How to do a good job of enterprise financial operations management

1, risk-benefit trade-off? For additional risks need to be compensated with additional benefits

We are referring to the expected return rather than the actual return. We can only anticipate future outcomes and cannot know in advance what will actually happen. The extra return

will compensate for the extra risk, which is why corporate bonds have higher interest rates than Treasury rates.

2. Money time value concept? A dollar today is worth more than a dollar in the future

The most basic concept in financial management is that money has a time value, that is, a dollar today is worth more than a dollar in the future. In economics this concept is expressed in terms of opportunity cost. To measure wealth or value, we use the concept of time value to express both the future costs and benefits of a project in present value terms. If the present value of the benefits is greater than the present value of the costs then the project should be accepted and vice versa. The future benefits and costs of a project cannot be reasonably assessed without considering the time value of money.

3. Cash flow concept? Measurement of value to consider cash rather than profit

Measurement of property or value using cash flow rather than accounting profit. Cash flow is the cash received by a business and available for reinvestment. Whereas, `accounting profit on accrual basis of accounting is the revenue earned and not the cash available on hand. A company's cash flow and accounting profit often occur at different times. For example, capital expenditures such as the purchase of new equipment will be depreciated over several years, and the depreciation expense is deducted from profits. However, the cash flow associated with this expenditure occurs all at once. The outflows and inflows of cash reflect when the benefits and costs really occur.

4. Incremental cash flow? Only the increment is relevant

We should think in terms of the increment, i.e., comparing the change in cash flows when a new project comes on and when a new project does not come on, or more precisely, the incremental cash flows after taxes.

5. Taxation affects business decisions. Income taxes are considered when evaluating new projects. The government also realizes that taxes affect a company's business decisions, so they can be used to influence company spending to some extent. Taxation also plays a very important role in determining the financial structure of a company, and the tax code makes debt financing preferable to equity financing.

6. There are no consistently high profits in a competitive market

If an industry is lucrative, it will attract a large number of vendors, and the resulting increase in competition will cause profits to fall to the rate of return required by investors. On the contrary, if the profits offered by an industry are lower than the rate of return demanded by the investor, there will be an exit of manufacturers from this industry, which will reduce competition and prices will rise accordingly.

It follows that very high profits in a competitive market cannot be sustained for long. In this case, there are two ways to minimize competition in the market:

one is to make the product unique, and the other is to reduce costs.

Second, improve the financial organizational structure, and further clarify the financial management center management functions.

The Financial Management Center is a collection of funds, accounting, budget control, cost management as one of the financial management organization, according to the needs of the management, its functions are further divided into financial management, funds management and accounting for three parts:

1, financial management functions

The main Responsible for the planning, guidance and system construction of the entire Group's financial work, as well as the supervision of the implementation of the relevant financial management system. Assist in the development of assessment indicators and organize the implementation of the Group's investment in major economic activities such as research, demonstration, analysis work, engaged in the determination of the Group's financial objectives and the implementation of the profit distribution plan and financial analysis, financial policy information research;

2, funds management function

As for funds management, the company is now practicing the The centralized reporting funds management system of the unified income and expenditure, the allocation of imprest, suitable for smaller enterprises to adopt, under the existing conditions of our enterprises can be merged into the financial management function. However, with the rapid expansion of the scale of the group company, the group company should establish a clearing center or internal bank funds operation. Through the establishment of the clearing center or internal bank, the introduction of bank operation mechanism, unified settlement of group funds, financing and other management, the implementation of the unified deposit and loan;

3, accounting function

Responsible for providing the company's financial information, preparation of consolidated financial reports, accounting analysis, external disclosure of accounting information, internal provision of Management of a variety of accounting information required to develop the Group's accounting policies and regulations, guidance and supervision of the accounting work of the branch (sub) companies.

The establishment of ? The three unified sub? The financial management system, strengthen the headquarters of the financial management center functions.

On the basis of computerized financial accounting, the establishment of the "three unified sub" financial management system. Three unified sub? As the main form of the operating mechanism, the independent accounting department of the subsidiary companies to implement the financial institutions, financial personnel, capital operations and economic accounting separation of the new management system, and modeled on the function of financial institutions, credit, settlement, interest rates, etc. introduced into the internal business.

1, the implementation of ? Institutional unification? The implementation of? The organization is unified? After the department of financial institutions belonging to the company's financial center to centralized and unified leadership, the financial institutions of the units for the financial center of the sent institutions. Two levels, each in its own way, the group's management functions through the issuance of special management normative documents, top-down, bottom-up implementation and feedback, the group's special management normative documents, integrated management of a number of functions of the group's management, supporting the upper and lower levels of the two levels of the financial institutions of the interface and unity of the formation of the group's parent company up and down through the management of the system of the combination of the blocks.