period connected with the lack of a methodological approach to financial planning. In addition, analysis of the economic literature of the mid 90-ies and analysis of practical experience of enterprises on this subject shows that there happened an eclectic of approaches of the distribution economy of the Soviet period and Western management. For example, planning in many enterprises begins, as before, from the volume of production, although the ideology of market conditions is qualitatively different: firstly we should plan sales volume. There is still no clear understanding of the differences from the budget plan at the level of enterprises and corporations. In the government document about the development of financial policy of the enterprise, concepts – “consolidated” and “summary” budgets – are identified, etc.
In connection with the above mentioned we can conclude that there is a need to develop the concept of financial planning. This is especially refers to large companies and corporations with extensive mining and governance structures. Necessity of plans is related to the uncertainty of the future legislative framework and economic situation in the country. In addition, it owns a coordinating role, because any mismatch of firms requires financial costs to overcome it.
Financial plan – is a document that reflects the financial strategy and methods of its implementation, that will ensure profitability, solvency and financial stability of the enterprise, and as a whole – will increase income of the owner.
Classification of types of financial plans is given in different ways by various authors: long-term and short-term; strategic, tactical and operational; strategic, prospective, complex, current operational etc.
If you stick to the western ideology of management (strategic management dominates there), it can be conceptually viewed two levels of financial plan: strategic and tactical. The composition of indicators, the degree of their specification depends on the planning period.
Strategy – is a compass that point the way, the vector of direction of the enterprise. Typically, the strategy can be formed by senior management and it is formulated at a qualitative level, or as a general quantitative benchmarks.
Strategic Financial Plan is a system of financial performance goals, aimed at the maximizing of value of the enterprise. Strategic objectives for the duration are usually planned for a year. These include the rate and the proportion of financial performance, the philosophy of financial policy.
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