Embrace finances of the company
There are more people who can make money than ones who are able to manage resources. Graduates with perfect diplomas don’t start doing business or take market risks. Another ones, who don’t study well and don’t want to endure humiliations and instructions, try to become entrepreneurs after graduating the University. But finally, they are hit by the lack of knowledges.
Before I worked in bank, all financial or credit operations seemed to me like fiends. And they scared accountants worse than taxes. Getting loan approval was considered as a success but coming of loan inspectors plunged a company into abysses of turmoil. Repayments were considered as a great skill.
For years I had been looking at intimidated accountants who scare the owners. I hadn’t understood it before I visited courses for Chief Accountants. It wasn’t a teaching but intimidation by fines, penalties, mulcts and forfeits.
Between payments to government and to contractor the economist chooses the first operation. If there is no urgency, anyway, he will send money instantly. Accountants have dreams of perfect reputation and lack of any reasons to get arrested. The date of payday and social welfare payments recede into the background. Thereafter accountants remind themselves about owner’s interests.
As an enemy agent who overuses his knowledges of foreign language, the accountant fills his worth. With a lawyer he restrains the owner with references to the formalism. It never comes to their minds that paying a small fine is a reasonable price for entrepreneurial risks. There are no blameless businesses.
Finance cycle in business begins with prepayments and continues with payments for finished products and sales. Then it ends with budget allocation. Shortfalls are replenished. Surpluses are placed.
The benzene ring of worries includes:
1. Sales.
2. Taxes.
3. Production.
4. Licensing.
5. Stock markets.
6. Loans.
7. Pricing.
8. Payments and payoffs.
9. Cash flows.
10. Budget financing.
11. Foreign economic activity.
Finances of companies are classified into groups:
1. Creation of material and technical base for production. Selling of finished products and using of profit.
2. Payments of salaries, distribution of bonuses and capital, stimulation of employees’ loyalty.
3. Replenishment of working capital, financing of import, researches, design developments and marketing analyses.
4. Loan, tax and customs interactions, modernization of production capacitiy, investment attraction, IPO.
Financial relationships arise between:
1. Contractors.
2. Other businesses.
3. Insurance.
4. Employees of organization.
5. Banks.
6. Investment funds.
7. Divisions and departments.
8. Suppliers and buyers.
9. Own and temporary staff.
10. Government and third-party organizations.
11. Transport and building associations.
12. Foreign organizations and representative offices.
Income and expense managements form additional and reserve capitals, funds for depreciation, amortization, currency, investments, consumption, salary and budgetary payments. If there is an excess of budget, then medical and social insurance are included.
Cashless payments help avoid cost and risks of collection. Credit resources promote the modernization, keep growing of quality and increase competitiveness. It’s important to avoid loans for solving temporary problems. Cash gaps are considered as bad accounting alarm.
Loading and reporting could be improved by:
1. Leasing – lending of expensive fixed assets.
2. Warranty – surety to ensure fulfillment of a contract.
3. Letter of credit – contingent monetary obligation as an order of applicant.
4. Forfaiting – acquisition of commercial obligations’ risks with a financial agent.
5. Factoring – lending to suppliers by short-term receivables.
6. Hedging – opening positions in different markets to compensate price risks.
The triad of financial resources consists of:
1. Formed at owned funds:
a) Amortization, depreciation and stable liabilities.
b) Target receipts, mutual and other contributions.
c) Operating income and selling disposed property.
2. Mobilized in the financial market:
a) Selling own securities.
b) Loans and foreign currency exchange.
c) Dividends and interests from related issuers.
3. Receipt in budget allocation:
a) Mutual finances.
b) Budget subsidies.
c) Insurance payments.
Quantum leap in development could be received by the combination of organizations in:
1. Syndicate – centralization of distribution and sales with saved law and production components.
2. Cartel – unlawful collusion which works until it would be exposed. Pricing, spheres of influence, using of patents, controlling over purchasing and selling contracts, hiring and firing are usurped.
3. Monopsony – competition-free buyers dictate terms to sellers. It could be found in state and transcontinental markets.
4. Conglomerate – acquiring of small and middle-sized companies by a bigger one without any production, sales and functional dependencies.
5. Trust – monopoly association which cuts off heads of manufacturing, commercial and juridical integrity of participants in favor of the parent company.
6. Holding – separating parts of the main company through reorganization or acquisition. There are “sisters” and “granddaughters”.
7. Consortium – temporary coalition of independent businesses to coordinate their activities.
8. Concern – merger of economic potential and marketing strategies. It’s a centralization of resources.
Money that should be counted before the despute is the main reason of any action. As Americans say: “Money can’t buy happiness. But it sure can rent”. Cynicism and price of freedom are hidden in the dictum. One who has resources won’t be punished. It’s the law of the aggressive market.
Be careful and prepare for tomorrow. Manage your finances but do not serve them. Pay first, only then faint. Look down on money. Look down on money, but don’t lose sight of them. Don’t try to buy customer’s love but improve your positions for bargaining. Well-being forms balanced decisions.
Source New Retail
Translation Maksim Sukhorukov