5 Tips to Help with Financial Planning

objectives of strategic financial planning

Financial planning means putting your incomes and expenses on a scale to achieve monetary equilibrium or upward mobility on your income levels. Your plan should capture how your current and future risks are covered to protect you from economic uncertainties and losses. Planning helps you to sustain yourself and your family, and so it should be taken as a priority and not a choice. Another aspect of your plan that you should prioritize is your goals either in short, medium and long term and their budgetary requirements.

1. Understand Your Money Mindset

The first tip to having a productive financial plan is to understand your money mindset. If what matters most to you is the present then you fall in the survivor’s list. Survivors also include people who tend to have the urge to satisfy their current desires such as a pricey pair of shoes or a sumptuous snack with little or no thought of the financial implications of their decisions on tomorrow.

Achievers are action oriented and are classified as precious. They have investments, shares and bank deposits. Even if they lose their jobs, they still have something they can bounce back on. However, these actions do not portray financial stability because such people lack intention.

The wealthy people are the strategists. They are long term viewers. All their actions fulfill a purpose, and they seek development in all aspects of their life. They don’t just pump in money in endless investments but instead have fewer investments that are sustainable and profitable but take time to actualize.

Once you understand which money mindset best describes you, you will be able to draft a financial plan that works for you and your needs.

2. Formulate a Financial Plan

No engineer is complete without his measuring tape just as no electrician is complete without his tester. When you draft your plan on paper, you bring your ideas and thoughts to life. A blueprint of your plan enables you to have a reference for your progress. Start by stating your short, middle and long-term goals and then align them with their expenditure and projected profits. You also need to put into consideration your assets and liabilities and how you can maximize and minimize them respectively to achieve your goals.

Implement your plan and then conduct a monitoring and evaluation exercise as per the set timelines and make adjustments where necessary.

The golden rule here is to avoid spending before you have dealt with small/personal debts and bills. Saving does not require you to be earning a lump sum salary. Starting small especially when you are young with minimal responsibilities helps you have enough for investments in the future. Analyze your spending and cut on expenses that are not necessary. It is also advisable to plan for your retirement, even though you might not think about it when you’re young. The earlier you start saving, the more financially stable you will be once you’ve stopped working.

4. Invest in Yourself

The most valuable investment you can make is in yourself. It does not necessarily mean to completely lose you in a classroom trying to amass a good number of degrees. It captures your entire being. Learn to exercise more, travel to different places in the world or your country or attend inspiring and informative talks. When your life gets sucked into these various facets, you get exposed to a lot of things that will eventually guide you in making your financial plan. It is also crucial to build your career and increase your earning potential.

5. Seek Financial Advice

Once you have managed to grow your savings, it is advisable to seek advice from a financial planner to assist you to make sensible investment choices. A wise financial adviser will help you identify the risks involved in potential investments, and provide viable options for maximum returns while helping you achieve your financial goals in the shortest time possible. A financial adviser can also come in handy by helping you prepare a budget. You don’t have to seek financial advice from a financial planner only. You can also talk to a relative or a mentor who is good with money.


objectives of strategic financial planning

Strategic Financial Management: Definition, Benefits, and Example

objectives of strategic financial planning

Investopedia / Dennis Madamba

What Is Strategic Financial Management?

Strategic financial management means not only managing a company's finances but managing them with the intention to succeed—that is, to attain the company's long-term goals and objectives and maximize shareholder value over time.

Key Takeaways

Understanding Strategic Financial Management

Strategic financial management is about creating profit for the business and ensuring an acceptable return on investment (ROI). Financial management is accomplished through business financial plans, setting up financial controls, and financial decision-making.

Before a company can manage itself strategically, it first needs to define its objectives precisely, identify and quantify its available and potential resources, and devise a specific plan to use its finances and other capital resources toward achieving its goals.

Strategic management also involves understanding and properly controlling, allocating, and obtaining a company's assets and liabilities, including monitoring operational financing items like expenditures, revenues, accounts receivable and payable, cash flow, and profitability.

Strategic financial management encompasses furthermore involves continuous evaluating, planning, and adjusting to keep the company focused and on track toward long-term goals. When a company is managing strategically, it deals with short-term issues on an ad hoc basis in ways that do not derail its long-term vision.

Strategic financial management includes assessing and managing a company's capital structure, the mix of debt and equity finance employed, to ensure a company's long-term solvency.

Strategic Versus Tactical Financial Management

The term "strategic" refers to financial management practices that are focused on long-term success, as opposed to "tactical" management decisions, which relate to short-term positioning. If a company is being strategic instead of tactical, it makes financial decisions based on what it thinks would achieve results ultimately—that is, in the future—which implies that to realize those results, a firm sometimes must tolerate losses in the present.

"Strategic" management focuses on long-term success and "tactical" management relates to short-term positioning.

Part of effective strategic financial management thus may involve sacrificing or readjusting short-term goals in order to attain the company's long-term objectives more efficiently. For example, if a company suffered a net loss for the previous year, then it may choose to reduce its asset base through closing facilities or reducing staff, thereby decreasing its operating expenses. Taking such steps may result in restructuring costs or other one-time items that negatively affect the company's finances further in the short term, but which position the company better to succeed in the long term.

These short-term versus long-term tradeoffs often need to be made with various stakeholders in mind. For instance, shareholders of public companies may discipline management for decisions that negatively affect a company's share price in the short term, even though the long-term health of the company becomes more solid by the same decisions.

The Elements of Strategic Financial Management

A company will apply strategic financial management throughout its organizational operations, which involves designing elements that will maximize the firm's financial resources and use them efficiently. Here a firm needs to be creative, as there is no one-size-fits-all approach to strategic management, and each company will devise elements that reflect its own particular needs and goals. However, some of the more common elements of strategic financial management could include the following.

Managing and Assessing Risk

Establishing Ongoing Procedures

Strategies Based on Industry

Just as financial management strategies will vary from company to company, they also can differ according to industry and sector .

Firms that operate in fast-growing industries—like information technology or technical services—would want to choose strategies that cite their goals for growth and specify movement in a positive direction. Their objectives, for example, might include launching a new product or increasing gross revenue within the next 12 months.

On the other hand, companies in slow-growing industries—like sugar manufacturing or coal-power production—could choose objectives that focus on protecting their assets and managing expenses, such as reducing administrative costs by a certain percentage.

What Are the Benefits of Strategic Management?

Having a long-term focus helps a company maintain its goals, even as short-term rough patches or opportunities come and go. As a result, strategic management helps keep a firm profitable and stable by sticking to its long-run plan. Strategic management not only sets company targets but sets guidelines for achieving those objectives even as challenges appear along the way.

What Is the Scope of Strategic Financial Management?

Strategic management can encompass all aspects of a firm's long-term objectives. Financial management often plays a key role in this, which involves cost reduction, risk management, and budgeting.

What Is the Ultimate Objective of Strategic Financial Management?

The goal of strategic financial management is to ensure that long-term goals are properly planned for and ultimately met.

Investing Basics

Podcast Episodes


By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

What is Strategic Financial Planning?

Overview of strategic financial planning.

Strategic financial planning is the process of determining how a business manages itself financially to ensure it achieves its goals and objectives for both the short-term and long-term. Sound planning considers every aspect of a business' operations and the impact each has on the overall financial position of the company.

During an organization's planning cycle there will be models supporting different types of planning processes such as sales planning, headcount planning, revenue and expense planning, and capital planning. These models are designed to collect data at the micro level. Integrated Financial Statements is the macro level model consolidating and analyzing the results of the micro-planning processes. At a corporate level, the results of the planning process should be validated against the strategic objectives of the corporation and provide predictability into the long-range plan.

While many companies rely on ERP systems and spreadsheets for their planning process, leading to errors and difficulty in arriving at consensus plans and budgets, high-performance companies replace the manual spreadsheet process with robust multidimensional modeling capabilities and integrated workflows to minimize error, maximize control, and boost accountability.

MindStream Analytics offers performance management solutions , support, and services that deliver world-leading enterprise planning and consolidation to help companies plan, understand and manage financial and operational performance. Finance can determine if corporate objectives are in synch with operational plans.

Contact us to learn more about eliminating the chaos of collecting, revising and approving budgets and forecasts by implementing solutions that allow strategic and controlled planning processes with the flexibility to adapt as your business changes.

Contact MindStream Analytics

Want to know more about Strategic Financial Planning? Fill out the form below and we'll get back to you shortly.

Partner SpotLight

Oracle Partner

Oracle has the most comprehensive suite of integrated, global business applications that enable organizations to make better decisions, reduce cost..

Oracle Profile

Case Studies

Quick Links

MindStream Employee Login

objectives of strategic financial planning

Insights - Articles, Blogs and on-demand webcasts

Financial planning: The key to a successful strategic plan

Tags: Healthcare

A strategic plan identifies where you want your healthcare organization to go — and then maps out the steps to get there. Financial planning plays an important role in the strategic plan, allowing your organization to evaluate the impact of a particular initiative and then prioritize strategies. This is essential today when there is limited time and resources to implement initiatives.

