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Financial planning and control is a significant process in business, whose main aim is to offer focused guidance on organisational performance and management. We need to define these terms separately, for perfect understanding of the concept. Financial planning refers to the projection of assets, income, and sales through an approach which has been based on alternative marketing and production strategies, and the determination of the various resources that would be required to reach those business projections. On the other hand, financial control is the phase upon which the overall implementation of financial plans takes place. Financial planning and control offers internal as well as external guidance to the overall planning and steering of corporations. More importantly, the concept also plays a significant role in providing key corporate information to stakeholders and other participants in a business.
The concept of financial planning and control is associated with various corporate functions. For instance, it offers guidance in planning, administering and observation of value development in corporations through important financial aspects which include; cash flows, income statements and balance sheets. The other function of financial planning and control is to offer external guidance on corporate affairs to stakeholders, in order to enable them to have full access of appropriate economic and financial performance of a corporation (Jones 1986). This way, the stakeholders are able to assess and rate the creditworthiness of the organisation in a perfect way, thus facilitating control capabilities and statutory compliance. This report examines the concept of financial planning and control as it is used by GCC organisations.
In order to bring out a strong argument about the use of financial planning and control in GCC organisations, we first of all need to understand what GCC organisations are. GCCs are some type of organisations whose activities are team oriented. This form of structure plays a key role in ensuring there is flexibility in allocation of responsibilities and tasks, as well as efficient decision making in all areas of business concern. Basically, GCCs don’t serve as single contact points for communication between key players in the network, but also as a significant interface towards suppliers and external customers (Rudberg and West 2008). Through this perception, it would be obvious that GCC organisations should try to provide quality services all units of the network. In that regard, it would be important for any GCC organisation to adopt the idea of financial planning and control in its business plans, among other important approaches.
As it would be observed, GCC organisations are associated with many benefits that have been realised through constant application of the process of financial planning and control. These benefits are divided into three main categories which include; supply chain measure, reduced costs and increased efficiency, and improved service and quality. Under the supply chain measure, there is the benefit of effective coordination of supply chain and integration between key sites in business. Through this effective process, GCC organisations have been able to focus on their market goals through integration of functions. More importantly, the organisations have been able to realize a common platform for support of decisions.
Other benefits which could be found observed under reduced costs and increased efficiency would include things such as improved efficiency in transportation and inventories, increased efficiency in product and service delivery, high utilization planning resources and production, emphasised support of logistics to internal sites, and increased efficiency in matters involving decision making. Regarding improved service and quality, GCC organisations have been able to benefit a lot from this process in a number of ways. For instance, the approach has contributed to great market competence to many organisations. This competence combination would add great value to business by helping to facilitate better and more informed business decisions (Stock and Lambert 2001). This has also contributed to increased opportunities that would also add value to business, such as tracking of transportation, among other things.
The way GCC organisations conduct their financial planning and control is not so different from the approach applied by other corporations. However, the main concept of GCC organisations is that they aim at establishing integrated, as well as coordinated operations control in networks of supply, thus enabling effective management of capacities and flow of materials in networks. GCC organisations basically serve as communication and information nodes that would enable integrated activity operations as well as remote control within the supply network, across different organisational levels and geographical locations. The only difference between the concept of financial planning and control in GCC organisations and other corporations is that, unlike the latter, GCCs apply an integrated approach to carry out the process. GCC organisations use financial planning as a central factor behind the financial forecasting of their business goals, and would therefore view the concept as one of the most important drivers of business success in the modern competitive world. As it would be observed, growth cannot be viewed as the underlying goal of any business organisation, but the most appropriate goal here is for corporations to be able to establish stronger shareholder values. Just like other businesses, GCC organisations employ financial planning to conduct important businesses undertakings that can be used to predict the shape of a firm.
GCC organisations apply the process of financial planning and control to estimate the value of capital to sustain corporate goals and objectives, and also in determining their competition in the market. These organisations apply the concept to frame their financial policies in relation to investment, procurement, and the administration of funds. Other significant objectives of financial planning and control, as it would be applied by GCCs, would include determination of capital structure, determination of capital requirements, and framing of financial policies with significant connection to lending, cash control and borrowing, among other money dealings. Determination of capital structure refers to the composition of the structure of capital whereby short and long-term decisions of debt-equity ratio are included (Dreyer et al. 2009).
Determination of capital requirements would depend on factors such as cost of fixed and current assets, long-range planning and promotional expenses. Another important objective that explains why GCC organisations would apply the process of financial planning and control is that, a finance manager is able to make sure that scarce or rare financial resources are fully maximised, while costs are controlled, to ensure maximum return of gains on investment. The main focus of any successful corporation is to be able to generate enough flow of cash that would enable them cover costs and be able to make profits. By maintaining proper financial planning and controls, most GCC organisations have managed to monitor their financial positions, thus finding it easy to maintain a tight control of all costs incurred.
The idea of financial planning and control comes with great importance to modern business organisations (Olhager and Wikner 2000). Generally, this is a process which entails framing policies, programmes, procedures, as well as budgets and costs concerning important financial activities. Through all these, effective and adequate investment policies are fully ensured. These benefits can be observed through a number of approaches as expressed in the following few sentences. Through the process of financial planning and control, GCC organisations have been able to realise many outstanding benefits. For example, the process has helped them to minimise the number of uncertainties that would be observed in ever-changing market trends.
The process is also useful in that; it helps organisations to observe a perfect balance between inflow and outflow of funds, thus maintaining stability in business. Another key importance of the process is that it plays a major role in ensuring that fund suppliers would found it easy to invest in only those corporations that practice financial planning and control. The process helps in facilitating expansion opportunities and programmes, thus playing a key role in the long-term’s survival and prosperity of firms. Lastly, financial planning and control also plays a significant part in getting rid of all uncertainties which are likely to hinder the advancement of firms. As it can be observed from the above observations, the process of financial planning and control has succeeded in helping many GCC organisations realise their goals and objectives in business. In that case, modern corporations should see them as important guidelines which could be used to improve businesses.
Reference List
Dreyer, H, Alfnes, E, Strandhagen, J, & Thomassen, M 2009, ‘Global supply chain control systems: a conceptual framework for the global control centre’, Production Planning and Control, vol. 20 no. 2, pp. 147-157.
Jones, C 1986, ‘Financial planning and control practices in UK companies: a longitudinal study’, Journal of Business Finance & Accounting, vol. 13 no. 2, pp. 161-185.
Olhager, J & Wikner, J 2000, ‘Production planning and control tools’, Production Planning & Control, vol. 11 no. 3, pp. 210–222.
Rudberg, M & West, M 2008, ‘Global operations strategy: coordinating manufacturing networks’, Omega, vol. 36 no. 7, pp. 91–106.
Stock, J & Lambert, D 2001, Strategic logistics management, McGraw-Hill, Irwin, Boston.
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