Why should everyone have financial thinking?

As long as every individual or organization survives in this economic society, it will inevitably involve how to manage the financial problems of "money", but most people have never managed and strengthened finance as a separate skill or thinking.

Personally, where does a person's money come from and how to spend it? The way to spend money is to choose consumption, investment, financial management, insurance or savings. This is the most basic financial cash flow problem, which is presented in a table as a simple financial "cash flow statement".

For another example, the total income of a family includes wages, labor services, transfer of assets, etc. Its expenditure includes daily necessities, education and training, movies, music and entertainment. Calculated on a monthly or annual basis, we can see that the total income of the family minus the total expenditure during this period is the net income of the family, or the profit of the family during this period. If presented in tabular form, it is a simple financial income statement (or income statement).

If you can think about the impact of this event on money when making an activity decision, whether it is a profitable business or a loss-making business, congratulations, you have begun to embark on the broad road of "financial thinking". In fact, it's as simple as that: always think about whether to earn or lose, how much money to spend, how much money to collect, and how much money to leave in the end. This is the most basic way to cultivate financial thinking.

What is financial thinking?

Many people may have a headache immediately when they hear the word "finance", saying that finance is full of technical terms and a lot of figures in accounting, finance and tax law, and it is "cutting and confusing". Simple contact will make life very annoying.

In fact, in addition to the boring and monotonous figures themselves, it is also related to our financial practitioners' preference for "inner show". Most financial practitioners are similar to me. They are not good at communication and cannot express their views and ideas. For a long time, this has caused an intuitive view of our financial practitioners-insipid. In fact, we are all inner show (otaku, otaku), and the fashionable point is "man show". Hehehe, we have offended our peers!

The simple explanation of financial thinking is that individuals or organizations take profit and loss, cash flow and other factors into account when making decisions, that is, they must have financial thinking. As for whether the above factors are comprehensive and reasonable, it is a question of one's own ability and cultivation in the later period, not a question of thinking.

Whether exploring new markets or acquiring new companies, decision makers always think about how much money this order can make. With this idea, when buying a company or developing a new market, it is inevitable to update the company's valuation and profit statement every day, and be cautious when valuing the cost, income and net assets, so as not to waste money.

Finance is not limited to historical data, but also attaches great importance to future development. Financial coverage is relatively wide: accounting, taxation, financing, budgeting, planning, internal control and statistics. If the finance is only positioned or limited to the original accounting scope, the financial department of the unit will lose most of its functions; This is equivalent to the fact that the enterprise hired a famous Russian Hercules, but only let him sit in the reception room and watch the gate, and at the same time dislike his salary.

Takaharu Abe, a senior Japanese accountant, mentioned in his book Everyone Should Have Financial Thinking that business will never be smooth sailing. If we can't perceive the accompanying risks and learn from our mistakes, we can't continue and develop. At this time, if you use financial thinking, you will have different results. It is very helpful to think and consider an enterprise with financial thinking. Financial statement is the report card of the operator for a period of time, and it is also a mirror reflecting the current situation of the company. Just like a physical examination, you may not notice the problem yourself, but if there is an "abnormal value" during the physical examination, you should pay attention to it!

Discrimination of financial concept

1, "profit" ≠ "making money"

Enterprise development is to make money, but it is not enough to look at profit only, what is more important is cash flow. Suppose you have a house. When you bought it, you spent 800,000 yuan. Now you sell it for 654.38+0.5 million yuan. It is agreed that the buyer will pay after half a year. Now the problem comes: the profit from the sale of real estate is 700,000 yuan (150-80), but the current cash inflow is zero. The surface is good, but you haven't received the money yet, but if you need 6.5438+0.5 million cash urgently because of sudden reasons, no cash will lead to personal bankruptcy, and then you will see the trap below the surface of the problem. Cash is king, especially in the economic downturn. If you only look at the book figures, you will make a lot of profits, which obviously just stays in accounting thinking. We must jump out of the numbers and carefully analyze the cash flow in order to have a relatively accurate judgment. Enterprises often die not because of low profits, but because they have no cash and can't move, leading to instant death. Both profit and cash flow should be considered, which is the real "financial thinking".

