In addition to the planning of economic activity, the company needs financial planning (budget of income and expenses of the enterprise). It is with its help that the company's management can provide control over the formation, as well as the rational use of resources. In addition, financial planning allows you to create conditions for increasing the efficiency of using the existing potential of the enterprise and generally improve its financial condition.
The plan of
expenses and revenues allows you to identify unaccounted for in the
production plan reserves, suggest methods to more efficiently use the existing production capacity of the enterprise, as well as take into account other important points.
To ensure flexibility and efficiency in making managerial decisions, it is customary to draw up a plan of income and expenses on a quarterly basis, while inflation should be taken into account. When developing a financial plan, the following indicators are determined:
- expenses for the sale of finished products;
- thief;
- depreciation;
- investment size;
- sources of financing;
- the company's need for current assets;
- sources of coverage of the need for working capital;
- and others.
The budget is compiled on the basis of the calculations of the indicators indicated above. Judging by the name, it reflects, on the one hand, projected revenues and revenues from the activities of the enterprise, and on the other, costs and all kinds of deductions. Ultimately, the financial plan is the information base of budget control. That is, for the timely implementation of the analysis and the identification of various deviations of actual indicators from forecast ones. If discrepancies are detected, appropriate adjustments are made. The plan of expenses and incomes can be not only general. Often, local budgets are compiled in parallel, which take into account forecasts related to the functional or operational budget.
There are several strategies to make a plan of expenses and revenues of an enterprise:
- Top down. In this case, all tasks, goals and targets are set by senior management. After that, the indicators are divided into smaller ones and are included in the plan of one or another unit.
- Down up. Planning of expenses and incomes here begins with the lowest levels in the hierarchical structure of the enterprise. Further, the indicators are transferred to the sales service and, after agreeing with the forecasted revenue volumes, are transferred to the top management. The administration of the enterprise compares the planned costs and revenues, and then determines what result is necessary to achieve in the period under review.
The general budget reflects the relationship of the enterprise with other market participants (financial and credit institutions, insurers, state and municipal enterprises and others). In addition, the plan of expenses and income should take into account the size of inflation, changes in the monetary policy of the state and other macroeconomic factors.