A good financial plan can help you keep your business profitable, reach your goals, manage risk, and stay competitive. It can also provide valuable management information, such as budget-to-actual comparisons and key performance indicator reports.

Historically, financial planning was done using spreadsheets, but these introduce problems around security, human error, slowness, and accuracy. Instead, new software solutions allow for forward-thinking planning that is connected to other systems.

Financial Statements

Creating accurate and contextual financial statements is table stakes for all businesses. Whether they need to attract investors, secure loans or comply with tax laws, companies should have the capacity to produce reports that meet these requirements.

The most common financial statements include the balance sheet, income statement and cash flow statement. The balance sheet captures a company’s assets, liabilities and shareholder equity at a given point in time. The income statement captures the revenue, expenses, gains and losses that a company incurs over a period. The cash flow statement highlights the inflows and outflows of cash that a business experiences.

Other financial statements include the statement of changes in equity, which details the addition to and subtractions from shareholder or owner capital over a period. This information helps company management to make informed decisions about financing, investments and growth strategies.

Cash Flow

Cash flow is a measure of money coming into and out of your business. It includes both operating activities, such as the net income from sales and inventory, and investing activities, such as purchasing long-term assets.

Monitoring cash flow is essential for a business, as it helps to prevent overspending and improve financial stability. This involves analyzing income and expenses, identifying areas of overspending, and creating a plan to reduce costs.

It is also important to monitor upcoming expenses, such as software tool subscriptions that renew on a monthly basis. Proactive invoicing and offering discounts for early payments can help to optimize cash flow. Additionally, businesses that sell products can manage cash flow by minimizing the amount of stock on hand and by forecasting demand accurately.


A budget is a tool used by businesses to predict how much money they will make and spend over time. It also helps management allocate resources and achieve financial goals. Preparing a budget requires knowledge of the business’s past experiences, forecasting trends and other market factors.

Different budgets can be made for recurring expenses and capital expenditures. These can have different time horizons and require different strategies to reach.

Effective budgeting involves communicating the company’s plans to employees and stakeholders. Expert communication skills can explain complicated financial trends and budget forecasts in simple terms, increasing their effectiveness. It can also help managers delegate responsibilities to employees and improve teamwork. This can improve the company’s ability to meet deadlines and deliver on objectives. It can also help prevent conflicts between departments.


Forecasts relate to the planning process and provide estimates of future business performance. They can be short-term or long-term, covering specific periods or broader trends. They are important for budgeting, predicting revenue and strategic planning.

A well-formed forecast is accurate, timely and clear. It provides information that helps in planning and identifying opportunities for your company to function more efficiently.

FP&A best practices include using multiple scenarios to create financial forecasts. These can help you avoid over- or underestimating performance, which can lead to strategic missteps and wasteful spending. It is also helpful to use a rolling forecast, which can adjust throughout the year to match real-world business conditions. This can be facilitated by a corporate performance management system, which incorporates budgeting, planning and forecasting software.

Delegation of Authority

Delegation of authority is a critical aspect of financial planning and organisation. It allows you to streamline the approval process and reduces financial risks. It also helps to develop the skills of your staff.

Delegating authority should always be accompanied by responsibility. Accountability is the obligation of a manager to carry out his duties as per standards of performance.

The delegation of authority should be clearly documented and accessible to all employees. It should include the levels of approval required for various expenses, including threshold limits. Ideally, separate delegations should be set up for different departments. These should be revised as the organisation grows and changes. This ensures that the correct level of authority is assigned to each position. This is particularly important when dealing with accounts payable.  his response