For example, if you have a rural health clinic and you plan to expand services over the next three years, you need to understand the demand for those services and the resources needed to fund the expanded operations. Will this expansion have an immediate return, allowing for investment in other initiatives that may have a longer ramp-up time?

If a strategic plan is the roadmap for your organization, the financial plan is both the fuel and the guardrails. It outlines not only how you will allocate your resources to achieve the goals but also how those goals will affect your organization’s long-term financial well-being.

A strategic financial plan will serve functions such as these:

6 steps to build your strategic financial plan

Strategic financial planning recognizes that the company’s goals and its financial functions do not exist as silos. This process combines traditional strategy formulation with financial planning in a hybrid approach.

It can look a bit different than traditional strategic planning, with time built into the process to conduct scenario testing and cost benefit analysis — before leadership commits to targets.

Here’s what the process can look like, in six steps:

1. Identify the team and stakeholders

Strategic financial plans can’t be crafted in a vacuum. Certain stakeholders may have greater insight into the external environment, including the political, demographic, technological and competitive forces in the market.

Other stakeholders are better positioned for internal introspection, identifying the organization’s strengths and shortcomings. Your finance team can help gather business intelligence and will have its own perspective on the organization’s financial future.

Once you’ve identified your planning team, establish key roles. That includes identifying expectations and determining how decisions will be made. One best practice is to develop a charter for your leadership group. Quantify and allocate shared resources and agree on the planning process to be followed.

2. Develop a common fact base

Identify what you need to know to develop your strategic financial plan. For example, a critical access hospital may start with defining its market and client base. Specifically, determining what geographic area most of its patients come from and the ages of their clients. This information, paired with existing volumes (current state) and projected volumes (future state), inform the needs of a physician/provider complement.

Once you know the staff, equipment, resources and technology to meet market needs (status quo), you can then create a financial forecast to pressure-test strategic initiatives by looking at the resulting changes in operating performance, liquidity and capital metrics.

3. Identify objectives and opportunities

The central part of any strategic plan is identifying what you want to accomplish. Are you looking at revenue goals? Profitability goals? These are objectives.

Develop a list of available opportunities. External benchmarks and internal data can be useful in identifying financial and operational opportunities for improvement. Look for gaps in comparative key performance indicators around revenue, volume, collections, profitability, etc.

Other signals may be less apparent but equally important. For example, difficulty developing, recruiting and/or retaining certain staff and/or technical skills can be a sign that changes should be considered.

4. Determine strategy and prioritize

You have limited resources, so where do you start? As a group, you’ll need to develop a prioritization framework. Use both quantitative and qualitative criteria and recognize that financial impact likely won’t be the only factor when it comes to making decisions.

Your framework might look something like the table below. Other criteria could include complexity or effort required.

5. Quantify financial impact

Your strategic financial plan grounds your plans in reality. Estimate the project costs, understand the potential revenue stream and then estimate and compare the overall cost to benefit. Test every goal for cost-effectiveness. Until you do that, the strategic plan is just a list of opportunities that are not properly vetted.

Consider the impact of any initiative against metrics such as these:

6. Implement, measure, monitor and improve

As you implement, set a regular cadence for check-ins and leadership updates against the plan. This should be a standing agenda item at the board of directors’ meetings. Cascade plans and the progress on those plans down through the organization. Have the discipline to communicate successes and challenges across leadership, employees and your stakeholder group.

When the business fails to meet certain goals, ask yourself:

Remember, there are very few flawless implementation plans. Be nimble and adjust regularly.

How Wipfli can help

Strategic financial planning requires a complex knowledge of financial projections, scenario testing, working capital management and more. The process can also be time intensive, putting significant demand on CFOs and financial teams who may already be stretched thin.

Wipfli can provide you with dedicated project assistance, offering data collection and responsive financial analysis to your strategic planning team. This allows you to keep the process moving forward efficiently, while informing your plan with a solid financial foundation.

Contact us to learn more .

Sign up to receive additional healthcare industry content in your inbox, or continue reading on:

Jeffrey Johnson

Article Download

Please register, contact information.

* = required fields

First Name *

Last Name *

Phone number *

The Relationship Between Strategic & Financial Planning

Why Is Strategic Management Needed?

How can a company keep its strategic plan dynamic, how to determine the net income using the contribution margin income statement.

Strategic planning is the process of identifying where you want your company to be in the future and then charting steps to get there. However, you can't get where you want to go unless you have the financial resources to execute your vision. Financial planning is the process of connecting your financial operations with your big picture strategy.

Strategic planning outlines what you plan to do. Financial planning outlines how to use your financial resources to achieve these objectives.

Strategic Financial Planning

There is a give and take relationship between your strategic and financial plans. You need financial planning to achieve your strategic objectives, but your strategic objectives also influence your financial strategies. If you own one store and plan to open three more over the next five years, you need funding to finance the new ventures, which will, in turn, will bring in additional revenue that is useful for paying for future expansion.

Strategic financial management depends on developing a financial plan that syncs with your company's overall strategic plan and then reevaluating and adapting as circumstances unfold. If you do not meet your specific goals and milestones, you should ask whether your business has not been operating effectively or whether the goals themselves were unrealistic.

Setting Goals

Effective goals for strategic planning are realistic and quantifiable. They should be based on real trends and numbers rather than wishful thinking. Financial planning brings professional tools and information to this process by drawing on past accounting information and integrating research and projections for future planning.

Reassessing Goals

Because long-term planning covers an extended period, your company's strategic financial management will most likely evolve. If your results fall short of your goals or exceed them by a significant amount, it's time to look at the strategic variance or the specific amount you have miscalculated. According to the Corporate Finance Institute , a relatively small strategic variance is understandable and even expected because you don't have a crystal ball to see into the future, but a dramatic strategic variance suggests you need to revisit the planning process.

In case of a dramatic variance, assess whether the discrepancy came from faulty assumptions and accounting or unforeseen circumstances. If it is the former, you can take a closer look at your assumptions or figures and then recalculate in terms of what you have discovered. If the discrepancy comes from the latter, you still need to recalculate, taking into account the new circumstances at play.

Devra Gartenstein founded her first food business in 1987. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills.

Related Articles

The importance of strategic evaluation, why is it important for entrepreneurs to develop financial plans for their companies, examples of strategic management accounting, what does a business plan consist of, how does management implement strategies in management accounting, goals & plans for a successful business, how to evaluate strategic management, about business financial planning, practical interview questions for a finance director, most popular.

The Role of Finance in the Strategic-Planning and Decision-Making Process

Financial goals and metrics help firms implement strategy and track success.

Share on Facebook

The fundamental success of a strategy depends on three critical factors: a firm’s alignment with the external environment, a realistic internal view of its core competencies and sustainable competitive advantages, and careful implementation and monitoring. [1] This article discusses the role of finance in strategic planning, decision making, formulation, implementation, and monitoring.


objectives of strategic financial planning

A good strategic plan includes metrics that translate the vision and mission into specific end points. [5] This is critical because strategic planning is ultimately about resource allocation and would not be relevant if resources were unlimited. This article aims to explain how finance, financial goals, and financial performance can play a more integral role in the strategic planning and decision-making process, particularly in the implementation and monitoring stage.

The Strategic-Planning and Decision-Making Process

1. Vision Statement

The creation of a broad statement about the company’s values, purpose, and future direction is the first step in the strategic-planning process. [6] The vision statement must express the company’s core ideologies—what it stands for and why it exists—and its vision for the future, that is, what it aspires to be, achieve, or create. [7]

2. Mission Statement

An effective mission statement conveys eight key components about the firm: target customers and markets; main products and services; geographic domain; core technologies; commitment to survival, growth, and profitability; philosophy; self-concept; and desired public image. [8] The finance component is represented by the company’s commitment to survival, growth, and profitability. [9] The company’s long-term financial goals represent its commitment to a strategy that is innovative, updated, unique, value-driven, and superior to those of competitors. [10]

3. Analysis

This third step is an analysis of the firm’s business trends, external opportunities, internal resources, and core competencies. For external analysis, firms often utilize Porter’s five forces model of industry competition, [11] which identifies the company’s level of rivalry with existing competitors, the threat of substitute products, the potential for new entrants, the bargaining power of suppliers, and the bargaining power of customers. [12]

For internal analysis, companies can apply the industry evolution model, which identifies takeoff (technology, product quality, and product performance features), rapid growth (driving costs down and pursuing product innovation), early maturity and slowing growth (cost reduction, value services, and aggressive tactics to maintain or gain market share), market saturation (elimination of marginal products and continuous improvement of value-chain activities), and stagnation or decline (redirection to fastest-growing market segments and efforts to be a low-cost industry leader). [13]

Another method, value-chain analysis clarifies a firm’s value-creation process based on its primary and secondary activities. [14] This becomes a more insightful analytical tool when used in conjunction with activity-based costing and benchmarking tools that help the firm determine its major costs, resource strengths, and competencies, as well as identify areas where productivity can be improved and where re-engineering may produce a greater economic impact. [15]

