Financial Planning Financial planning affects everyone who has

Financial Planning Financial planning affects everyone who has an interest in the business. The business, as a whole, needs to plan in order to get the best use of its resources. Future activities should be planned as far ahead as possible. By analysing the profit and loss statement, the balance sheet and other financial accounts the business can make decisions about future activities.

Investors are people who provide the business money in the hope of making a profit when they are paid back. Anyone investing in a business will want to know about the future plans of the business. Creditors are people who lend money to the business or supply goods on credit. They make a judgement about the chances of being paid back as promised, using the financial plans of the business to help them. The different departments within a firm will be allocated a budget to operate with at the start of each year. They will use the financial plans of the business to organise their own activities to help them meet these plans – by setting their own income or sales targets, etc.