Solutions To Financial Management Problems Of Private Enterprises

At present, the survival environment of private enterprises is not as early as that year. Many small and medium-sized private enterprises are reluctant to maintain their operation. However, some entrepreneurs believe that the difficulties of the current business environment are temporary. Many entrepreneurs are optimistic about the future. They believe that through this trough, enterprises will still usher in a golden age. Another factor that supports entrepreneurs' optimism is that China is still an overregulated market economy, which has created many administrative monopolies or segmented markets. In the long run, it needs to be broken. For many private enterprises, this is also a virgin land to be reclaimed, and it is also the place where opportunities lie ahead, such as gold reform and so on.

But opportunities are not equal to everyone, and more precisely, opportunities are no longer obtained with courage alone. The threshold for future opportunities will only grow higher and higher.

Take financial reform as example, the financial industry is a capital intensive industry, and a knowledge intensive industry. It is a risk management enterprise. Although it is a high return, it is also a high-risk industry. This is absolutely a challenge to the management and management ability of an enterprise.

In the field of resources, its cyclical nature is also a challenge to the management of enterprise capital flow.

The larger the scale of enterprise operation and the more kinds of business, the greater the system risk. It is also a challenge to resource allocation and coordination capability of enterprises.

Because of the increasing challenges, many entrepreneurs have begun to stagnant or only fine-tuning them locally. This has also led to serious competition in the homogenization of the original industry, the slight profit management of enterprises, and even the sustainable operation of enterprises.

How to deal with the challenges of homogenization competition? How to deal with new opportunities? How do these private enterprises need to change their financial management?

First,

We should adjust our business expectations, respect the rules of the industry, and replace the over sensitive management mentality with a relatively rational attitude.

The most convenient indicator is the rate of return on investment and tolerance (positive and negative deviation), and the comparative analysis of their capabilities and the average level of the industry. The rate of return on investment falls to a suitable and acceptable range, such as setting different tolerance for different industries: high tech start-ups have higher investment return and tolerance, and the return on investment and tolerance of mature industries can be relatively low.

Secondly, we must do a good job in resource allocation.

and

According to the industry rules and trends, formulate strategies and action plans, allocate resources according to the action plan, and allocate resources and responsibilities to the target realization path through the budget formulation.

The budget not only enables entrepreneurs to have a clear idea of the future operation, but also is especially important for diversified enterprises and enterprises that want to challenge new opportunities. Through scientific budget, resources can be properly allocated to various industries and business activities, so as to avoid unnecessary management problems such as waste, wrangling, shirking responsibility or delaying opportunities caused by uncertainty in resource utilization.

After doing the above work, the focus of the enterprise is on carrying out the execution. At this time, we must do well daily control, accounting analysis and capital operation in financial management.

Many private enterprises have a mistaken perception of Finance (Accounting). They think that finance is nothing more than bookkeeping. Ignoring accounting professional accounting and analysis can help managers to have a clear understanding of the resources and capabilities of enterprises. For example, sub sector and business accounting can help enterprises understand the resource occupancy, profitability, debt paying ability, operation capacity and development ability of each business unit. Management can assess the current situation of business development through regular financial management reports, at the same time, understand business development opportunities and idle resources, so as to adjust the business behavior accordingly. This also reflects the philosophy of financial management PDCA (plan execution inspection improvement).

Of course, it is not easy to do well. It is necessary for enterprises to make preparations for organization, process, system and technology. If necessary, we need to adjust the governance structure. This is a systematic project and a comprehensive pformation from mental model to executive system.