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Financial Planning and Control

In the corporate sense, financial planning and control refers to the steps, measures and boundaries a company puts in place in order to meet their financial and strategic goals. Typically, the financial plan is based on the company’s vision and is comprised of all the activities, processes, staff, IT,  other resources and associated costs and timelines that a company needs to reach those goals. In addition, the financial plan will analyze short and long term economic circumstances to get an idea of other indicators that may come into play a role. For many companies, the financial plan showcases revenue generating efforts to stakeholders. 

At the base of a financial plan
is the cash flow statement, income statement and the balance sheet. These give stakeholders a true look into a company’s revenue, liability and equity. But in the eyes of stakeholders, they want to know how these figures impact where a company is headed, which is why projecting cash flows, income and balance sheet drivers is so essential for the financial plan.

The Management Study Guide discusses the primary objectives of financial planning and control as the following:

  • To determine capital requirements (short and long term capital needs)
  • To determine capital structure (debt-equity ratio)

  • Establishing financial policies (cash control, lending, borrowing)

  • Maximize ROI of financial resources by controlling costs and spending

cash flow analysis