SWOT (strengths, weaknesses, opportunities, and threats) is a classic model of internal and external analysis providing management information to set priorities and fully utilize the firm’s competencies and capabilities to exploit external opportunities, [16] determine the critical weaknesses that need to be corrected, and counter existing threats. [17]

4. Strategy Formulation

To formulate a long-term strategy, Porter’s generic strategies model [18] is useful as it helps the firm aim for one of the following competitive advantages: a) low-cost leadership (product is a commodity, buyers are price-sensitive, and there are few opportunities for differentiation); b) differentiation (buyers’ needs and preferences are diverse and there are opportunities for product differentiation); c) best-cost provider (buyers expect superior value at a lower price); d) focused low-cost (market niches with specific tastes and needs); or e) focused differentiation (market niches with unique preferences and needs). [19]

5. Strategy Implementation and Management

In the last ten years, the balanced scorecard (BSC) [20] has become one of the most effective management instruments for implementing and monitoring strategy execution as it helps to align strategy with expected performance and it stresses the importance of establishing financial goals for employees, functional areas, and business units. The BSC ensures that the strategy is translated into objectives, operational actions, and financial goals and focuses on four key dimensions: financial factors, employee learning and growth, customer satisfaction, and internal business processes. [21]

The Role of Finance

Financial metrics have long been the standard for assessing a firm’s performance. The BSC supports the role of finance in establishing and monitoring specific and measurable financial strategic goals on a coordinated, integrated basis, thus enabling the firm to operate efficiently and effectively. Financial goals and metrics are established based on benchmarking the “best-in-industry” and include:

1. Free Cash Flow

This is a measure of the firm’s financial soundness and shows how efficiently its financial resources are being utilized to generate additional cash for future investments. [22] It represents the net cash available after deducting the investments and working capital increases from the firm’s operating cash flow. Companies should utilize this metric when they anticipate substantial capital expenditures in the near future or follow-through for implemented projects.

2. Economic Value-Added

This is the bottom-line contribution on a risk-adjusted basis and helps management to make effective, timely decisions to expand businesses that increase the firm’s economic value and to implement corrective actions in those that are destroying its value. [23] It is determined by deducting the operating capital cost from the net income. Companies set economic value-added goals to effectively assess their businesses’ value contributions and improve the resource allocation process.

3. Asset Management

This calls for the efficient management of current assets (cash, receivables, inventory) and current liabilities (payables, accruals) turnovers and the enhanced management of its working capital and cash conversion cycle. Companies must utilize this practice when their operating performance falls behind industry benchmarks or benchmarked companies.

4. Financing Decisions and Capital Structure

Here, financing is limited to the optimal capital structure (debt ratio or leverage), which is the level that minimizes the firm’s cost of capital. This optimal capital structure determines the firm’s reserve borrowing capacity (short- and long-term) and the risk of potential financial distress. [24] Companies establish this structure when their cost of capital rises above that of direct competitors and there is a lack of new investments.

5. Profitability Ratios

This is a measure of the operational efficiency of a firm. Profitability ratios also indicate inefficient areas that require corrective actions by management; they measure profit relationships with sales, total assets, and net worth. Companies must set profitability ratio goals when they need to operate more effectively and pursue improvements in their value-chain activities.

6. Growth Indices

Growth indices evaluate sales and market share growth and determine the acceptable trade-off of growth with respect to reductions in cash flows, profit margins, and returns on investment. Growth usually drains cash and reserve borrowing funds, and sometimes, aggressive asset management is required to ensure sufficient cash and limited borrowing. [25] Companies must set growth index goals when growth rates have lagged behind the industry norms or when they have high operating leverage.

7. Risk Assessment and Management

A firm must address its key uncertainties by identifying, measuring, and controlling its existing risks in corporate governance and regulatory compliance, the likelihood of their occurrence, and their economic impact. Then, a process must be implemented to mitigate the causes and effects of those risks. [26] Companies must make these assessments when they anticipate greater uncertainty in their business or when there is a need to enhance their risk culture.

8. Tax Optimization

Many functional areas and business units need to manage the level of tax liability undertaken in conducting business and to understand that mitigating risk also reduces expected taxes. [27] Moreover, new initiatives, acquisitions, and product development projects must be weighed against their tax implications and net after-tax contribution to the firm’s value. In general, performance must, whenever possible, be measured on an after-tax basis. Global companies must adopt this measure when operating in different tax environments, where they are able to take advantage of inconsistencies in tax regulations.

The introduction of the balanced scorecard emphasized financial performance as one of the key indicators of a firm’s success and helped to link strategic goals to performance and provide timely, useful information to facilitate strategic and operational control decisions. This has led to the role of finance in the strategic planning process becoming more relevant than ever.

Empirical studies have shown that a vast majority of corporate strategies fail during execution. The above financial metrics help firms implement and monitor their strategies with specific, industry-related, and measurable financial goals, strengthening the organization’s capabilities with hard-to-imitate and non-substitutable competencies. They create sustainable competitive advantages that maximize a firm’s value, the main objective of all stakeholders.

[1] M.E. Porter, “ What is Strategy ?” Harvard Business Review , 74, no. 6 (1996). [purchase required]

[2] D. Abell, Defining the Business: The Starting Point of Strategic Planning , (New Jersey: Prentice-Hall, 1980).

[3] J.S. Bruner, The Process of Education: A Landmark in Education Theory , (hyperlink no longer accessible). (Boston: Harvard University Press, 1977).

[4] J.A. Pearce and R.B. Robinson, Formulation, Implementation, and Control of Competitive Strategy , (New York: Irwin McGraw-Hill, 2000).

[5] C.S. Clark and S.E. Krentz, “Avoiding the Pitfalls of Strategic Planning,” Healthcare Financial Management , 60, no. 11 (2004): 63–68.

[6] T. Jick and M. Peiperl, Managing Change: Cases and Concepts , (New York: Irwin/McGraw-Hill, 2003).

[7] J.C. Collins and J.I. Porras, “ Building Your Company’s Vision ,” Harvard Business Review , 74, no. 5 (1996). [purchase required]

[8] Pearce and Robinson.

[9] J.A. Pearce and F. David, “ Corporate Mission Statement: The Bottom Line ,” The Academy of Management Executive , 1, no. 2 (1987): 109–116. [purchase required]

[10] R.K. Johnson, “Strategy, Success, a Dynamic Economy, and the 21st Century Manager,” The Business Review , 5, no. 2 (2006).

[11] M.E. Porter, “How Competitive Forces Shape Strategy,” Harvard Business Review , 57, no. 2 (1979).

[13] A.A. Thompson, A.J. Strickland, and J.E. Gamble, Crafting and Executing Strategy , (New York: McGraw-Hill/Irwin, 2009).

[14] Pearce and Robinson.

[15] Thompson, Strickland, and Gamble.

[16] B. Jovanovic and G.M. MacDonald, “ The Life Cycle of a Competitive Industry ,” The Journal of Political Economy , 102, no. 2 (1994: 322–347).

[17] C.A. Lai and J.C. Rivera, Jr., “Using a Strategic Planning Tool as a Framework for Case Analysis,” Journal of College Science Teaching , 36 , no. 2 (2006): 26–31.

[18] M.E. Porter, Competitive Advantage: Techniques for Analyzing Industries and Competitors , (New York: The Free Press, 1980).

[19] Thompson, Strickland, and Gamble.

[20] R.S. Kaplan and D.P. Norton, “Using the Balanced Scorecard as a Strategic Management System,” (hyperlink no longer accessible).  Harvard Business Review , 74, no. 1 (1996).

[22] Peter Grant, “How Financial Targets Determine Your Strategy,” Global Finance , 11, no. 3 (1997): 30–34

[24] Sidney L. Barton and Paul J. Gordon, “Corporate Strategy: Useful Perspective for the Study of Capital Structure?” The Academy of Management Review , 12, no. 1 (1987): 67–75 .

[25] B.T. Gale and B. Branch, “Cash Flow Analysis: More Important Than Ever,” Harvard Business Review , July–August (1981).

[26] H.D. Pforsich, B.K.P. Kramer, and G.R. Just, “Establishing an Effective Internal Audit Department,” Strategic Finance , 87, no. 10 (2006): 22–29.

[27] Q. Lawrence, “Hedging in Perspective,” Corporate Finance , 115, no. 36 (1994).

Print Friendly, PDF & Email

Six Steps for Confronting the Emerging Leadership Succession Crisis

Battle a leadership-succession crisis with comprehensive talent-management systems to identify and develop high-potential leaders early in their careers.

Interview with Robert Eckert, Chairman of the Board and CEO of Mattel, Incorporated

Robert Eckert, Chairman and CEO of Mattel, discusses his role at the helm of the worldwide leader in toy design, manufacturing, and marketing.

Political Connections: The Missing Dimension in Leadership

Political Connections: The Missing Dimension in Leadership

This research focuses on three key dimensions of leadership: charismatic leadership, instrumental leadership, and political connections.

How Coach, H-P, Zara, and Ford Profited from a Comprehensive Application of Market Orientation

How Coach, H-P, Zara, and Ford Profited from a Comprehensive Application of Market Orientation

An integration of management and marketing approaches to market orientation is necessary to gain its full benefits, as evidenced by the success of Coach, H-P, Zara, and Ford.

