Learn these 14 steps to carry out the financial-economic plan of a company

Developing a good financial strategy is essential for business success. See what factors to include and how to prepare it!

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The finances and accounting of a company are an essential part of ensuring its success, and that is why professionals in this sector are in such demand. It doesn’t matter if the business idea is brilliant, or if there is barely any competition in the market, if you don’t have a defined, structured, economic and financial business plan with clear objectives, everything else will be of no use.

If you also agree, continue reading this post, where we explain what this plan consists of and the steps to develop it.

What is the difference between accounting and finance, business-wise?

Although accounting and finance are separated by a fine line and, in almost all companies, they work within the same department, to fully understand what an economic-financial plan is, we must understand the difference.

While accounting focuses on the recording and presentation of financial information obtained from a company, ensuring compliance with legal and reporting requirements, finance focuses on the management of financial resources, strategic decision making and planning. to maximize profitability and the future value of the company. It could be said that accounting focuses on the past and finance on the present and future of the entity.

What does the financial-economic plan of a company consist of?

Now that you know how to discern between accounting and corporate finance, let’s define what a company’s financial economic plan is: this consists of the preparation of a document that details the organization’s financial strategy, including projections of income, expenses, investments and sources of income. financing. This plan is created for the purpose of establishing financial goals, evaluating the viability of projects and providing guidance for short- and long-term financial management. It also includes tools such as budgets, projected financial statements, and risk analysis to support key financial decision-making.

Basic economic aspects that every financial plan must include

Every company financial plan must consider essential variables that are decisive for achieving the stated objectives, which is why, in your economic strategy, you cannot forget to add these factors:

  • Executive Summary: A brief description of the company’s financial objectives and goals.
  • Analysis of the current situation: a review of the current financial situation of the company, including historical financial statements.
  • Financial Projections: Detailed estimates of future income, expenses, investments, and cash flows, often for a period of several years.
  • Budget: A detailed breakdown of income and expenses for a specific period, usually annually.
  • Financing sources: indication of how the company plans to finance its operations and projects.
  • Sensitivity and scenario analysis: evaluation of how different economic variables can affect financial projections.
  • Key performance indicators (KPIs): metrics that will be used to evaluate financial performance, such as profit margin, ROI, and liquidity, among others.
  • Investment plan: details about planned investments, including cost and expected return.
  • Risk management: identification and strategies to manage financial risks that the company may face.
  • Financial policies: description of the policies that govern the company’s financial management, such as credit or investment policies.
  • Implementation timeline: A detailed action plan showing how financial strategies will be executed.
  • Evaluation and control: How financial performance will be measured and evaluated over time and what adjustments will be made if necessary.

Now yes: let’s see how to make a financial economic plan step by step

Understanding and knowing what the key indicators are, it is time to organize them to give shape to the example of an economic-financial plan that we present below and that you can also use to make your own. Pay attention!

Definition of financial objectives and goals

Clearly identify the financial objectives you want to achieve with the plan, such as revenue growth, profitability, business expansion, etc.

Analysis of the current economic situation of the company

Evaluate the current financial situation of the company. This includes reviewing past financial statements, identifying assets and liabilities, and understanding the current cash position.

Business financial projections

Make financial projections for a future period. This involves estimating expected income, expenses, investments and cash flows. Consider different scenarios, such as one optimistic and one conservative.

Annual budget

Create a detailed annual budget that breaks down your expected income and expenses for the coming year. Make sure it is realistic and achievable.

Sources of financing for different business projects

Define how you will finance operations and projects. This may include equity capital, loans, and investors, among others.

Economic sensitivity analysis

Evaluate how different economic variables (such as changes in costs, market demand, etc.) can affect your financial projections.

Key financial performance indicators

Establish KPIs to measure financial performance, such as profit margin, ROI, and inventory turnover, among others.

Investment plan in which the company will participate

Detail the investments necessary to achieve your goals, including the cost and possible returns.

Financial Risk Management

Identify financial risks and establish strategies to mitigate or address them.

Corporate financial policy

Establish policies that guide financial management, such as credit, collection, investment policies, etc.

Financial Plan Implementation Schedule

Develop a detailed action plan that shows how you will implement financial strategies over time.

Evaluation and control of financial performance

Establish metrics to measure financial performance over time and schedule regular reviews of the plan to make adjustments if necessary.

Presentation and communication of the financial plan to the board of directors

Communicate the plan to all stakeholders and obtain a commitment from senior management and relevant teams.

Execution and monitoring of the financial plan

Implement the plan and constantly monitor to ensure goals are being met and make adjustments if necessary.

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