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What is financial planning for a business?

Financial planning is simply the process of allocating funds to, and determining how a business will achieve its different goals and objectives outlined by the business or business plan. Like a business plan is a blueprint for your business, a financial plan is a blueprint for the business' finances.

Why is financial planning important for a business?

Stock can be defined as a supply of goods kept on hand for future use or sale to customers by a merchant, distributor, manufacturer, etc. Stock is also referred to as inventory. Stock can be categorised into four main types; raw materials, work in progress, finished goods, or consumables.

As a business owner, one of the key financial decisions made will be debt collection or debt recovery. Developing, monitoring, and maintaining client credit policies including contingencies for debtors in default, is vital to maximise cash flow and minimise financial risk. 

A credit policy, if properly developed, can be a critical tool for maintaining alignment on credit issues throughout your company. It gives your team a process to follow to manage defaults and recover money owed.

Financial Reporting refers to standard practices to give stakeholders an accurate depiction of a business' finances, including its revenues, expenses, profits, capital, and cash flow, as formal records that provide in-depth insights into financial information and is useful in making economic decisions. Stakeholders include – investors, creditors, the public, debt providers, and government agencies.

Financial reporting is usually considered an end product of Accounting.