Three Ways Larger Monitors Can Improve Productivity

Three Ways Larger Monitors Can Improve Productivity

If computers are always getting faster, but people are not, how can we maximize employee productivity when it comes time to upgrade computer systems?

The Role of Finance in the Strategic-Planning and Decision-Making Process

This article discusses the role of finance in strategic planning, decision making, formulation, implementation, and monitoring.

The Final Issue of the GBR Is Dedicated to Dr. Owen Hall, Jr.

The Final Issue of the GBR Is Dedicated to Dr. Owen Hall, Jr.

Junior was a man devoted to Pepperdine, his students, and his colleagues and was a stalwart member on many committees, always looking for how to best serve the Pepperdine Graziadio Business School and the University.

After the Covid-19 Economic Crisis

After the Covid-19 Economic Crisis

Introduction Value for Money (VfM) analysis helps governments decide whether it is more cost-effective to do a project through traditional procurement, or through PPPs. State government financial departments, project teams, and senior management can run this type of simplified VfM analysis with the help of a few consultants in order to select the ideal type … Continued

Unprecedented Times

Unprecedented Times

Companies should leverage new cost savings, optimize critical assets, and be purposeful with building or sustaining their company culture in a digitally distributed environment, while taking into consideration the human factor more than ever before.

Your Article Library

The objectives and importance of financial planning for an organization.

objectives of strategic financial planning


Some of the important objectives and importance of financial planning for an organization are as follows:

Financial planning means deciding in advance how much to spend, on what to spend according to the funds at your disposal.

Financial Planning

Image Courtesy :

In the words of Gerestenbug financial planning includes:

(i) Determination of amount of finance needed by an enterprise to carry out its operations smoothly.

(ii) Determination of sources of funds, i.e., the pattern of securities to be issued.

(iii) Determination of suitable policies for proper utilisation and administration of funds.

(a) The financial planning begins with determination of total capital requirement. For this the finance managers do the sales forecast and if the future prospects appear to be bright and expect increase in sale, then firm needs to increase its production capacity which means more requirement of long term funds. Higher level of production and increase in sales will require higher fixed as well as working capital.

(b) After estimating the requirement of funds the next step of financial planning is deciding how to raise this finance. Finance may be internally generated by the business or capital may have to be raised from external sources such as equity shares, preference shares, debentures, loans, etc.

(c) Financial planning is broader in scope as it does not end by raising estimated finance. It includes long term investment decision. In financial planning finance manager analyses various investments plans and selects the most appropriate. Finance managers make short term financial plan called budgets.

Objectives of Financial Planning :

Financial planning is done to achieve the following two objectives:

1. To ensure availability of funds whenever these are required:

The main objective of financial planning is that sufficient fund should be available in the company for different purposes such as for purchase of long term assets, to meet day-to- day expenses, etc. It ensures timely availability of finance. Along with availability financial planning also tries to specify the sources of finance.

2. To see that firm does not raise resources unnecessarily:

Excess funding is as bad as inadequate or shortage of funds. If there is surplus money, financial planning must invest it in the best possible manner as keeping financial resources idle is a great loss for an organisation.

Financial Planning includes both short term as well as the long term planning. Long term planning focuses on capital expenditure plan whereas short term financial plans are called budgets. Budgets include detailed plan of action for a period of one year or less.

Importance of Financial Planning :

Sound financial planning is essential for success of any business enterprise. Its need is felt because of the following reasons:

1. It Facilitates Collection of Optimum Funds:

The financial planning estimates the precise requirement of funds which means to avoid wastage and over-capitalization situation.

2. It Helps in Fixing the Most Appropriate Capital Structure:

Funds can be arranged from various sources and are used for long term, medium term and short term. Financial planning is necessary for tapping appropriate sources at appropriate time as long term funds are generally contributed by shareholders and debenture holders, medium term by financial institutions and short term by commercial banks.

3. Helps in Investing Finance in Right Projects:

Financial plan suggests how the funds are to be allocated for various purposes by comparing various investment proposals.

4. Helps in Operational Activities:

The success or failure of production and distribution function of business depends upon the financial decisions as right decision ensures smooth flow of finance and smooth operation of production and distribution.

5. Base for Financial Control:

Financial planning acts as basis for checking the financial activities by comparing the actual revenue with estimated revenue and actual cost with estimated cost.

6. Helps in Proper Utilisation of Finance:

Finance is the life blood of business. So financial planning is an integral part of the corporate planning of business. All business plans depend upon the soundness of financial planning.

7. Helps in Avoiding Business Shocks and Surprises:

By anticipating the financial requirements financial planning helps to avoid shock or surprises which otherwise firms have to face in uncertain situations.

8. Link between Investment and Financing Decisions:

Financial planning helps in deciding debt/equity ratio and by deciding where to invest this fund. It creates a link between both the decisions.

9. Helps in Coordination:

It helps in coordinating various business functions such as production, sales function etc.

10. It Links Present with Future:

Financial planning relates present financial requirement with future requirement by anticipating the sales and growth plans of the company.

Related Articles:


No comments yet.

Leave a reply click here to cancel reply..

You must be logged in to post a comment.

web statistics

Strategic Financial Management

Describes the process of managing the finances of a company to meet its strategic goals

What is Strategic Financial Management?

Strategic financial management is a term used to describe the process of managing the finances of a company to meet its strategic goals. It is a management approach that uses different techniques and financial tools to devise a strategic plan. Strategic financial management ensures that the strategy chosen is implemented to achieve the desired goals.

Strategic Financial Management

Features of Strategic Financial Management

Importance of Strategic Financial Management

The approach of strategic financial management is to drive decision making that prioritizes business objectives in the long term. Strategic financial management not only assists in setting company targets but also creates a platform for planning and governing plans to tackle challenges along the way. It also involves laying out steps to drive the business towards its objectives.

The purpose of strategic financial management is to identify the possible strategies capable of maximizing the organization’s market value . Also, it ensures that the organization is following the plan efficiently to attain the desired short-term and long-term goals and maximize value for the shareholders. Strategic financial management manages the financial resources of the organization for achieving its business objectives.

Goal-Setting Process

There are various ways to set goals for strategic financial management. However, regardless of the method, it is important to use goal-setting to enable conversations, ensure the involvement of the main stakeholders, and identify achievable and striving strategies. The following are the two basic approaches followed for setting the goals:

SMART is a traditional approach to setting goals. It establishes the criteria to create a business objective.

The management of an organization needs to decide on which goal-setting approach would best fit their business as well as the requirements of strategic financial management.

Certain factors need to be addressed while determining the objectives of strategic financial management. They are as follows:

1. Involvement of Teams

Other departments, such as IT and marketing, are often involved in strategic financial management. Hence, these departments must be engaged to help create the planned strategies.

2. Key Performance Indicators (KPIs)

The management team needs to determine which KPIs can be used for tracking the progress towards each business objective. Some financial management KPIs are easy to determine as they involve working towards a specific financial target; however, other KPIs may  be non-quantitative or track short-term progress and help ensure that the organization is moving towards its goal.

3. Timelines

It is important to decide how long it would take the organization to reach that specific target. The management team needs to decide actionable steps depending on the timeline and adjust the strategies whenever required.

The strategies planned by the management should involve steps that would move the business closer to achieving its goals. Such strategies can be marketing campaigns and sales initiatives that are considered critical for a business to reach its goal.

Additional Resources

Thank you for reading CFI’s guide to Strategic Financial Management. To keep learning and developing your knowledge base, please explore the additional relevant resources below:

objectives of strategic financial planning


Modern Leadership for the Modern Professional

All Blog Posts

Strategic financial planning: growing your business the smart way, strategic financial planning definition - strategic financial planning defined and explained.

Strategic financial planning is the process of figuring out how a company will handle its money to reach its short-term and long-term goals. Good financial planning takes into account all of a company's activities and how they affect each other and its finances.

In order to make a complete financial plan, strategic financial planning includes a full, 360-degree analysis of the company's performance.

Budget Development, Cost Systems and Management Report - Strategic Financial Planning Definition

Budget development involves creating a financial plan that outlines projected revenue and expenses for a given period, typically a fiscal year. It helps organizations allocate resources, prioritize spending, and track performance.

Cost systems refer to the processes and techniques used to determine the cost of producing goods and services. It includes cost accounting, cost analysis, and cost control.

Management reports are required on a regular basis for organizations to provide information on their financial and operational performance. Management uses these to make informed decisions and track progress toward goals. Financial statements, budget-to-actual comparisons, and key performance indicator (KPI) reports are all types of management reports.

Resources Required to Achieve Resources (Cost, Type, Amount) - Strategic Financial Planning Definition

In strategic financial planning, the resources needed to reach goals can change based on the size and goals of the organization.

The following are some of the shared resources needed for effective financial planning:

Cost: The cost of financial planning can include both internal and external resources. The time and effort of staff can be considered internal resources, while the cost of hiring consultants or outside experts can be considered an external resource.

