Financial planning in a business is becoming more prominent because all the players are facing fierce competition in the operating business environment. It stands to reason, therefore, that every business enterprise should judiciously plan its finances and use them optimally.
Financial planning simply refers to those activities in a business organization that will determine its optimal requirement for liquid funds. By extension, it refers to how and in what combination funds should be raised and used in order to achieve your strategic goals and objectives.
Financial planning is so important in a business venture because funds raised for business operations always come at a cost and the availability of money is limited. As such, the need for financial planning in a business cannot be overstated. The cliché, “waste not, want not” must be held sacred in any business if that organization hopes to make the most use of its available funds and maximize profits.
However, for financial planning to make sense, business owners and managers must be credible. Credibility is paramount because the more credible an organization becomes, the easier it is for it to raise funds to execute business expansion projects, management of working capital, etc.
In alliance with financial institutions and providers, a commercial company can achieve optimal financial planning by taking advantage of some available financial packages such as:
– Sale with leaseback
– Use of Foreign Guarantee
– Opening of Letters of Credit
-Documentary Law
– Collection invoices
– Deferred payment
-Commercial paper
– Opening of Domiciliary Account
-Commercial credit
In conclusion, applying a combination of these financing packages and rotating them several times will substantially reduce the cost of capital/fund. As it is, a financial plan can be viewed as a budget or income saving and spending plan.
This will go a long way in helping the company achieve optimal financial planning.