Financial planning and forecasting an integral part of the financial activities of the state and business entities is financial forecasting and planning. Forecasting is to use certain methods, using a special toolkit of quantitative assessments, to process the currently available information about finances, the patterns of their changes, the specific conditions of their functioning at the given moment, and get an idea of the directions of their development and the state in the future. In a market economy, forecasting is a scientifically analytical stage of planning, a research basis for preparing planning decisions and plan assignments.
The Main Functions Of Financial Forecasting
- scientific analysis of social, economic and scientific technical processes and trends, objective investigative links of social economic phenomena of economic development in specifically historical conditions, assessment of the current situation and identification of key problems of economic development;
- assessing the impact of these trends in the future and anticipating new conditions and problems that need to be resolved;
- Identification of possible development alternatives in the future, accumulation of material for a fully justified choice of one or another possibility of development and adoption of an optimal planning solution that provides an active impact on the further development of finance. The forecast outlines the areas and opportunities within which real goals and objectives can be set, identifies the problems that should become the object of development in the plan. It examines options for actively influencing the objective factors of the future development of finance.
A financial forecast is a study of long term development that is not limited to a specific economic and political decision, and therefore has a preliminary, variant nature, its horizons are not limited to the planned period.
The development of the forecast and the formation of the plan are interrelated stages of the planned work, which, however, are specific. The difference between them is that the plan reflects and embodies the already adopted economic and political decision, and the forecast is a search for a possible realistic, economically correct solution. The plan because of all types and stages of planned work should be qualitatively unambiguous, aimed at achieving the already chosen goals.
The forecast reveals the possibility of various development options analyzes and justifies them. In the forecast, it is possible to consider various principles of financial policy and a combination of objective and subjective, economic and economic factors. He does not put any compulsory tasks, but contains the material necessary for their development.
It is a kind of financial activity of the state and economic entities aimed at achieving a balance between their monetary resources and directions of using these funds.
It should be noted 3 or 4 that in the process of financial planning, not only the financial proportions themselves are determined, but also the proportions associated naturally with material, labor, etc. Financial planning is an organic part of socio economic planning. As the relations arising in all parts of the financial system planned, we can talk about the system of financial plans: budgetary, extra budgetary, insurance, etc. At the same time, the following cuts of financial plans distinguished: national, sectoral, territorial, financial plans of individual enterprises and organizations.
The system of financial plans built hierarchically. The central link of the system is the budget plan. State social extra budgetary funds also develop financial plans for their incomes and expenditures.
In an orderly manner, insurance funds mobilized and used to recover losses and eliminate the risks of various participants in insurance relations. In other words, financial plans drawn up at all levels of the financial system and by all subjects of financial relations.
For practical construction of financial plans, a whole set of planning methods is used, the most important of which are economic analysis, regulatory and balance methods.