The process of estimating the fund requirement of a business and specifying the sources of funds is called financial planning. It ensures that enough funds are available at right time so that a firm could honour its commitments and carry out its plans.
It includes the exploration of different alternatives of source of finance, selection the best alternative and implementation of financial plans and policies. In layman’s language we can say that financial planning means deciding in advance how much to spend, on what to spend, according to the funds at your disposal. Following are the tasks which come under financial planning:
(i) Determination of Financial Objectives.
(ii) Formulation of Financial Policies and Rules.
(iii) Forecasting the Needs of Finance.
(iv) Developing Alternative Source of Finance.
(v) Selection of Best Alternative.
(vi) Implementing Financial Plans and Policies.
