The Six Steps Of The Financial Planning Process

761 Words 4 Pages
According to Glenn Stevick, financial planning process has six steps: “establish financial goals, gather relevant data, analyze the data, develop a plan for achieving goals, implement the plan and finally, monitor the plan” (Stevick, 2006). It is imperative for a business to have and use because without establishing goals and managing where money is being expended, those goals may end up being obsolete and as a result, a closed business. In order to accomplish these six steps, there are two fundamentals of business in regards to financial management or financial planning. These two are “represented by management accounting and corporate finance; Managerial accounting includes techniques for financial analysis, costing the activities of the …show more content…
The very essence of financial planning is to be goal based, whether it be through savings, investing and even risk management. The goals-based financial planning process will help to drive the financial plan which is needed to run a business effectively. Keeping in mind, not all business goals will be achieved, but it helps to understand what is important before identifying the plan to achieve said goals. “After the goals have been defined and the resources have been identified, the optimal strategy must be determined. Determining the strategy may require revisiting the resources available, as well as the goals” (Blanchett, 2015, p. 49). For example, Blanchett mentions “if the optimal strategy is not consistent with the client’s wishes, it may result in the client having to save more than originally planned. After the plan has been determined it should be implemented. This may require opening up new accounts and making potentially significant changes in how savings are directed” (2015, p. …show more content…
Furthermore, the process of financial planning should be reviewed annually and upon any major business changes. Without the steps utilized for financial planning, with goals and resources identified and proper techniques to monitor costs which affect the company, a business can find themselves in a precarious situation. When working with customers or even vendors, there are steps to ensure better management of cash flow, by way of financial management. “Cash flow management means delaying outlays of cash as long as possible while encouraging anyone who owes you money to pay it as rapidly as possible” (Entrepeneur Media, Inc., 2015). Being able to identify any issues that may arise, financially, is a result of measuring cash flow with an accurate projection into the future. With educated guesses with a number of factors, such as payment histories, personal attention to detail on any upcoming expenses, and your relationship with a vendor can help gather information on the businesses cash flow projections. Not only is measuring cash flow important, but improving receivables “materials and supplies into products, inventory into receivables, and receivables into cash” (Entrepeneur Media, Inc.,

Related Documents