2. "Assets" ≠ "Wealth"

The conventional way to judge the asset size of a person or an enterprise is to look at the total assets data in its financial statements, but just having more total assets does not necessarily create more wealth. If the total assets contain a lot of useless and invalid assets, it is not only wealth, but also liabilities, because you may have to pay maintenance fees to maintain them. So we must clarify a concept that assets are not equal to wealth.

We always think that with more assets, we will create more wealth. In fact, the most valuable thing for a company is its income-generating ability, because all the assets of the company are ultimately precipitated costs, and the cost depends on whether customers are willing to pay for it. Therefore, wealth actually depends on the ability of assets to eventually turn into income.

3, "cost control" ≠ "cut funds across the board"

If sales are not as good as expected or internal funds are tight, enterprises will first think of controlling and cutting costs. When it comes to reducing costs, the strategy of reducing activities immediately comes to mind. It is a very common case that "the department can cut its expenses 10% because it stops the planned activities". It would be nice if the same activity could be completed at a low price in other ways. If it can't be solved in other ways, with the shrinking activity, the turnover will be lower and lower. Obviously, it is impossible to control costs and expenses in a "one size fits all" mode. It is necessary to classify and analyze one by one according to subjects, projects and contents to see if there is room for improvement, and then carry out classification control and reduction.

For example, expenses directly related to turnover, such as advertising fees or promotion fees, should not be simply across the board. We might as well look at the past practice from the beginning, and then compare and analyze the results after cutting various expenses, and completely change the practice. If we implement cost control in the way of "cutting 30% across the board", we will also cut the really necessary funds.

The most powerful way to control and reduce costs is to "spend more money to propose more profitable planning schemes". Yongxing Harada, president of McDonald's Holding Company in Japan, once said in the book "Winning in Management": "Reducing costs means" spending more money to propose more profitable planning schemes ". The more steep the business is, the more we need to discuss spending more money on investment. If not, it will be impossible to resurrect in the future. " Don't be bound by the thinking of spending money all the time. If you want to think about new ways to increase turnover with money, you must think through it and implement it seriously.

4. What's the charge?

What is the concept of cost? The concept of cost is divided into traditional accounting concept and economic concept. We should not only learn to distinguish them, but also learn which concept to use to solve problems on what occasions. The definition in the traditional accounting category: (1) is the economic value measured in money by consuming resources through producing and selling certain kinds and quantities of products; (2) the economic value needed to acquire material resources; (3) The sacrifice of resource value paid or payable for a certain purpose can be measured in monetary units. The concept of cost in traditional accounting is easy to understand, and it is also the cost content that everyone is talking about in our daily life. However, the concept and content of traditional accounting cost are often misleading when making financial management decisions. Why do you say that? Let's first look at the concept of cost in economics.

The concept of cost in economics: the maximum cost of giving up other purposes in order to achieve one purpose. It is basically consistent with the concept of opportunity cost in financial management and is also a concept often used in financial decision-making. Each of us, especially financial practitioners, must learn to distinguish and skillfully use these two concepts.

Simply put, cost is the biggest price to give up. A resource has several options, and the cost of the selected option is the highest among all unsuccessful options.

Be a financial officer with a strategic overall view

Financial people who only pay attention to historical figures now indicate that they will be eliminated. Why do you say that? How can you make accurate and objective financial statements without understanding the development trend of the industry and the business market of the company? To say the least, even if the figures in the report are correct, what is the significance for the development of enterprises? The overall strategic view of financial personnel comes from their understanding of the industry and the company's business.

With the overall strategic situation, you can get rid of the limitation of numbers and pay attention to more valuable things, thus ensuring that the financial decisions you put forward are beneficial to the development of the whole company.