What is the difference between financial plan and financial forecast?

Answer:

The financial forecast is an estimation and the forecast of possible future income or income and expenses, as well as the financial plan of the necessary measures to generate future income and future expenses. In addition, the financial plan can be seen as what an individual or company plans to do with income or income.

Financial forecasting is an essential factor for the success of the business. In order to efficiently manage working capital and cash flow, the company should have a reasonable idea of how much the company expects to receive within a certain period of time and that his necessary expenses will be during the same time period. Financial forecasts are usually reviewed and revised annually as new information about the assets and costs become available : new data allows a person or business to make more accurate financial forecasts. It is easier for companies that generate stable income to make accurate financial projections than for new businesses or companies whose revenues are subject to significant seasonal or cyclical fluctuations.

The financial plan process, the company lays out, as a rule, is broken down in step-by-step format, for the use of their available capital and other assets to achieve its goals of growth or income or on the basis of reasonable financial forecast. A financial plan can be considered synonymous with the business plan that it lays out what the company plans to do in terms of resources to work to create the highest possible income.

For the individual, the financial forecast is an estimate of its income and expenses for a certain period of time. Based on this forecast, then a person can create a financial plan that includes savings, investment and additional income to Supplement their personal finances—as well as anticipating the costs that would Deplete them.

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