The financial plan provides the short-term basis for budgeting control and prevent the most common problem for new ventures—lack of cash.

Please read the explanation below.

Explanation:

Statement of cash flows which is one of the items included in the financial plans includes cash flow from operating, financing and investing activities in which a foretasted or projected cash flow statement can be prepared as well. The cash flow statement is one of the most critical tool for business because it shows how much cash you will need to meet an obligation, when, how and where you can generate funds. Generating a negative cash flow or running at a loss especially on operating cash flow is a major red flag that indicates not having enough cash to meet something that demands immediate attention and action for running the business as a result of lack of cash. The cash flow statement can be prepared monthly, quarterly and annually.Therefore, there is a need to analyze the cash flow statement in a short summary in the financial plan of a new venture which should also be sensitized in order to appropriately plan and budget for smooth running of the business without running out of cash.

I hope this answers your question.