Financial planning

Financial Planning

Financial planning is a tool for planning cash flow (CF) and planning future profits or economic result (ER). The result of financial planning are statistical tables and graphs that display these two planned quantities. The planning itself is implemented through financial plans, which are divided into two categories:

• Annual financial plans that are created by the user usually for a period of 1 year ahead. These plans define regular fixed expenses for the operation of the company and regular income of the company, for example in the form of rentals.
• Financial plans of contracts
  • Automatic financial plans of contracts, which are created automatically when entering the planned invoicing date of the contract and the price of the contract.
  • Manual financial plans of contracts that are created by the user in situations where the invoicing of, for example, a longer-term contract is divided into several periods.

Annual Financial Plans

Annual financial plans define the firm's fixed expenses and regular income. Examples of fixed costs include:

• Wages
• Rents
• Office operation
• Leases and vehicle fleet
• Telecommunications
• Insurance
• …

Examples of regular income include:

• Rentals
• Positive interest
• …

Annual financial plans are created manually in the Finance / Financial Planning application. All amounts are entered excl. VAT in the main currency of the portal.

Financial plans of contracts

Each contract automatically creates a default financial plan. The default financial plan is automatically created when Planned billing is filled in the contract and at the same time the contract has quotation or contract items created. In such a case, the difference between income and expenses from the contract items is entered into the plan, and this planned value is placed in the initial financial plan:

• from the point of view of the planned ER as of the invoicing date,
• from the point of view of the planned CF as of the invoicing date, to which the default number of due days of the given client is additionally added.

The default financial plan can be replaced with your own – manually created – financial plan. A contract can contain multiple financial plans. Financial plans are created on the Finance tab in the contract form. All amounts are entered excl. VAT in the currency of the contract.

Planned cash flow (CF)

The basic prerequisite for displaying a CF plan is:

• Existence of annual financial plans,
• Existence of financial contracts plans – either automatic or manual,
• Regular uploading of monthly bank statements to the Bank application.

Planned CF is available in the Finance / Financial planning / Cash flow plan application. The standard CF plan includes both the amount of cash in bank accounts and in cashdesks. There is also a cashless version of the scheduled CF, which only counts cash balances in bank accounts.

Planned CF is calculated on a monthly basis. Each row of the Planned CF table shows the planned cash balance as of the last day of that month. Months that have already passed show the actual cash balance or actual balance in bank accounts and cashdesks. The months yet to come – including the current month – show the projected cash balance at the end of that month. Thus, the future months show the actual cash balance as of the last day of the month preceding today's date, further increased by the financial plans of the future periods. Financial plans from past months are not used.

The planned CF takes into account the VAT of all outgoing invoices and enters the given months as planned income on the due date of the outgoing invoice. In the same way, it enters the given months as a planned expenditure in the month when the VAT is to be deducted from the invoice.

The planned CF takes into account the VAT of received invoices or receipts and enters the months as income on the date when the VAT is to be claimed.

Planned profits or planned economic result

The basic prerequisite for displaying the ER plan is:

• Existence of annual financial plans,
• Existence of financial contracts plans – either automatic or manual.

The planned ER is available in the Finance / Financial planning application. Contract plans (revenues) and manual financial plans (expenditures) enter the planned ER.

Planned ER is calculated on a monthly basis. Each line of the planned ER table shows the planned amount of profit in the month. This amount is calculated as the difference between the financial plans of contracts and other financial plans in the month. The sum of the amount of profits for the whole year then indicates the planned amount of ER in the year.