- Financial planning determines how a business’s goals will be achieved.
Financial needs
- The financial needs of a business will be determined by:
? - current business size & future (growth/development) plans
- the current phase of the business cycle
- capacity to source finance — debt and/or equity
- management skills for assessing financial needs and planning.
Budgets
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A budget is :
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a financial document used to estimate ==future revenue and expenses== over a period of time.
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A budget should provide an accurate picture of income and expenses
- used for important decisions (hire more staff, cut expenses, etc.)
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The three main different types of budgets are:
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Operating budgets
- (Sales, Production, Raw materials, Direct labour, Expenses)
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Project budgets
- (Capital expenditure, Research and development)
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Financial budgets
- (Income statement, Balance sheet, Cash flow statement)
Record systems
- Record systems are :: the mechanisms employed by a business to ensure that data are recorded and the information provided is accurate, reliable, efficient and accessible.
- By law, businesses must keep records of financial transactions for at least 5 years(for tax purposes)
Financial risks
- Financial risk refers to :: the possibility of financial loss to businesses.
- common financial risks for businesses include:
- credit, market, liquidity and operational risks.
Financial controls
- Financial controls are :: the procedures, policies and means by which a business monitors and controls the allocation and usage of its resources.