Financial Term: Financial Planning

What is financial planning

Financial planning means that taxpayers or their agents consciously use tax revenue , accounting, law, finance, etc knowledge And adopt legal and reasonable or "non illegal" means to reduce tax costs and serve the economic behavior of maximizing enterprise value.

The development of enterprises cannot be separated from financial planning. Due to the formation of the global village, it is more and more common for enterprises to carry out international financial planning. International financial planning of enterprises includes several aspects: financial and tax arrangements, offshore investment, reasonable tax avoidance, capital hedging, international investment and financing matching, asset management and trust, etc.

Characteristics of financial planning

Financial planning is an overall decision on the financial activities of an enterprise. Its focus is not the present, but the future. It is based on the long-term need Scientific judgment on the development of enterprise financial activities. It mainly displays several characteristics in daily financial activities:

1. Global. Financial planning is formulated according to the long-term development needs of the enterprise, with the overall situation of financing, investment and operation management of the entire enterprise as the object. It is a description of the overall development strategy theory of an enterprise from the perspective of finance, an action program and blueprint for the future financial activities of the enterprise, and plays a guiding role in the specific financial work of the enterprise.

2. Long term. The purpose of financial planning is not to solve the current problems of the enterprise, but to seek the long-term development of the enterprise in the future. Therefore, once the financial plan is formulated, it will have a significant impact on the financial activities of the enterprise in a long period of time in the future.

3. Risk. As the business environment of enterprises is always changing, the financial planning of enterprises is accompanied by certain risks. The size of financial planning risk depends on the knowledge, experience and judgment ability of financial decision-makers. Once the scientific and reasonable financial planning is realized, it will bring vitality and vigor to the enterprise and enable the enterprise to develop rapidly; On the contrary, it will also cause certain losses to the enterprise and make the enterprise fall into financial difficulties.

4. Adaptability. The essence of modern enterprise management is to solve the balance between the external environment, internal conditions and business objectives in a complex and changeable environment. The financial planning integrates the enterprise with the external environment, avoids the problems in the financial management of the enterprise as far as possible through analysis, evaluation and other means, and enhances the adaptability of the enterprise to various complex factors.

The role of financial planning

1. Clarify the relationship: The financial planning must clarify the relationship between the investment plans of different business activities of the enterprise and the feasible financing options of the enterprise.

2. Propose alternatives: financial planning enables enterprises to understand various investment and financing options. Among the various plans listed in the financial plan, the enterprise needs to know what is the best and evaluate each plan.

3. Analyze feasibility: different plans must be adapted to the company's overall goal, namely, maximizing shareholder wealth.

4. Avoid unexpected changes: financial planning must indicate what will happen if a specific event occurs.