FINANCIAL PLANNING AND CONTROL A KEY TO MANAGEMENT EFFICIENCY

CHAPTER ONE

1.0 INTRODUCTION

1.1  BACKGROUND OF THE STUDY

“It s something of a truism that we are living in an era of planning and control. Whether it be the housewife with her house keeping allowance or the industrialist with his responsibilities to shareholders, planning and control are a part and percel of our daily lives and it is an essential factor in national business and privet life” In a competitive world where the key factors are costs, price turnover and profit planning and control enable every individual to have a sound appreciation of the financial implications of his plans and actions, financial planning and control can be used by any size of type of organisation and in degree varying form a complete system, covering decentralized departments to organisation with only a single procedure. As a tool of management, it can increase the efficiency of the organisation as a whole since all the departments are involved. Moreso, no business can prosper unless all functions accounting finance, marketing, personnel and so forth are fully stated with competent individuals. The efficiency and effectiveness of any organisation therefore depends on a number of factors which may be categorized as clarity of purpose, management, planning, control and communications. There is need to have a knowledge of the objectives of the organisation otherwise it will not be possible to identify goals set targets for their achievement in form of planning control and management of it finance. According to Eugene F. Brigham & B .J compesy, “Finance Management involves planning for, acquiring and utilizing funds in a way that maximizes the efficiency and value of the firm”. Most especially finance is the evaluation and acquisition of productive assets, procurement of funds and disbursement of funds. It involves four basic issues which are the functions of the financial officer.

These functions are: – Raising of funds to finance projects. – Employment of these funds in viable projects Management of the cash flow arising form these project, and – Return of funds to their funding or original source Financial capital is the major resources of any firm. The financial manager’s duty is to implement the acquisition, allocation and management of these resources. Finance therefore spreads into all segments of a firm’s activities thus, its function must be understood by all the managers in the firm. Having known the future financial needs of a firm and its financial policies the question then is, how are these financial or funds raised ? This required the knowledge of the financial markets form which funds are drawn. It also required a knowledge of how to make sound investment decisions and to stimulate efficient operations in the organisation. These are alternative choice in financial decisions. The choice includes the use of internal or external sources, According to U. N Harper, “before looking outside a firm for fund, the possibility of providing such funds internally should be examined.”