Financial planning has a pivotal role in financial management. 

The importance of it can be explained under following headings: 

(i) Securities: For obtaining finance what securities are to be offered it is clearly mentioned in the financial plan. Further which securities to be kept for obtaining working capital or short term loan and which are to be kept for long term finance, this is clearly classified and mentioned. Plan includes the clear policy for rotation of securities for maintaining continuous supply of finance. 

(ii) Fulfils requirement: Financial plan fulfils the financial requirement of the enterprise. It specifies the strategy and sources for obtaining finance. The requirement of funds for research, raw materials, payment of wages, are mentioned period wise. This provides target for the financial management. 

(iii) Risk: A financial plan clearly mentions the extent of risk that can be undertaken by an enterprise. This provides the limits of working in the financial management.