2.1.4 Planning Flashcards
(16 cards)
what’s a cash flow forecast
a document predicting the cash inflows and outflows at any one time
formula for net cash flow
inflows - outflows
formula for closing balance
opening balance + net cash flow
benefits of cash flow forecasting
help plan and manage finances
help identify financial risks and funding needs in advance
provides help in strategic decision making
causes of cash flow problems
overtrading
allowing too much trade credit to customers
unforeseen costs
What is Planning?
Planning is the process of setting objectives and determining the best course of action to achieve them.
It involves forecasting future conditions and making decisions to guide the organization.
what is the importance of planning
Planning helps organizations set clear goals, allocate resources effectively, anticipate challenges, and improve decision-making.
what are the types of planning
Types include strategic planning (long-term goals), tactical planning (short-term actions), and operational planning (day-to-day operations).
what is stategic planning
A long-term planning process that defines the overall direction and goals of the organization, typically covering 3-5 years.
what is tactical planning
Short-term planning that outlines specific actions and resources needed to achieve the strategic goals, usually covering 1-3 years.
what is operational planning
Day-to-day planning that focuses on the specific tasks and processes needed to run the organization efficiently
what are smart objectives
Objectives should be Specific, Measurable, Achievable, Relevant, and Time-bound to ensure effective planning.
what is SWOT analysis
A tool used in planning to identify Strengths, Weaknesses, Opportunities, and Threats related to the organization or project.
what is contingency planning
Preparing alternative plans to address potential risks or unexpected events that could impact the organization’s goals.
what are the benefits of planning
clear Goals: Establishes specific objectives for the organization.
Resource Allocation: Helps allocate resources effectively to achieve goals.
Improved Decision-Making: Provides a framework for making informed decisions.
Risk Management: Identifies potential risks and prepares contingency plans.
Coordination: Enhances coordination among different departments and teams.
Increased Efficiency: Streamlines processes and improves overall efficiency.
Future Focus: Encourages proactive thinking and long-term vision.
what are the drawbacks of planning
Time-Consuming: Planning can require significant time and effort.
Inflexibility: Rigid plans may hinder adaptability to changing circumstances.
Over-Reliance on Plans: May lead to complacency if teams rely too heavily on plans.
Uncertainty: Plans can become outdated due to unforeseen changes in the market.
Complexity: Detailed planning can become complicated and difficult to manage.
Cost: Resources spent on planning could be seen as a cost rather than an investment.
