Financial planning in a company 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 plan its finances judiciously 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 enterprise because the 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, “don’t waste, don’t want” must be held sacred in any business if that organization hopes to make the maximum 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 them to raise funds to run projects for business expansion, working capital management, etc.
In alliance with financial institutions and suppliers, a commercial company can achieve optimal financial planning by taking advantage of some available financial packages such as:
– Sale with subsequent lease
– 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 plan for spending and saving income.
This will go a long way in helping the company achieve optimal financial planning.
