5 Steps Of Corporate Finance

Just as enterprises need to pay attention to different problems at different stages of growth, financial management also has different emphasis in different growth stages of enterprises.

First, it is

At this stage, the enterprise is in its initial stage, and its staff size is not more than 30 people. Its business is relatively simple. From the aspects of products, business units and regions, management points are few and single, and the scale of operation and capital is also small.

Therefore, the requirements for financial functions are low, limited to cashiers, records, simple accounting and tax returns, and finance is a backstage isolated service function.

This stage is easy to produce problems because of the limited level of accountants, often lack of strict audit procedures, accounting attribution, accounting accuracy and poor standardization, there are potential security risks of funds.

In addition, business flexibility leads to many financial account items, and accounts can not truly reflect the overall business situation.

A better solution is to hire experienced accountants or institutions to check accounts regularly.

Second, control.

Enterprises grow further and expand into larger markets, product lines and organizations.

At this stage, due to the increasing operation of capital and goods, the risks faced by enterprises are increasing, and the possibility and extent of damage to property losses are expanded.

Organizational units, personnel and geographical management points have increased rapidly, which has also increased the risk of capital allocation and cost control.

At the same time, rapid expansion requires higher capital turnover. If there is no accurate and timely understanding of the overall financial and financial situation, it will lose market opportunities or cause a cash flow crisis.

This stage of the enterprise, like a fast Mercedes Benz train, if there is no set of good braking devices, encountered bend, sudden situation and so easy to derail.

Therefore, at this stage, enterprises need an effective control system urgently, so that sustained Mercedes Benz can be built on a controllable platform.

In line with the management requirements at this stage, financial management emphasizes financial safety, such as capital, goods and assets, and requires accurate accounting and accounting.

Finance is widely involved in the control of business processes, closely related to business, and set up a set of financial control system, ensuring internal safety from four aspects of capital, inventory, information and accounting.

The problems that are easy to appear at this stage are: lack of systematic analysis and understanding of possible risks; using control means, but not controlling the effect of control, and lack of scientific evaluation methods; the control points and control means are not appropriate, and the control effect is not appropriate; the control of the accounting system is ignored, the financial control of the business system is ignored, and the financial control still stays in the post, thus the control function of the business can not be played.

To solve this stage of the problem requires professionals who know both management and finance and have good overall situation and systematic thinking.

In practice, an enterprise can build this control platform by hiring such a chief financial officer, or by hiring a professional advisory body.

Third, analysis.

Enterprises grow further, or are in the leading position in the existing market, or enter diversified development in a larger scope.

Routine index analysis is an important part of financial analysis, but it is mainly used by investors.

For business managers, the content of financial analysis is much more than that.

At this stage, enterprises need to establish their own financial analysis system and models.

The results of financial analysis can be widely used in performance planning, profitability analysis, efficiency improvement and salary setting.

Fourth, capital operation.

At this stage, enterprises use capital means to expand rapidly and enter diversified expansion and development. Enterprises raise funds through listing, or carry out other strategic and financial financing.

At the same time, take M & A and other means to expand.

This stage of Finance focuses on the operation of capital, the direct operation and management of investment and financing, and the capital structure optimization and profit distribution involved.

Fifth, financial efficiency.

At this time, enterprises have more complex capital structure, corporate structure, large amount of working capital, and bargaining chips for tax negotiations.

This stage of finance is mainly through tax optimization and management of working capital, which directly produces benefits for enterprises, so as to avoid unnecessary tax and capital idle, resulting in losses.

The above five steps of finance have internal logical development order, but they are not completely separated.