Strategic financial planning: What it is, how it works, and how to do it

Many businesses feel like they’re flying blind when it comes to money. Costs pop up out of nowhere, and revenue can dip without warning. Missing bill payments can leave you scrambling, and that stress eventually eats into your focus on growth.

It's no wonder that a recent QuickBooks survey found that over half (52%) of small business owners feel that poor financial or resource management is holding them back.

That’s where strategic financial planning comes in. You gather your numbers (often using accounting software), set clear goals, and chart a path to reach them. Learn more about strategic financial planning, how it works, and how to make it part of your routine.

What is strategic finance?

Strategic finance is the practice of managing a company's finances with the intent to achieve long-term goals and maximize shareholder value. It involves creating profit, ensuring an acceptable return on investment, and strategically managing resources and capital to meet long-term objectives.

The objective is to equip businesses with the tools and insights needed to make well-informed financial decisions that foster their sustained growth and prosperity.

How strategic financial planning works

Strategic financial planning is the process of defining long-term financial goals. You then plan, control, allocate, and secure the resources needed to reach them. It focuses on maximizing shareholder value and achieving organizational objectives over time. 

In short, strategic planning starts by setting clear, long-term objectives that align with your company’s mission. 

Next, you identify the resources—capital, personnel, technology, etc.—needed to hit those targets. Finally, you draft a financial plan that lays out how and when you’ll allocate funds, what milestones you’ll track, and who owns each step.

At this point, you'd begin the process of strategic financial management, which involves actively making decisions to ensure the company's future profitability.

Key considerations

Strategic financial planning is more than just number crunching—it's about aligning the company's financial strategy with its long-term vision. Understanding the distinctions between strategic and tactical approaches, setting clear objectives, and leveraging financial planning and analysis (FP&A) can help you make informed decisions that drive sustainable growth.

The importance of objectives and goals in strategic financial planning

Strategic financial planning always starts with clear, long-term objectives that align with your company’s vision and mission. These goals should be specific, measurable, and time-bound. For example, “grow revenue by 20% in three years” rather than “make more money.” 

By setting these targets, you can weigh every decision against the opportunity cost of spending resources elsewhere.

The role of financial planning and analysis (FP&A)

FP&A teams often lead strategic planning efforts. They integrate corporate strategy with financial insights, using tools like ERP systems to gather data and enterprise business intelligence platforms to generate forecasts. It ensures that financial models reflect both market realities and strategic goals, guiding executives in making informed decisions.

Strategic vs. tactical financial management

A key part of successful strategic financial planning is monitoring business performance to ensure it's on track and assessing whether the strategy needs revisions. There are two main approaches to this financial management process: strategic and tactical. Strategic means “Where do we want to be in five years?” while tactical means “How do we pay current bills?”

Strategic financial management makes big-picture decisions that may involve short-term sacrifices for long-term gains. For instance, you might invest somewhere now to capture future market share. Tactical financial management handles day-to-day money matters, like managing cash flow or paying bills, to keep operations running smoothly.

Key components of strategic financial management

Now that you know what financial planning means for a business, let’s discuss key components of managing this process. At its heart, strategic financial management combines big-picture vision with hands-on money management. This ensures your financial controller and leadership team follow the same playbook.

Here’s a quick overview of the key SFM components:

How to implement strategic financial planning and management 

Here's a step-by-step guide to implementing an effective strategic financial plan:

Step 1: Assess the current situation

Begin by analyzing your current financial performance. Review income statements, balance sheets, and cash flow statements to identify strengths, weaknesses, opportunities, and threats.

Step 2: Set clear objectives 

Define specific, measurable, achievable, relevant, and time-bound (SMART) financial goals. These objectives should align with your company's vision and mission, providing direction and benchmarks to measure progress.

Step 3: Develop financial forecasts 

Project future financial performance based on historical data and market analysis. Utilize business intelligence and forecasting tools to anticipate revenue, expenses, and cash flow, plan for various scenarios, and make proactive adjustments.

Step 4: Formulate strategic initiatives

Determine specific actions and projects that will help achieve your financial objectives. This may include expanding into new markets, launching new products, or optimizing operations to improve efficiency and profitability.

Step 5: Allocate resources wisely

Distribute financial, human, and technological resources effectively to support your strategic initiatives. Prioritize investments that offer the highest return on investment and align with your long-term goals.

Step 6: Monitor and adjust

Regularly review your financial plan's performance against your objectives. Use KPIs to track progress and make necessary adjustments in response to changing circumstances or new opportunities.

