Four Difficult Problems Faced By Financial Management Of Growing Enterprises

2012-08-22   |   by CusiGO

“Big shoes” reduce efficiency, waste resources, and “small shoes” restrict development. In the growing enterprises, it is very important to build a suitable financial management system. Because of the high financial management requirements, talent allocation and complicated process system, it will not promote the development of business and management, but may lead to the business department’s antipathy and conflict, affecting the development of business.

At the same time, because the overall management level is not matched, the implementation often takes the form, but also attacks the enthusiasm of financial personnel, and cultivates bad working habits. “Wearing small shoes” is more common. There is no system in financial management, or lack of system management ideas, leading to the lack of important financial strategies and financial functions. For example, centralization or decentralization? What functions should finance play? What is the status of the company’s assets and funds, what are the key risk points and control points? What are the requirements for financial information, what is necessary for business management decisions? How to ensure the data is correct, etc. According to our experience, it is conservatively estimated that more than half of the growing enterprises do not have a systematic financial management idea and method. It’s no wonder that many bosses complain about financial management confusion, unclear information, inaccurate data, useless analysis, or more or less financial losses from time to time.

In the process of growth, one of the great temptations faced by entrepreneurs is financing. For those companies with good growth, bank loans, domestic and international listing, strategic or financial investment and many other opportunities come to knock on the door. Some enterprises don’t know whether the development speed needs financial support or whether the huge financing opportunities need the cooperation of scale and speed. Part of the growing enterprises

How fast development is appropriate? The answer to this question is often closely related to fund-raising. However, the answer to this question may be one of the key strategic issues that growth enterprises need to consider and one of the biggest risks.

In addition to speed, another problem with expansion is control. This is reflected in three aspects: first, capital control in expansion, second, performance control in expansion, third, corporate culture control in expansion. These three aspects are related to financial management.

The direct result of the expansion is the decentralization of enterprise area, the increase of management points, the increase of personnel scale, the increase of business units, and the increase of various forms of legal entities, such as branches, offices, joint ventures, subsidiaries, etc. This kind of distribution will inevitably lead to the expansion of cost and the increase of management complexity and difficulty. At the same time, in the expansion stage, capital is often a scarce resource, which causes a contradiction. How to find a new management mode: not only to meet the expansion requirements, but also within the controllable range, so as to ensure the sustainable development of enterprises with sufficient financial support, has become a major challenge for the financial management of growing enterprises. Performance and corporate culture control, in the final analysis, are the problems of organizational management. The core content of organizational management is performance management and salary incentive. On the one hand, it is necessary to control the total cost of compensation within an economic and reasonable range; on the other hand, it is necessary to guide the efforts of all members of the organization through the establishment of key performance indicators; create internal fairness and competition through corresponding compensation incentive policies, and stimulate the enthusiasm of members of the organization; Through the analysis and monitoring in the implementation, we will continue to strengthen the objectives and improve the gap, so as to ensure the realization of the strategic objectives of the enterprise. These constitute an important part of financial management in this stage performance management, which requires financial personnel to change from the height of overall organizational management and strategic management to the promoters of corporate strategy and goal realization.

If the former challenge requires finance to be the promoter of strategic implementation, here, finance will become the assistant of strategic and tactical formulation. A series of important business decisions, such as product pricing, business combination, customer selection, sales policy-making, production and purchase decision, require corresponding financial data and analysis suggestions. The market faced by growing enterprises is changeable. High growth will inevitably lead to new competition or more participation in the competition with large enterprises. In such an environment, it is very dangerous to make blind or wrong decisions due to the lack of information. This kind of analysis requires financial managers to take the initiative to look at problems from the perspective of operation, find problems, and provide valuable suggestions for decision makers through professional methods and tools.