Type: For financial planning, you need things like financial software, tools for analyzing data, and tools for researching the market.

Amount: The size and complexity of the financial plan will determine how many resources are needed. Larger organizations may have to pay a lot, while smaller ones may be able to reach their goals with a small amount of money.

When making a financial plan, it is important to think about both how much resources will cost and how many of them will be available. The most effective financial strategies are well-designed, well-executed, and well-supported by the appropriate resources.

Working Capital Management (Inventory, Receivables, Payables, Cash) - Strategic Financial Planning Definition

Working capital management refers to managing a company's short-term assets and liabilities to ensure its ability to meet its obligations and maintain ongoing operations.

Critical components of working capital management include:

Inventory: Managing your company's raw materials, work-in-progress, and finished goods to ensure an optimal balance between holding too much stock (which ties up cash) and insufficient inventory to meet customer demand.

Receivables: Managing your company's accounts receivable, including collecting customer payments and managing bad debt.

Payables: The management of your company's accounts payable, including the payment of bills and negotiation of payment terms with suppliers.

Cash: Managing your company's cash flow, including predicting and controlling cash inflows and outflows and managing short-term investments and borrowing.

Effective working capital management helps companies stay financially stable, lower the risk of going bankrupt, and make more money. By keeping track of its short-term assets and debts, a company can make sure it has enough money to pay its bills and invest in growth opportunities.

Employee Structure, Payroll and Benefits - Strategic Financial Planning Definition

Employee structure, payroll, and benefits are essential components of strategic financial planning.

Employee Structure: The "employee structure" of a company is the number and types of workers it needs to reach its goals. It involves thinking about the size and make-up of the workforce as well as how employees are split between departments and locations.

Payroll: Payroll refers to the process of paying employees for their work. It involves figuring out and processing regular pay, overtime pay, bonuses, and other forms of compensation.

Benefits: Benefits are things like health insurance, retirement plans, paid time off, and other perks that employees get in addition to their wages.

When making a financial plan, a company needs to think about how much their employee structure, payroll, and benefits will cost and make sure they fit with their overall financial goals. It involves thinking about the long-term cost effects of employee benefits like health insurance and pension plans, as well as the possible effects of changes to labor laws and rules. By carefully managing their employee structure, payroll, and benefits, companies can improve their financial stability, attract and keep good workers, and stay ahead of the competition in the market.

Risk Identification and Management - Strategic Financial Planning Definition

Risk identification and management is the process of finding possible threats to an organization's goals and objectives and putting plans in place to reduce or deal with those threats.

Risk Identification: It means finding and evaluating the organization's possible risks, such as market, operational, financial, and reputational risks.

Risk Assessment: It involves evaluating the likelihood and impact of each identified risk and prioritizing them based on their potential impact on the organization.

Risk Mitigation: It involves implementing strategies to reduce the likelihood or impact of risks, such as implementing controls, transferring risk through insurance, or avoiding them altogether.

Risk Monitoring and Review: It involves regular monitoring, reviewing the effectiveness of risk management strategies, and making changes as necessary to ensure effective risk management.

Risk management is an ongoing process that helps organizations make better decisions, better use their resources, and become more resistant to threats from the outside. By identifying and managing risks, organizations can improve their financial stability, protect their reputations, and reach their goals and objectives more effectively.

Corporate Tax Planning - Strategic Financial Planning Definition

Corporate tax planning legally reduces a company's tax burden by making smart business and financial decisions. It can include maximizing deductions, utilizing tax credits, deferring income, and reorganizing business structures. The goal is to pay the least amount of tax possible while still following all laws and rules.

Succession Planning - Strategic Financial Planning Definition

Succession planning involves identifying and developing future leaders within an organization to ensure its continued success. It can include finding possible leaders to take over, improving their skills and experience, and making a clear plan for when the current leader leaves. Strategic financial planning is an important part of succession planning because it involves figuring out how a change in leadership will affect the company's finances and making sure the company has enough money to help with the change. It means getting the company ready for any possible financial risks and making a good financial plan to help the new leaders and make sure the company's success in the future.

Personal Strategic Financial Planning - Strategic Financial Planning Defined and Explained

The financial planning process is highly personalized and individualized. When you plan your finances, you should think about all the psychological and economic factors that affect your goals and plans. Personal financial planning gives you a long-term plan for your money that takes into account all of your finances and how they affect your ability to reach your goals.

As a business owner, personal financial planning can help you lay the groundwork for a financially stable future. Through six distinct steps, plan your finances smartly. 

Obtain Data to Understand Your Situation - Personal Strategic Financial Planning

Obtaining data is a critical step in personal financial planning. It involves getting information about your income, expenses, assets, debts, and insurance coverage. Use the information you gathered to comprehensively understand your current financial position and identify areas where changes or improvements may be needed. 

Obtain the following data to create your plan:

Income sources and amounts

Expense categories and amounts

Debt balances and interest rates

Current insurance coverage details

Investment and retirement account balances

Real estate and personal property values

To make an effective and realistic financial plan, you need to have a full and accurate picture of your financial situation.

Choose Your Financial Goals - Personal Strategic Financial Planning

Choosing financial goals is a critical step in personal financial planning. It means figuring out what you want to do with your money and setting goals that are clear, measurable, and doable. 

Here are some financial goals to consider:

Building an emergency fund

Paying off debt

Saving for a down payment on a home

Funding education expenses

Planning for retirement

Building wealth

Protecting against financial risks

Clear financial goals can help you stay focused and motivated as you work towards your financial objectives. It is important to put your goals in order of importance and make a plan for reaching each one, taking into account your current financial situation and your long-term financial goals.

Identify Financial Barriers - Personal Strategic Financial Planning

Identifying financial barriers is an essential step in personal financial planning. It means figuring out what could keep you from reaching your financial goals and coming up with ways to get around them. 

Some typical financial barriers you must take a look at are:

High debt levels

Unexpected expenses

Poor spending habits

Lack of savings

Inadequate insurance coverage

Uncontrolled investments

Once you know what your financial problems are, you can make a plan to deal with them. It could mean cutting back on spending, making more money, getting professional financial advice, or making a plan to pay off debt. Getting past financial problems can help you reach your financial goals and make you more financially secure in the long run.

Draft a Financial Plan - Personal Strategic Financial Planning

Drafting a financial plan is a crucial step in personal financial planning. It means putting the information you've gathered and your goals into a written plan that shows the steps you need to take to reach your financial goals. 

A financial plan should include the following components:

Budgeting: Creating a budget to manage your income and expenses

Saving and investing: Establishing a plan for saving and investing to meet your goals

Debt management: Developing a strategy for paying off debt and managing future debt

Insurance planning: Evaluating and securing appropriate insurance coverage for you and your family

Retirement planning: Planning for a secure retirement

Estate planning: Making arrangements for the transfer of assets upon death

A financial plan should be looked at and changed often to account for changes in your finances and to make sure you are still on track to reach your goals. Working with a financial advisor can help you come up with and carry out a detailed plan for your money.

Follow Your Plan's Advice - Personal Strategic Financial Planning

Following your financial plan's advice is critical to personal financial planning. It means taking action and making the changes to the way you spend, save, and invest money that you need to make to reach your financial goals. Putting your financial plan into action may require short-term discipline and sacrifice, but it can lead to big financial gains in the long run.

Some tips for following your financial plan include:

Stick to your budget

Automate savings and investment contributions

Avoid new debt

Review and update your plan regularly

Seek professional financial advice when needed

Celebrate progress and stay motivated

By following your financial plan, you can take control of your finances and work towards a secure financial future. It is crucial to remain committed to your goals and make adjustments to stay on track.

Refine Your Plan Regularly - Personal Strategic Financial Planning

Regularly refining your financial plan is a critical step in personal financial planning. It means reviewing and updating your financial plan on a regular basis to make sure it stays relevant and in line with your changing goals and financial situation.

Some reasons why you may need to refine your financial plan include the following:

Changes in income or expenses

Achieving financial goals

Setting new financial goals

Market changes affecting investments

Life events such as marriage, children, or divorce

By making changes to your financial plan on a regular basis, you can make sure it continues to help you reach your financial goals. It is essential to review your plan at least annually and make any necessary changes to stay on track. Working with a financial advisor can also help you improve your plan and make sure it stays useful and realistic.

Strategic Financial Planning for Business - Strategic Financial Planning Defined and Explained

With a plan, it is easier for a business to thrive in this dog-eat-dog world. For a business to succeed, careful financial planning is necessary. You need a business plan to know where your company is going and why. It helps anticipate things like a downturn in the economy, which may not be something you expect.

Creating a sound financial strategy for your business will help you decide where to put your time, money, and energy. Include tangible milestones that will bring you closer to your ultimate goal. Forecasting, budgeting, cash flow analysis, and key performance indicators are just a few tools that can help you pinpoint each component of your strategy. Now, let's break down the steps to take.

Determine Where You Are - Strategic Financial Planning for Business

Determining where you are is a critical step in strategic financial planning. It involves assessing your current financial position and understanding your strengths and weaknesses. 

