Financial planning plays a crucial role in the success of an organisation. Its importance can be highlighted from the following factors:
(i) It tries to link the present with the future: Financial palnning helps in forecasting future. In this way, it helps an organisation cope with adverse situation and prepare for future organisation.
(ii) Helps in avoiding surprises and shocks: Through financial planning, an organisation can detect situation of shortage or surplus of funds that may arise in future. Therefore, it prepares the organisation in advance for such situation.
(iii) Improves coordination : Through financial planning, various business activities such as sales and production are coordinated in a better manner, such coordination ensures smooth functioning of the business by providing clear policies and procedures.