MODULE 6

FINANCIAL PLANNING:
TOOLS AND TECHNIQUES
THE PLANNING PROCESS
THE BUDGETING PROCESS
Financial planning refers to the
process of determining the best uses of the
financial resources of an organization to
attain its predetermined objectives and the
procurement of the required funds at the
least cost.
Financial Planning Tools are the instruments used to meet current and future financial goals
through a sound financial plan
What are the major planning tools and techniques?

1.SWOT (strengths, -Applies when you’ve made a decision and taken

weaknesses, opportunities, action
threats) analysis diagram

2. Stakeholder matrix -Who is a stakeholder-and Why do they matter?

3. Cause and effect diagram -Pushes you to consider all possible causes of a problem,
rather than just the ones that are most obvious
4. Risk map -A data visualization tool for communicating specific risks
an organization faces
5. Summary risk -Is a summary that lists estimates for all the risks
profile associated with a strategy, program, project or activity

6. Decision tree -Is a flow-chart diagram that shows the various outcomes
from a series of decisions

7. Radar chart -are used to compare two or more items or groups on

various features or characteristics
Financial planning process is a logical, six-step procedure:

Determining your current (1)

financial situation.
(4) Evaluating alternatives.

Developing financial goals. (2)

Creating and implementing
(5)
a financial action plan
Identifying alternative
courses of action.
(3)
Reevaluating and revising
(6) the plan.
 FINANCIAL PLANNING PROCESS
Determine Your Identifying
Current Financial Develop Evaluating
Alternative
Situation Financial Goals Courses Of Action Alternatives
In this first step of You should Developing You need to evaluate
financial planning periodically analyze alternatives is crucial possible courses of
process , you will your financial values for making good action, taking into
determine your and goals. This decisions. Although consideration your
current financial involves identifying many factors will life situation,
situation with regard how you feel about influence the personal values, and
to income, savings, money and why you available current economic
living expenses, and feel that way. The alternatives, conditions.
debts. purpose of this possible courses of Know the
Preparing a list of analysis is to action usually fall consequences of
current assets and differentiate your into these choices and you will
debts balances and needs from wants. categories: need to consider the
amounts spent for Specific goals are Continue same lost opportunities
various items gives vital to financial course of action that will result from
you a foundation for planning. You must Expand the current your decisions.
financial planning decide which goals situation
activities. to pursue. Change the current
situation
Take a new course of
 FINANCIAL PLANNING PROCESS
Create and
Implement a
Reevaluate and
Financial Action Plan Revise Your
Action Plan
In this step, you Financial planning is
develop an action a dynamic process
plan. This requires that does not end
choosing ways to when you take a
achieve your goals. particular action.
As you achieve your You need to
immediate or short- regularly assess your
term goals, the goals financial decisions.
next in priority will When life events
come into focus. affect your financial
needs, this financial
planning process will
provide a vehicle for
adapting to those
changes.
What is a budget and budgeting process?

A budget is a tool for planning, implementing, and controlling activities for

optimum utilization of scare resources in a business . It explains the company’s
objectives and the course of action it will choose to achieve its goals in detail.
Also, it mentions the controls to be put in place for achieving its successful
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implementation.

The budgeting process is the process of putting a budget in place. This process
involves planning and forecasting, implementing, monitoring and controlling,
and finally evaluating the performance of the budget.
 BUDGETING PROCESS
BUDGETING PROCESS refers to process that involves planning and forecasting, implementing, monitoring and
controlling, and finally evaluating performance of budget
APPROACHESS STEPS IN BUDGETING

Top Down Preparing Base for Budget According to Funding

Bottom Up
Approach
Approach
Where budgeting
Where budgeting
Creating Cost Buffer
decisions are taken
decisions start at
by senior
management departmental level Preparing Revenue and Expenditure Budget

Incorporating Departmental Budget

IMPORTANCE

Helps to
Incorporating Bonuses
Helps in
proper control
funding wasteful Provision For Capital Expenditure
according to expenditure
Helps in in
targets Changes in Budget Model and Review
setting up organization
the priority
to Approval and Implementation
channelize
resources Budgetary Controls
 THANK YOU
Reported by: Catherine P. Pereira Professor: Doc Rome Moralista