To determine where you are, you should:

Review your current income, expenses, assets, liabilities, and insurance coverage

Assess your current debt levels, investment portfolio, and retirement accounts

Identify your current financial habits and behaviors

Evaluate your current risk tolerance and investment strategy

Understand your current cash flow and net worth

By determining where you are, you can clearly understand your current financial situation and use this information to develop a strategic financial plan that aligns with your goals and objectives. This step can help you figure out where you might need to make changes or improvements to reach your financial goals.

Focus on What Matters - Strategic Financial Planning for Business

Focusing on what matters is a crucial step in strategic financial planning. It involves prioritizing your financial goals and ensuring that your financial plan aligns with what is most important to you.

To focus on what matters, you should:

Identify your top financial goals and prioritize them

Evaluate your current financial situation and determine where you direct your resources

Re-evaluate your budget and spending habits to ensure they align with your priorities

Adjust your investments and savings plan to support your top financial goals

Regularly review your progress toward your financial goals and make adjustments as needed

By focusing on what matters, you can ensure that you align your financial plan with your values and direct your resources toward what is most important to you. It can help you stay motivated and focused on achieving your financial goals and lead to long-term financial success. 

Establish Goals - Strategic Financial Planning for Business

Establishing goals is a critical step in strategic financial planning. It means setting SMART (specific, measurable, achievable, relevant, and time-bound) financial goals that match your values and top priorities. 

To establish your goals, you should:

Define your financial vision: How do you want your financial future to look?

Identify short-term, mid-term, and long-term financial goals: This can include paying off debt, saving for a down payment on a home, saving for retirement, et cetera.

Prioritize your goals: Which goals are most important to you?

Make your goals specific, measurable, achievable, relevant, and time-bound: This will help you track your progress and stay motivated.

Establishing clear financial goals can provide direction and purpose to your financial planning efforts. It is important to review and update your financial goals on a regular basis to make sure they are still useful and in line with how your finances and priorities change. Working with a financial advisor can help you establish and achieve your financial goals.

Delegate Authority - Strategic Financial Planning for Business

Delegating authority is a critical step in strategic financial planning. It involves entrusting specific financial tasks and responsibilities to trusted individuals or organizations. Delegating authority can help you deal with complicated financial tasks, lighten the load of managing money, and make sure your financial plan is carried out well.

Examples of financial tasks that you can delegate include:

Investment management

Tax preparation and planning

Estate planning

Retirement plan administration

Record keeping and budgeting

When giving power to other people or groups, it's important to choose trusted and knowledgeable people or groups and set clear expectations and rules. It is also essential to regularly review and evaluate the effectiveness of the delegation and make any necessary changes to ensure you execute your financial plan effectively.

Delegating authority can be a powerful tool for achieving your financial goals. However, remaining engaged and informed about your finances and actively managing your financial future are essential.

Repeat - Strategic Financial Planning for Business

It is important to repeat the strategic financial planning process to make sure that your financial plan stays useful and effective. It means looking at your financial situation, goals, and plans on a regular basis and making changes to make sure they are still in line with your changing needs and priorities.

The key steps to repeating the strategic financial planning process are:

Review and update your financial situation: Assess changes in your income, expenses, assets, liabilities, and insurance coverage.

Re-evaluate your goals: Ensure your financial plans remain relevant and aligned with your changing financial situation and priorities.

Re-assess your financial barriers: Identify new ones and determine how to overcome them.

Re-draft your financial plan: Update your financial plan to reflect your updated financial situation, goals, and strategies.

Re-focus on what matters: Ensure your financial plan aligns with your values and priorities.

Re-delegate authority: Evaluate and make any necessary changes to delegate financial tasks and responsibilities.

By going through the strategic financial planning process again and again, you can stay on track to reach your financial goals and make sure that your plan keeps working over time.

Importance of Strategic Financial Planning in Business - Strategic Financial Planning Defined and Explained

The strategy in a business plan is based on the financial projections in the plan. The information is used to set financial goals for the organization, making sure that your goals are met. It gives management measurement points by which they may decide whether or not advancement is on the right road. A solid financial plan not only assists in setting performance goals for the organization but also gives a framework for how you should compensate employees.

Benefits of Strategic Financial Planning - Strategic Financial Planning Defined and Explained

Strategic financial planning is important for businesses because it helps them align their money with their long-term goals and plans. 

The benefits of strategic financial planning in business include:

Increased Profitability - Benefits of Strategic Financial Planning

By setting clear financial goals and making a plan to reach them, businesses can find ways to save money, bring in more money, and make more money.

Improved Decision-Making - Benefits of Strategic Financial Planning

A well-made financial plan can give organizations valuable financial information and insights that help them make smart decisions about their operations, investments, and strategies.

Better Risk Management - Benefits of Strategic Financial Planning

By finding and analyzing financial risks, organizations can come up with plans to protect themselves from these risks and keep their finances stable.

Enhanced Competitiveness - Strategic Financial Planning for Business

A good financial plan can help an organization keep its finances stable, giving it an edge over its competitors.

Better Use of Resources - Strategic Financial Planning for Business

Strategic financial planning can help organizations get the most out of their money, people, and technology to be as efficient and effective as possible.

Better Alignment with Stakeholders - Strategic Financial Planning for Business

Strategic financial planning can help organizations make sure that their financial goals and objectives are in line with what shareholders, customers, and employees want and need.

In conclusion, strategic financial planning can help organizations reach their financial goals and objectives, make better decisions, manage risk, stay competitive, and align with stakeholders. This can lead to long-term financial stability and success.

Methods of Strategic Financial Planning for Business - Strategic Financial Planning Defined and Explained

Methods of strategic financial planning for business are the tools and techniques that organizations use to make smart decisions about their financial future. The goal of these methods is to help a business stay healthy and profitable in the long run. By predicting future cash flows, analyzing risks, and looking at investment opportunities, companies can make smart choices about where to put their resources and which projects to put first. The ultimate goal of strategic financial planning is to maximize profits and shareholder value while minimizing risk and making sure the organization's finances are stable.

SWOT Analysis - Methods of Strategic Financial Planning for Business

Financial SWOT analysis lets companies discover their strengths, weaknesses, opportunities, and risks. Financial planners employ SWOT analysis, which examines those attributes without an economic focus.

Competitive Analysis - Methods of Strategic Financial Planning for Business

Competitor analysis involves discovering and studying your industry's competitors' advertising methods. Compare your company's strengths and shortcomings to those of each competitor using this data.

Cost-Benefit Analysis - Methods of Strategic Financial Planning for Business

Cost-benefit analysis compares a decision's benefits against its expenditures. A cost-benefit analysis looks at things like how much money a project will make or how much money it will save.

Cash Flow Analysis - Methods of Strategic Financial Planning for Business

A cash flow analysis looks at a company's working capital, which is the money it has to run its business and fulfill contracts. Current assets minus current liabilities equals that (liabilities due during the upcoming accounting period).

Budgeting - Methods of Strategic Financial Planning for Business

Budgeting is creating a spending plan based on expected income and expenses. It involves forecasting future costs and revenues and allocating resources accordingly.

Portfolio Management - Methods of Strategic Financial Planning for Business

It reduces risk and boosts earnings. Portfolio managers figure out what their clients' financial needs are and give them the best plan for investing with the least amount of risk.

Business Valuation - Methods of Strategic Financial Planning for Business

Strategic planning necessitates business valuation. The business company decides on complicated issues as well as the material and order of important events based on corporate value.

Financial Ratios Analysis - Methods of Strategic Financial Planning for Business

The balance sheet and statement of cash flows are two types of financial records that are used in financial ratio analysis. Financial ratios help business owners and regular investors figure out if a business is profitable, solvent, efficient, covered, worth what it's worth on the market, and more.

Conclusion - Strategic Financial Planning Defined and Explained

In conclusion, strategic financial planning is important if you want to grow your business in a way that is both creative and long-lasting. You can make sure your business stays on track to reach its financial goals by setting goals, analyzing your financial situation, making predictions about how things will go in the future, coming up with a strategy, making a budget, tracking progress, and making changes to your plan on a regular basis. By planning, you can make informed decisions to help your business grow and succeed in the long term.

Recommended Reading - Conclusion

Strategic Risks: Taking Risks That Matter (

Strategy-Execution — Strategy Execution, Management Accounting, & Leadership (

Strategic Management and Planning: What Is It and Why Is It Important? (

Strategic Financial Management - Overview, Features, Importance (

The Role of Finance in the Strategic-Planning and Decision-Making Process - A Peer-Reviewed Academic Articles | GBR (

Frequently Asked Questions - Strategic Financial Planning Defined and Explained

Do i need to hire a financial planner for my business - faqs.

Hiring a financial planner may be wise if your business finances are complex, you need more time or expertise to manage them, you have ambitious growth plans, or you need more financial knowledge. However, if your business finances are relatively straightforward, you can handle them independently.

How Much Does a Financial Planner Cost? - FAQs

A financial planner can cost anywhere from a few hundred to several thousand dollars per year, depending on the services they offer, their location, their qualifications, and how they are paid. Before hiring a financial planner, it's important to know how much they charge and how they get paid. You should also carefully look at their credentials and experience to make sure they are a good fit for your needs.

