Financial Operating Plan - FOP

DEFINITION of 'Financial Operating Plan - FOP'

A financial plan outlining the revenues and expenses over a period of time. A financial operating plan (FOP) uses past performances, incomes and expenses to forecast what to expect in the following years. It then incorporates past and recent trends into the planning so as to most accurately forecast what is to come. It will define goals for areas such as budgeting, sales, payroll, etc, as well as create a cash flow projection.

BREAKING DOWN 'Financial Operating Plan - FOP'

A good financial operating plan will need to be ammended and updated due to any extraordinary events relating to finances, as well as to see if it is still relevant to the current situation. If prepared and ammended accordingly, an FOP can be a useful tool in creating and managing the budget, improving control of management operations and ultimately creating profitability.