Financial Forecasting and Planning - Interconnected Controls

Elements of process management of the economic and social warehouse are planning and forecasting. They are used to establish the most appropriate areas of economic development, to adjust the growth rates of certain industries. Financial forecasting and planning are not identical concepts, they are designed to perform various tasks. Financial forecasting and planning are very important both for an individual enterprise and for the whole country, because these controls form the conditions for the implementation of the tasks.

In a broad sense, financial forecasting is aimed at studying the expected future economic situation. Forecasting develops strategies for ensuring the sustainability of the enterprise and determines the direction of capital investment, as well as articles for financing costs. In the narrow sense, the concept of โ€œforecastingโ€ is applied to calculations when drawing up financial plans, for example, when forecasting sales, to forecast the cost of expenses. Forecasting gives the calculations a certain elasticity, allows you to make adjustments in connection with the changed circumstances.

Financial forecasting and planning are also important for external users of this kind of information. For example, banks forecast the financial condition of creditors' enterprises . The methodology for assessing the likelihood of a deterioration in financial condition allows you to quickly respond to bankruptcy forecasts and take appropriate measures. Depending on the results of the state assessment of the bank, the company may be declared insolvent, and therefore, options for restoring solvency may be offered to it.

Financial forecasting forms the prerequisites for financial planning. Depending on the term, the forecast can be medium and long term. Financial forecasting determines the possibilities of controlling the movement of financial flows and precedes planning.

One of the key tools of economic management is planning. There are no unified planning principles , the financial plan synchronizes the crediting and spending of funds, and each organization carries out the planning process based on its experience and needs, in particular, the adequacy of funds for financing the future activities of the enterprise is assessed.

At the state level, the principles of effective public finance management are applied, which ensure the stable implementation of state programs in the social sphere. These include: tax and budget transparency, long-term stability of the country's budgets, an effective system of relations between budgets, consolidation of the budget process, medium-term financial planning, budgeting, with emphasis on results, financial control and reporting. These principles exist in the format of a unified system of public finance management, which must constantly develop and adapt to conditions and changing tasks.

Financial plans are divided into: current, operational and forward-looking. The significance of decisions made during planning extends over the long term. Long-term plans are a construction, the constituent elements of which are short-term plans. If we talk about enterprises, then, mainly due to lack of experience and time, they use short-term planning, that is, one year in advance. The annual budget is divided into quarterly and monthly plans. Financial forecasting and planning at enterprises can be carried out differently, depending on the size and size of the organization, but it is always aimed at setting goals and realizing them in the future.


All Articles