An important element in managing of economic and social processes are planning and forecasting. They are used mainly for predetermination of the rational aspects in the development of the economy, changes over a specific period of growth of individual industries. Financial planning and forecasting are the main element of the financial mechanism.
Justification of financial indicators, of planned financial transactions and the impact of many economic decisions can be reached in the process of financial planning and forecasting. These two very similar concepts in the economic literature and in practice are often been identified.
In fact, financial planning should be preceded by forecasting and should evaluate a variety of options (respectively, should determine possible management of financial resources at the macro and micro levels).
Predictions can be medium-termed (5-10 years) and long-termed (more than 10 years).
Financial forecasting precedes the stage of drawing up of financial plans; it develops the concept of financial policy for a certain period of development of society.
The purpose of financial forecasting is to determine the real potential of financial resources, sources of formation and their use in the forecast period.
Forecasting of the financial system allows to authorities to identify different options for development and improvement of the finance system, forms and methods of implementing monetary policy.
Financial planning – is a scientific process of justification for a certain period of movement of financial resources and relevant financial relationships.
Its object is mainly the financial activities of the State or any business entity; and the final result – is the production of financial plans, ranging from estimates of individual agencies to the consolidated balance sheets of the State. It identifies not only the movement of resources for the development and use of various funds, but also mediating their financial relationships and emerging cost ratio.
Financial planning – it is a purposeful activity of the state, of the individual units and economic entities to substantiate the effectiveness of economic and social decisions based on their availability of funding sources, on optimization of its tasks and on achieving positive outcomes.
Financial planning should be based on knowledge about the objective laws of social development, trends of movement of financial resources; about the study of the original database results previously conducted activities and financial transactions.
Financial plan – is a plan for the formation, distribution and use of financial resources. Financial plans are all the links in the financial system, by the way the shape of the financial plan, the composition of its indicators shows the specifics of the section of the financial system. Thus, companies and organizations that operate on a commercial basis, make balance sheets of i
ncome and expenditure; institutions engaged in nonprofit work make estimates; insurance companies, associations and cooperative organizations make financial plans; public authorities – the budgets of different levels.
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