How to align SFM with organizational goals and values

Successful strategic financial management involves making money decisions that fuel your mission, protect the planet, and build trust with everyone who cares about your success. Here are some useful ways to align SFM with your goals and values.

Understand the organizational vision and mission

Your financial plan should start with why your company exists and where it’s headed. When every money decision links back to core values, it’s like following a compass that always points toward your true north. Ensuring this alignment keeps every dollar spent on track with your broader purpose.

Set realistic and achievable financial targets

Good targets are like stepping stones. They’re tough enough to push you forward but close enough to reach. Ground them in what you can handle today and what the market can bear, so you’re celebrating wins instead of chasing mirages.

Allocate resources based on strategic priorities

Think of your budget as a pie. SFM helps you slice it so your biggest initiatives get the fattest pieces. This way, critical projects get fuel, and you avoid wasting crumbs on things that don’t move the needle. It eventually leads to efficient human capital management (HCM), giving you time to focus on growing your business.

Focus on environmental considerations and social responsibility

Investing in green practices, such as solar panels or waste cuts, has upfront costs and future payoffs. Ignoring these can mean surprise penalties or a bruised reputation down the road. Also, treating people and communities well can boost your brand, win loyal customers, and attract top talent. Skimp here, and you risk boycotts, lawsuits, or staff walking out the door.

Follow governance practices

Clear rules, honest reporting, and strong ethics build trust with investors and partners. That trust often translates into cheaper loans and steadier support when times get rocky. By upholding strong governance, you signal credibility to lenders, which helps lower your borrowing costs and boost financial stability.

Key metrics and KPIs in strategic financial planning

Using solid financial strategies for your business can make a real difference in the success of your financial planning and management. Here are some financial metrics that can help you turn plans into profitable results.

Revenue growth rate

The revenue growth rate measures how quickly your sales climb over time, showing if you’re on track to expand your market reach.

• Definition: It’s the percentage increase in a company’s sales over a set period.
• Example: If sales rise from $1 million to $1.2 million in a year, the growth rate is 20%, signaling solid expansion.

Profitability metrics

Profitability metrics reveal how efficiently you turn sales into profit. It’s a key sign that your cost controls and pricing strategy are working.

• Definition: Profitability metrics, such as gross profit margin and net profit margin, reveal how effectively your company converts sales into profit. Gross profit margin is revenue minus cost of goods sold, divided by revenue. Net profit margin is net income divided by revenue.
• Example: A gross profit margin of 50% means that for every dollar of revenue, 50 cents remains after covering the direct costs of producing goods or services.

Return on investment (ROI)

ROI gauges how well specific investments contribute to your bottom line, guiding future funding choices.

• Definition: ROI is a performance metric that helps evaluate an investment's efficiency or profitability by comparing its gain or loss relative to its cost.
• Example: If a company invests $10,000 in new equipment and it generates an additional $2,000 in profit in the first year, the ROI is 20%.

The role of technology in SFP and SFM

Good tools make strategic financial planning for business faster and smarter by turning raw numbers into clear insights you can act on. 

According to the 2024 Intuit QuickBooks Business Solutions Survey, 95% of respondents agree that integrated business solutions like Intuit's enterprise accounting software are crucial for sustained growth. Here are some key benefits of harnessing technology in strategic financial planning and management.

Data analysis and reporting tools

Modern financial software automates the collection, cleansing, and visualization of your numbers, giving you real-time dashboards instead of stale, manual reports. For example, Intuit Enterprise Suite (IES) offers customizable multi-dimensional accounting reports and drill-down views that let you spot trends by department, project, or region at a glance.

Forecasting and scenario planning software

Forecasting tools use your historical data to model future outcomes, helping you test “what-if” scenarios—like changing prices or launching new products—before you commit funds. With IES’ AI-driven forecasting, you can project up to two years ahead, compare alternative scenarios, and adjust your strategic plan based on data-backed insights.

Collaboration and communication platforms

Shared dashboards, approval workflows, and task-based checklists keep finance, operations, and leadership aligned on your strategic plan. Integrations between IES and other business systems, such as CRM tools, create a unified view of your data. This ensures everyone sees the same numbers and can collaborate smoothly on financial decisions.

Build a sustainable future with strategic financial planning

Getting strategic financial planning right isn’t just a nice-to-have—it’s the backbone of lasting growth and resilience. When you align your budgets, forecasts, and risk plans with your long-term vision, you can spot challenges before they hit and seize opportunities as they arise. This helps streamline your enterprise performance in the long run.

An integrated financial management solution simplifies operations by combining business and financial management on one scalable platform. Start aligning your company’s financial planning with Intuit Enterprise Suite today.