Understanding the financial management of small and medium-sized enterprises

What is the financial management of small and medium-sized enterprises? This article explains the problem for you.

At the present stage, most small and medium-sized enterprises in China mainly rely on themselves to accumulate original funds, which leads to the fact that many small and medium-sized enterprises have little capital and weak foundation in the process of starting a business, and it is difficult to grow in a short period of time. Enterprises are in a relatively low production and operation state for a long time. Under the attack of the crisis in the flooring industry, many small and medium-sized enterprises have poor ability to resist risks and the risk of bankruptcy has greatly increased. Based on the experience of more than 111 cases of diagnosis and consultation in private enterprises in the Yangtze River Delta, Jiutong Enterprise Management has summarized the financial management of private enterprises, and found that the four elements of financial management are the major problems of many small and medium-sized enterprises:

Four major problems of financial management of small and medium-sized enterprises

First, the credit management ability of small and medium-sized enterprises is low, and the demand for funds by small and medium-sized enterprises is characterized by small amount, frequent frequency and randomness, which has caused the increase of financing costs and made financing more complicated.

2. At present, most of the corporate financial governance structures of small and medium-sized enterprises in China are not perfect, and the financial statements are not standardized, so it is impossible to provide enterprises with various specific information reflecting the liquidity, profitability and safety of enterprise funds in time.

third, some small and medium-sized enterprises have the phenomena of repeated construction, inefficient use of funds and blind investment, with high assets and liabilities and high risk of corporate funds.

at present, the boss of most small and medium-sized enterprises in China is the general manager, the proprietress is the chief financial officer, and the money goes from the left pocket to the right pocket. The main responsibilities of financial managers are bookkeeping, reimbursement, statistics, inventory, making statements, filing tax returns, handling social security and paying salaries. The financial management is familial, the financial system is not standardized, the quality of financial personnel is not high, and the financial management level is low. Shuiliang Zeng, an expert on enterprise management in Jiutong, believes that the transformation of financial management of small and medium-sized enterprises at this stage determines the orientation and mode of enterprise financial resource allocation, and affects the flow direction and efficiency of enterprise capital operation. The overall financial strategic thinking of small and medium-sized enterprises should focus on the future strategic development of enterprises, fully consider the industry format, the growth rate of economic circle, the development stage of enterprises, the operation mode of enterprises and their own financial characteristics, and make management decisions with finance as the ultimate guidance. The Yangtze River Delta private enterprise management training and consulting organization believes that there are three main measures for the transformation of financial management of small and medium-sized enterprises at this stage:

Solutions to financial management

1. Capital structure

The importance of capital structure of small and medium-sized enterprises can be comparable to that of enterprise organizational structure. The capital structure that complements the enterprise operation will not only directly affect the financial risk of the enterprise, but also affect the financing ability of the enterprise. The greater the debt ratio of an enterprise, the higher the financial risk, especially under the influence of the global economic crisis and the poor economic benefits of the enterprise, the more likely it is to have a financial crisis, which will lead to the bankruptcy of the enterprise. At the same time, if the debt ratio is too large, the fund-raising ability will inevitably weaken, which will further affect the fresh blood supply of enterprises. Shuiliang Zeng, an expert of Jiutong Enterprise Management, believes that it is very important for SMEs to maintain a reasonable capital structure, while maintaining a reasonable and scientific capital structure should be paid attention to:

First, in the initial stage of starting a business, SMEs should determine their development strategy scientifically and reasonably according to their own capital strength, so as to match the enterprise scale with the capital structure, and try to avoid excessive debts and increased risks caused by the mismatch between the enterprise development scale and capital strength. Enterprises should always pay attention to the coordination of the ratio of capital to liabilities in the process of development. At this time, the Balance Sheet is particularly important.

second, implement a shareholder profit distribution policy that is conducive to the accumulation of enterprises, and adopt more retention and less points to accumulate more after-tax profits, enrich capital, and enable enterprises to develop faster. Of course, in the case of strong profitability and stable business, it will be more conducive to the development of enterprises to borrow moderately and give full play to financial leverage. But this premise must be to enhance the credit management ability of enterprises.

II. Fund management

Working capital management is an important means for small and medium-sized enterprises to benefit from management. In order to effectively manage the working capital of small and medium-sized enterprises, Shuiliang Zeng, an expert on enterprise management and private enterprise management, thinks that it is necessary to study the characteristics of enterprise working capital in order to control the flow and direction of enterprise capital chain in a targeted manner. Generally speaking, the working capital of an enterprise has the following four characteristics:

First, the turnover time is short. According to this feature, it shows that working capital can be solved by short-term financing.

second, non-cash working capital such as inventory, accounts receivable and short-term securities can be easily realized, which is of great significance for enterprises to meet temporary capital needs.

thirdly, the quantity fluctuates. Current assets or current liabilities are easily affected by internal and external conditions, and the quantity often fluctuates greatly.

fourth, the sources are diverse. The demand for working capital can be solved by both long-term financing and short-term financing. There are only short-term financing: short-term bank loans, short-term financing, commercial credit, bill discount and other ways.

Shuiliang Zeng, an expert on enterprise management and private enterprise management in Jiutong, believes that the effective way to reduce the proportion of working capital in total turnover is to accelerate the turnover cycle of monetary funds. According to the length of the circulating period of monetary funds, we can predict the demand of enterprises for working capital:

First, to reduce the management of working capital, we must start from three aspects: inventory management, accounts receivable management and accounts payable management. Shuiliang Zeng, an expert in private enterprise management, believes that for inventory management, on the one hand, sales should be strengthened, and the inventory turnover period should be reduced through sales growth;

second, on the other hand, we should calculate the economic lot size by determining the ordering cost, purchasing cost and storage cost, and control the funds occupied in the inventory to minimize it. For the management of accounts receivable, on the basis of credit risk analysis, enterprises should formulate reasonable credit standards, credit conditions and accounts collection policies; Through these measures, customers are encouraged to pay for the goods as soon as possible, thus accelerating the turnover of accounts payable. Shuiliang Zeng, an expert of Jiutong Enterprise Management, thinks that, generally speaking, the longer an enterprise delays the payment, the better it will be for the enterprise. However, due to the fact that the delayed payment may lead to the deterioration of the reputation of the enterprise, the enterprise must carefully weigh and compare various schemes before making a decision and choosing the most favorable scheme for the enterprise.

Third, capital management

On the issue of capital management, there is another "misunderstanding" that is, capital management means outward expansion, that is, enterprise merger, that is, financing from society, or even turning to private high-interest loans. In fact, these are not real capital management but speculation and gambling; Shuiliang Zeng, an expert in Jiutong Enterprise Management, believes that the capital operation of small and medium-sized enterprises at this stage is to sell some non-bad assets of enterprises at a strategic height when the "gold content" is high, and take the opportunity to adjust the business strategy of enterprises. ;