How Far Ahead Should I Plan? - FAQs

The time ahead you should plan for in strategic financial planning depends on several factors, including your personal and business goals, risk tolerance, and market conditions.

Long-term planning usually involves forecasting a business's future performance and cash flows for three to five years or more. It helps figure out what problems and opportunities might come up and how to reach long-term financial goals.

Personal financial planning can cover more than five years, like planning for retirement, an estate, or long-term investments.

Finally, the amount of time you should plan for will be determined by your specific circumstances and goals. But planning for the long term is usually a good idea because it lets you make smart choices that will help you reach your financial goals. Your financial plan will stay relevant and in line with your goals if you look at it often and make changes to it.

Get a $100 Amazon Gift Card!

Complete this 7-question survey requiring just 2 minutes for a chance to win a $100 amazon gift card drawing held every month in my newsletter., benjamin, blog.

This site features 688+ articles, with new additions daily, so stop by often!

We know you want more! Get these giveaways for FREE when you sign up with us.

130 Powerful Strategy Quotes Explained- Ebook

My Ultimate Excel Reference Workbook

Comprehensive Standard Cost How-To Workbook

Special offers and discounts

Exclusive know-how, tutorials, and insights

We respect your privacy.

Thank you for subscribing!

CMA Exam Study Guide- Part 2- Financial Statement Analysis - Section A Finance-Investments-Retirement-Planning-Insurance-Stock Market-Banking Services-Mutual Funds

Strategic Financial Planning Definition, Examples and Importance

Because it integrates the tasks of strategy development with those of financial planning, the strategic financial planning process is distinct from other planning processes. For many years, most companies throughout the world believed these two processes to be distinct from one another. This has changed recently. Strategic financial planning combines several procedures, resulting in a hybrid approach to financial planning.

Financial planning on a strategic scale is concerned with generating profit for the company while also assuring a reasonable return on investment (ROI) (ROI). Financial management is done through the development of corporate financial strategies, the implementation of financial controls, and the making of financial decisions.

Table of Contents

Strategic Financial Planning Definition

Strategic financial planning with the aim to succeed involves not just overseeing a company’s finances, but also ensuring that they are managed with the intention of achieving those goals and objectives while also maximizing shareholder value over the course of several years.

If you are at any stage of life, Strategic Financial Planning will provide an individualized financial guidance solution that is tailored to your specific needs and circumstances. Our expert Financial Advisers work with you through every stage of your individual financial planning journey in order to help you prosper, achieve your objectives, and achieve financial independence as quickly as possible.

In a broad sense, strategy formulation refers to the market in which a firm intends to establish itself as a participant. This indicates that the firm has decided to offer just certain items and services while refusing to sell any other products or services at all. It is this choice that determines the chances that the firm will have and the competition that it will most likely encounter in the future.

In comparison to just being in a strategic position and then competing, utilizing strategic financial planning to set your firm in an advantageous strategic position offers more advantages. It is important to take a long-term vision of where the firm wants to go in a few years’ time while making strategic financial decisions for the organization.

Examples of Strategic Financial Planning

Creating strategic financial management goals for a variety of business objectives, from product growth to customer service to internal operations and office culture, is simple and straightforward. Nonetheless, from a financial standpoint, this goal-setting process is more likely to be focused on financial benchmarks that can be achieved within a particular time frame. You can also look at examples of financial planning to get some additional knowledge on it.

When it comes to strategic financial management, specific goal formulation is simpler since numbers make it easier to conceive goals and measure progress. Examples of strategic financial objectives include the following:

You may work backward from your objective to build a template for how the company can accomplish the desired result once you’ve determined what you want to achieve.

Components of Strategic Financial Planning

You can understand features of financial planning as your self study. Strategic planning is the process through which an organization outlines and defines its strategy, as well as the direction in which it is headed. This resulted in decisions being made and resources being allocated in accordance with the plan.

For example, SWOT and PEST analyses, as well as STEER analyses, are all methods of doing strategic planning. When taking a longer term view, it is common to have a plan for one year, but it is more common to have a strategy for three to five years.

Costs of Starting a Business

For start-up businesses as well as those that are part of an established company. Costs for new fabrication equipment, new packaging, and a marketing strategy are all possibilities.

Costs that will Continue to Accrue

Costs for labor, supplies, equipment upkeep, shipping, and facility use are all included. It is necessary to break down the costs into monthly figures and deduct them from the income estimate (see below).

Analysis of the Competition

An examination of how your revenues will be affected by the competition.

Revenue Predictions

Determine how much money will be available throughout the course of the project’s duration to pay for continuing costs and whether or not the project will be profitable.

Objectives of Strategic Financial Planning

For our company, which is a growing company, it is critical to set goals, and in order to do so, it is necessary to impose a series of objectives that will support the achievement of these goals, among which are financial objectives that serve as the foundation for a solid plan to move our organization forward on the path to success; these financial objectives are as follows:


We are referring to the qualities of development that will allow the firm to continue to operate while also creating more employment and achieving a steady improvement and gradual expansion over time.

Earnings Increase as a Result of Growth

It is critical for us to provide strong yearly sales with a margin of 20% rise from the first five years in order to pay initial costs and create the projected profits from the second year onward.

Obtaining a Profit on an Investment

Return on investment refers to the amount of money that is recovered from capital expenditure. Our company expects to receive a 100 percent return on investment within two years of making a profit, generating a profit margin of 20 percent in the first five years and a profit margin of 40 percent in the sixth year.

Profit Margins Are Important

Obtain profit margins sufficient to fulfill the demands of the organization, as well as the ability to invest in the firm for development and distribution among employees under the terms of a profit-sharing contract.

Objectives based on non-financial elements that a firm want to attain with a particular indication that will allow it to be assessed over a specific period of time are referred to as strategic objectives.

Importance of Strategic Financial Planning

Any company enterprise’s success is dependent on the effectiveness of its financial planning. The following factors contribute to the perception of its necessity

Financial Control is Built on this Foundation

When it comes to financial planning, it serves as a foundation for monitoring financial operations by comparing real income to anticipated revenue and actual cost to estimated cost.

Optimum Utilization of Funds

The financial planning process determines the precise amount of cash that will be required, therefore avoiding wastage and over-capitalization situations.

Assist in Business Operational Activities

Because making the strategic financial decisions guarantees a seamless flow of funds as well as a smooth operation of production and distribution, the success or failure of a company’s production and distribution function is dependent on those decisions.

Correction in Capital Structure

Funds can be organized from a variety types of financial planning and utilized for a variety of purposes, including long-term, medium-term, and short-term. Due to the fact that long-term funds are typically supplied by shareholders and debenture holders, medium-term funds by financial institutions, and short-term funds by commercial banks, strategic financial planning is required in order to tap relevant sources at the right moment.

Aids in the Coordination of Activities

In addition, it aids in the coordination of various company tasks such as manufacturing, sales and marketing, and so on.

Aids in the Allocation of Funds

Using a comparison of several investment options, the financial plan proposes how the cash should be distributed for various objectives over time.

Prevention of Business Shocks and Surprises

Rather than being caught off guard by financial needs, strategic financial planning helps to avoid the shock or surprises that might otherwise be experienced by businesses operating in uncertain environments.

The Relationship Between Investment and Financing Options

Financial planning assists in determining the debt-to-equity ratio and in determining where to invest the funds raised. It establishes a connection between the two decisions.

Aids in the Efficient Use of Financial Resources

Finance is the lifeblood of every organization. As a result, financial planning is an essential element of the whole business planning process. The soundness of financial planning is critical to the success of any company strategy.

It Establishes a Link Between the Present and the Future.

Financial planning connects the dots between existing financial requirements and future financial requirements by forecasting the company’s sales and growth objectives.

When developing a financial plan, financial managers must take into consideration the following fundamental components. Depending on the size and industry of the project, more pieces may be required. Hope this information on strategic financial planning was useful to you. Now you have enough knowledge about financial planning on a strategic measure.

Search Site

Financial strategic objectives.

Financial Strategic Objectives

Financial strategic objectives are typically written as financial goals. When selecting and creating your financial objectives, consider what you’re trying to accomplish financially within the time span of your strategic plan.

Financial Strategic Objectives

This is an example of how Financial strategic Objectives fit into business objectives part of a strategy map

Here are some examples of Financial Strategic Objectives

Grow shareholder value:

The top goal of your organisation may be to increase the value of your organisation for your shareholders, stakeholders, or owners. Value can be defined in many ways, so this would need to be clearly defined.

Grow earnings per share:

This objective implies your organisation is trying to increase its earnings or profits. For publicly traded companies, a common way to look at this is through “earnings per share.” This can be measured quarterly and/or annually.

Increase revenue:

Revenue represents growth in your organisation, so increasing revenue is a sign of company health. You can make this more specific by defining revenue from a key area in your organisation.

Manage cost:

On the other side of revenue is the costs or expenses in your business. As you grow (or shrink) you need to carefully manage cost—so this may be an important objective for you.

