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This is how a financial plan for SMEs works

A fundamental part of the business plan of an SME is the financial plan. However, some of these organizations do not give the importance it deserves to the design of a detailed financial plan. And, they end up operating blindly, without being clear about the viability, the financing or the resources they need to make their business more profitable.

Paul Couso, commercial director of Datisa says that “Once the objectives have been established, a budget and adequate resources must be associated for the optimal functioning of each area. And, of course, to achieve these objectives. This is where the financial plan comes into play. This plan makes it possible to identify the viability of the business activity. And, at the same time, identify the financing needs that must be covered”.

By designing the financial plan, SMEs will be able to identify their financial needs in the short, medium and long term, the cost of daily operations and the investment they will have to make in tangible and intangible assets. On the other hand, they will also get information about its viability. They will do so based on two key aspects: the generation of sufficient resources to continue operating. And the generation of enough income -via sales- to make the company work.

Key aspects of the plan

For a financial plan to work it must include:

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  • Balance. It is the photograph that shows the state of the financial situation of the company. It is a key document to identify assets, rights and duties of the organization.
  • Budget of expenses, income, and profit and loss account. It collects the forecast of income and expenses of the company in a certain period. With this information, the financial area will be able to estimate the profit/loss of the company.
  • cash budget. It allows planning the availability of cash throughout the budgeted year, and the source of these availabilities.
  • Deviation control. Between the expenses, income, profit and loss lines, and budgeted cash availability, and their effective realizations. It allows anticipating financial and operational problems, and timely financial and operational decisions.
  • Investment planning. It helps determine where to invest in the next financial year to facilitate business continuity.

Pablo Couso insists that “The financial plan helps to analyze the need for financial resources that the business presents. Having this information will help to find optimal sources of financing. And, in many cases, you will avoid having to resort to external sources of financing”.

But, in general terms, designing a financial plan in the SME ecosystem will allow the profitability of its products/services to be identified. And determine the financial health of the business. In addition to identifying the need for financial resources in the short, medium and long term, to be able to anticipate events. And make smarter financial decisions.

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