Reflection Paper for Financial Planning

This study is about the contributions of SME’s (Small and Medium sized Enterprises) towards the socio-economic development across all the countries especially after 1980’s (Karadag, 2015). It highlights the challenges faced by SME’s in terms of poor financial access (external funding), low utilization of technology, lack of trained personnel and managerial skills. Basically, ineffectiveness of financial conduct has detrimental affects on the performance and longevity of the SME organizations. According to the studies, despite the importance of strategic financial management, SME’s are facing failure in business. However, studies also showed that with a proper strategic financial planning there can be an immense improvement in the growth. So, three propositions were stated. One was focused on managing its working capital i.e. keeping a track of funds coming in and going out. Second one deals with capital budgeting, i.e. if a proper technical evaluation is not done while going for fixed-assets which generally takes a lot of time to mature, then this can also lead to failure of business. So, it is important to keep in mind the short- and long-term goals/objectives and then take a decision about investing in fixed-assets. This is also known as strategic outlook which is another important factor for business growth. Third, it is very important to report the financial transactions, maintaining all the balance sheets and the record. Evaluation of these financial reports presents the trend and companies current financial performance and it can also act as a control and feedback function of strategic financial management.

Author has beautifully described the process of strategic financial planning and management along with their importance. All the three propositions were quite impressive. Well I think, maintaining the finance records are not only helpful for evaluation of the trends and financial condition but also for gathering external funds from banks or sponsors for expanding the business.

References: –

Karadag_Financial Management.pdf – https://elearning.ucd.ie/bbcswebdav/pid-1555519-dt-content-rid-8269535_1/courses/IS40370/Karadag_Financial%20Management.pdf