How To Grasp Centralization And Decentralization In Financial Management

In view of the financial management of a specific enterprise group, how to balance the centralization and decentralization and how to weigh it, find a breakthrough in solving the practical problems of the enterprise group's financial management mode and the operation of the enterprise group.

Strong centralization: first, cash management.

This is the core of financial management. It is an important issue for the group's financial management to centralize the scattered cash and reduce the level of cash holdings and ensure the capital needs of the group's key projects.

To this end, we must strengthen several aspects, one is bank account management; the two is cash forecasting; the three is financing management.

Next is budget management.

The parent company's financial centralization management is also reflected in the parent company's final decision on making budgets for guiding each subsidiary.

According to the group planning, the parent company puts forward some general goals, according to the company's long-term plan and annual plan, and decomposes the indicators to all subsidiaries.

The subsidiary company compiles the annual budget according to the indicators issued by the parent company and the specific circumstances of the unit, and reports it to the parent company for examination and approval.

The parent company set up a special budget management committee to review and balance the budgets of each subsidiary and compile the group budget.

The approved budget is issued to each subsidiary to guide its business activities.

In the process of budget execution, the parent company should adjust the deviation at any time according to the actual situation so as to ensure that the budget is completed.

Moderate combination of centralization and Decentralization: first, investment management.

The investment scale and investment direction of the group affect the development direction of the group to a large extent. Therefore, the group investment management tends to adopt centralized management.

After the parent company's centralized management of the subsidiary company's funds, the investment management can be moderately decentralized, that is, the subsidiary company has the right to formulate an investment project under the limit of the amount according to the specific circumstances. Generally speaking, the total investment of the subsidiary investment project is smaller than the total investment of the group. Generally, the investment amount is not more than 10%. If the total amount or proportion of the investment exceeds the upper limit, the group will integrate the project into the investment project of the group company.

In short, the parent company should establish and improve the system of subsidiary investment, approval, control, inspection and supervision, and attach importance to the tracking management of investment projects, so as to prevent the phenomenon of investment only without management and regulate the investment behavior of subsidiaries.

Next is the profit distribution.

The profit distribution of parent company is allocated by the group.

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For the parent company, the profit increased by a subsidiary must be kept at a certain rate in the parent company. At the same time, the interests of the employees of the subsidiary company should be gradually increased. This is the power source of the group's cohesive force.

For subsidiary companies, total capital control should be implemented in the allocation of funds, and a check and control system for wages and bonus distribution of subsidiaries should be established and improved.

The subsidiary companies must strictly abide by the provisions of the parent company.

The principle of withdrawal is allocated autonomously within the range of the amount of wages raised.

Extensive and thorough Decentralization: parent subsidiary companies

The centralized management does not exclude the exclusive accounting of the subsidiary companies, whereas the parent subsidiary companies have their equal and independent legal status, which provides a basis for decentralization of financial management. The subsidiary company has independent operation and self financing in the decision-making scope approved by the parent company, and has a statutory right of operation for its production, sale, investment and distribution.

The subsidiary company operates the product from research, development, production, sale to after sale service.

In the accounting of contracts, business purchases, assets liabilities and retained benefits, the accounting status of a subsidiary should be reflected. The system of making, examining, bookkeeping and reporting is handled by subsidiary companies in accordance with the financial accounting system and relevant regulations.