Makal Business Voice

When you are preparing a financial study of your business plan is very important to note that one of the toughest jobs to be developed as an entrepreneur is to reflect on the overall impact of financing decisions and investment.  This process is called financial planning and financial study is part of any business plan.

Financial planning is necessary because funding decisions and investment are mutually interdependent and should not be taken independently.  In that sense, that this plan can be developed by you with full ability, it is necessary to bear in mind the concepts of working capital management and financial statements.

The working capital management refers to management of cash used for short-term costs of the firm (wages, rent, insurance, utilities, etc.) and also include all assets and liabilities (which are the accounts  for and against having the company in the short term, ie less than a year), this is a focal point for financial management.

However, when a company starts, it begins to generate revenue before expenses.  The money will come faster than they enter.  The cash flow will be negative, and will remain so until such time that the outputs match the inputs account, the balance point.

The total negative cash flow until then is to be funded in advance.  For example, if the company is expected to accumulate a negative flow of 3 million pesos, must be financed by at least that amount (plus an extra amount to prevent liquidity problems) before implementation.  Or at least, know where and how to access that money.

Another important aspect of any financial study is referred to the financial statements, as business owners and managers need updated financial information to take decisions on its future operations.

This considering that in the complex world of business today, characterized by the globalization of business, financial information plays an important role in producing information needed for the management and development of the economic system.

In this way the accounting is a discipline of human knowledge that can prepare general information on businesses.  This information is displayed by the financial statements.  The term “financial statements” includes: balance sheet, profit and loss, cash flow statement (AFP), among others.

Against this, the fundamental characteristics that financial information must relate to the usefulness and reliability.  The utility, as a characteristic of financial information, is the quality to adapt, because it is the purpose of users, among which are the owners, investors, employees, suppliers, creditors, government, customers and  in general society.  The reliability of the financial statements reflects the truth of what is happening in the business.

The knowledge and application of accounting plays an important role in the development of the financial study of the business plan, because again, as in other studies of the business plan, to have information quickly, timely and accurately presents great benefits to  time to make the business plan.

As you can see the task is not difficult, rather it is necessary to rely on a team where there multidisciplinary of knowledge, where the shortcomings of some, are supported by the knowledge of others, thus achieving a synergistic effect capable of converting a  business idea into a successful, sustainable and competitive.