Financial planning is the act of combining cash flow, profit, and balance sheets which will assist in the smooth-flow operations of a company or an institution. The three should help prevent risks usually seen in operations and to meet the demands of regulation boards like the Securities and Exchange Commission.
If there is a good forecasting, the company can think up of ways to improve on their operations and policies which should also improve their profits. Poor forecasting will open the company to a lot of risks and could be the reason behind a failure in operations and loss of profits.
The financial planning will also include the budgeting issues. Budgets will depend on the forecast of the analysts which will have a lot of influence on the operations of this said company. It will also have a lot of influence in the hiring of employees or the downsizing of the employees.
The financial planning is usually handled by the finance committee headed by members of the board or under the guidance of certain key administrative positions. All of the planning would have to go through the wringer of the board members who will either approve or disapprove of the plans. If the financing committee foresee a good future, they should be able to see their budget increase.
Financial planning is a key function in any organization. Any wrong move and it can make or break the company, no matter how big or how small the business is. It would also help to have a lot of financial backing if the actions of the financing committee are risky. Also, after the approval of the board, the regulatory boards of the government will also have to be provided the information, hiding the plans would only make the government nervous. This is what happened to a lot of big companies that made some risky decisions and played a vital role in the current financial crisis.