A
strategic financial plan provides a road map to internal capital
generation and access to outside capital. Because an organization's
long-term financial future is largely dependent on today's strategic
investments, the process used to decide which projects receive capital
is critical to achieving the financial plan's target.
Capital planning is a
necessary component of strategic planning as it focuses prioritization
and suggests ways to develop a course of action in reinvesting and
developing the organization’s capital base and physical assets.
The framework on the right illustrates some of the issues that organizations need to consider in planning.