Maintain appropriate financial leverage:

Many organisations use debt— another word for financial leverage—as a key financial tool. There may be an optimal amount of debt you’d like to stay within.

Ensure favourable bond ratings:

For some organisations, bond ratings are a sign of healthy finances. This is a regularly occurring objective for a public-sector scorecard.

Balance the Budget:

A balanced budget reflects the discipline of good planning, budgeting, and management. It is also one that is typically seen in the public sector—or within divisions or departments of other organisations.

Ensure Financial Sustainability:

If your organisation is in growth mode or has an uncertain economic environment, you need to be sure you remain financially stable. Sometimes this means seeking outside sources of revenue or managing costs that are appropriate to your operations.

Maintain profitability:

This is a solid top-level objective that shows balance between revenue and expenses. If your organisation is investing in order to grow, you may look to an objective like this to govern how much you are able to invest.

Diversify and grow revenue streams:

Some organisations receive revenue from multiple sources or products and services. They set an objective to grow revenue in different areas to ensure that the organisation is stable and not subject to risk associated with only one revenue stream.

KPI Examples – 84 (21 st Century) Key Performance Indicators For Your Business

A KPI is a measurable value used by organisation’s as a way to keep track of and determine progress on a specific business objective. KPIs allow organisations to evaluate how well they’re performing on business objectives, and if current behaviours should be continued or if a change of strategies is needed. This handout provides 84 KPI examples for your business, we also include a brief description of why you may want to use each. We suggest you pick at least 2 KPIs for each of your key business objectives.

The best KPIs for your organisation starts with defining your business objectives and then designing KPIs that measure them.

This list is perfect for those who have already defined their business objectives and are looking for some inspiration around ways to measure these objectives.

Go to our list of Financial Strategy KPi's

We have listed some suggested internal Kpis for you to use as inspiration

Prism – The Online Behavioural Tool

Prism – The Online Behavioural Tool

objectives of strategic financial planning

Financial KPi’s

Leave a comment.

' src=

Cancel reply

You must be logged in to post a comment.

Our Executive Programmes

Search Our Site

Podcast – Who Dares Wins

Privacy Overview

Strategic Financial Management

The strategic financial planning process is different in the sense that it combines the functions of strategy formulation as well as financial planning. For many years, these two processes have been considered to be separate in most organizations around the world. Strategic financial planning merges these processes and created a hybrid approach.

In a broad sense, strategy formulation refers to the market in which the company decides to place itself . This means that the company decides to sell some products and services and excludes all other products and services. This decision in turn decides the opportunities that the company has as well as the competition that it is likely to face.

Using strategic financial planning to place a company in a strategically advantageous position has more benefits than having an ordinary strategic position and then competing. This long-term view of where the company sees itself a few years from now is kept in mind while making strategic financial decisions.

In this article, we will have a closer look at the strategic financial decision-making process .

Scanning the External Environment

The first step in the strategic financial planning process is scanning the external environment. This simply means that the organization pays close attention to social, political, demographic, and more importantly technological changes happening in the environment.

The organization tries to understand what the business environment will look like in the future. It tries to make an educated guess about the type of competition they will be facing and what competitive advantage will they have vis-a-vis their competitors. This process is done in the due course of strategic management as well. However, in the strategic financial management process, there is a lot of emphasis on numbers. Decisions are based on quantifiable information instead of being based on intuition.

Internal Introspection

The second step is for the company to clearly know its capabilities and shortcomings. The company needs to take a just and unflinching look at what its competitive advantage is today. The next step is for them to realize that this competitive advantage will change with the passage of time. A decision has to be made regarding whether the company should continue on the same course that it is on today, or whether it should change its strategic priorities and build a new competitive advantage.

Internal introspection can be challenging for many companies due to the paucity of relevant data. However, some resources should be spent in acquiring this data if it aids in the final decision-making. After all, the strategic priorities which the firm sets as a result of this exercise are likely to continue in the long run and will shape the financial future of the firm.

Clear and Compelling Goals

The process requires the creation of clear and compelling goals for the organization. In theory, mission and vision statements are present in every organization. However, in reality, they are often ignored. Also, the vision statements tend to be vague and can be used to include almost any line of business. This is done purposely to provide the organization with flexibility. However, it can work out to be disadvantageous in the long run. Also, these goals are generally set up at corporate level goal alignment meetings. Hence, the head office is generally under pressure from various departments to include their goals in the strategic goals as well.

The end result is a list of goals that dilute the focus of the organization. The entire process can end up being political if the senior management is not cognizant of the fact and does not try to steer the company in the right direction.

This is where strategic financial management is different. It clearly advocates that the organization should limit the number of strategic goals. The emphasis is on selecting a narrow set of goals and excluding everything else. The logic is that if the vast resources of the firm are concentrated on a narrow number of goals, then the firm will gain absolute superiority in such areas. On the other hand, vague and ambiguous strategic statements can be detrimental to the strategic financial management objective.

Management’s Vision Aligned with the Company’s Vision

In an ideal scenario, the strategic vision of the management needs to be aligned with the strategic vision of the board of directors. However, it does not happen in practice in several organizations. This is the case particularly when a company undergoes a change in the top leadership. The new management often wants to bring in changes. However, it is the responsibility of the board of directors to ensure that the vision of the management stays aligned with the overall vision.

The fact of the matter is that management can change over a period of time. However, the company will remain for a longer period of time. The management should adapt to the company’s strategic vision and not vice versa. Even if the new management wants to bring in changes, they should be deliberated and brought in through the right channel.

The bottom line is that there are a few steps in the strategic financial planning process that need to be followed rigorously. In the short run, they might seem to be unnecessary. However, in the long run, they provide tremendous clarity and as a result, the company is able to organize its resources in order to obtain the best possible results.

Related Articles

View All Articles

Our Team

Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team . MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider . To Know more, click on About Us . The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to and the content page url.


  1. What Is Financial Planning?

    objectives of strategic financial planning

  2. 7 best Work

    objectives of strategic financial planning

  3. Difference Between Strategic and Financial Planning

    objectives of strategic financial planning

  4. Business Plan Strategic Objectives PowerPoint Templates

    objectives of strategic financial planning

  5. Financial Planning Kpi Strategic Goals Strategic Planning Priority Planning Cpb

    objectives of strategic financial planning

  6. Strategic Objectives PR: A Toronto PR Agency

    objectives of strategic financial planning


  1. Financial Planning & Performance (Unit 1

  2. A2.1 Strategic Corporate Finance

  3. Lecture

  4. Strategic Financial Planning

  5. Chapter 8 Financial Strategy

  6. How to Formulate Good Vision, Mission & Strategic Objectives// Dr. Jesse K


  1. Your Complete Guide to Making a Financial Plan

    Financial security is one of the most common life goals around the world. It’s the reason why people save, scrimp and budget their money. But sometimes, they fall behind on their efforts.

  2. How to Make a Financial Plan for Your Business

    Preparing a financial plan for your business is important if you plan to pursue business finance options such as loans, according to Inc. Business finance companies look at the short-term viability as well as the long-term potential of a bu...

  3. 5 Tips to Help with Financial Planning

    Financial planning means putting your incomes and expenses on a scale to achieve monetary equilibrium or upward mobility on your income levels. Your plan should capture how your current and future risks are covered to protect you from econo...

  4. Strategic Financial Management: Definition, Benefits, and Example

    Strategic financial management is about creating profits for the business over the long run. · It seeks to maximize return on investment for stakeholders. · This

  5. What is Strategic Financial Planning

    Strategic financial planning is the process of determining how a business manages itself financially to ensure it achieves its goals and objectives for both

  6. Strategic financial planning gives you a roadmap

    6 steps to build your strategic financial plan · 1. Identify the team and stakeholders · 2. Develop a common fact base · 3. Identify objectives and

  7. The Relationship Between Strategic & Financial Planning

    Strategic financial planning helps you clarify your company's strategic objectives and sets you on a path to achieve your financial goals.

  8. The Role of Finance in the Strategic-Planning and Decision-Making

    Financial Goals and Metrics Help Firms Implement Strategy and Track Success · 1. Vision Statement · 2. Mission Statement · 3. Analysis · 4. Strategy Formulation · 5.

  9. The Objectives and Importance of Financial Planning for an

    The main objective of financial planning is that sufficient fund should be available in the company for different purposes such as for purchase of long term

  10. Strategic Financial Management

    The approach of strategic financial management is to drive decision making that prioritizes business objectives in the long term. Strategic

  11. Strategic Financial Planning: Growing Your Business the Smart Way

    Clear financial goals can help you stay focused and motivated as you work towards your financial objectives. It is important to put your goals

  12. Strategic Financial Planning Definition, Examples and Importance

    Strategic financial planning with the aim to succeed involves not just overseeing a company's finances, but also ensuring that they are managed with the

  13. Financial Strategic Objectives

    Financial Strategic Objectives · Grow shareholder value: · Grow earnings per share: · Increase revenue: · Manage cost: · Maintain appropriate

  14. The Strategic Financial Planning Process

    Using strategic financial planning to place a company in a strategically advantageous position has more benefits than having an ordinary strategic position and