Chapter 24 Chapter 24 Overview of Financial Management

The first principle of financial management. 1. Maximize the overall interests of the enterprise (or maximize the profits of the enterprise). 2. Minimize the total cost of enterprise operating funds, promote the sufficient and reasonable flow of funds inside and outside the enterprise, and improve the benefits and efficiency of bonus use. 3. Enterprise financial management reflects the characteristics of the industry, region, and ownership, follows the national fiscal, taxation, and accounting laws and regulations, and also pays attention to absorbing international advanced management experience and gradually integrating with international financial practices.

4. The enterprise's finances are controllable, which promotes the coincidence of financial management with the overall strategy and planning objectives of the enterprise.Encourage, support, support, restrict, and prohibit the financial behavior of subordinate enterprises through necessary financial means, so that they can operate on the predetermined development track. Article 2 Financial institution setup. 1. Parent company level. (1) Establish departments related to financial activities, such as finance department, audit department, financing department, investment department, financial settlement center, internal bank, and financial company.

(2) Some financial institutions can work together according to the size and needs of the company, such as the Finance Department and the Financial Settlement Center. (3) The financial institution is in charge of the company's deputy general manager of finance. 2. Subsidiary level. (1) Subsidiaries generally only have a finance department.Auditing and regional settlement centers can also be added to larger subsidiaries. (2) For small-scale subsidiaries, do not set up a separate financial institution, but only set up no less than 2 financial positions attached to the company's administrative department (secretariat).

3. Branch and factory level. (1) Branches can set up a finance department, which mainly focuses on accounting and cost control. (2) Branches can also have their own accounts and internal accounting by the finance department of the headquarters of the superior company. 4. Affiliated enterprises and cooperative enterprises. Set up financial institutions with reference to the core corporate financial rules and regulations. Article 3 Appointment of financial personnel. 1. Accounting personnel of the parent company, especially senior financial managers, must be senior financial experts who are proficient in management accounting, responsibility accounting, cost accounting, investment and financing operations, capital markets, etc.

2. The head of finance of the parent company is a senior manager who is appointed and dismissed by the board of directors. 3. Implement the accountant appointment system for the subordinate enterprises. (1) The financial supervisors and senior accounting personnel of the branch companies, wholly-owned subsidiaries, and holding subsidiaries within the enterprise group are recommended and reviewed by the person in charge of the parent company (financial department) at the upper level, and the personnel department approves and handles relevant procedures. (2) The salary, personnel relationship and post appointment and dismissal of accounting personnel are assigned to the parent company, which is dispatched and assessed by the parent company, and is responsible for the training and business guidance of all financial personnel.

(3) The accountants regularly report to the superior financial department. (4) The transfer and resignation of financial personnel must first obtain the consent of the superior parent company and the leaders of the company, and supervise the handover and resignation. Article 4 Financial management system. 1. The financial system is the most important rules and regulations of the group, which must be uniformly formulated by the company headquarters. 2. The rules and regulations formulated by the parent company are compiled into a book and sent to the subordinate enterprises for unified implementation.

3. The effectiveness of the financial system: (1) Compulsory implementation for the core layer, wholly-owned subsidiaries, and holding subsidiaries, all applicable without discount. (2) There are certain restrictions on the affiliated companies in which the shares are held, and it is best to abide by them. (3) It is instructive for cooperative enterprises, and it is recommended to refer to it for implementation. Article 5 Financial supervision. Establish a multi-level financial supervision mechanism: 1. The parent company shall set up an audit department, an audit department or a supervision department for supervision and management.

2. For the internal supervision of subsidiaries, audit posts can be set up in the finance department to carry out daily supervision and management. 3. Accept audits, financial and tax inspections, property and capital verification, and asset assessments from external national and local fiscal and taxation or auditing departments of the enterprise, and hire independent certified accountants to conduct impartial audits when necessary. 4. Strengthen the audit and inspection of the enterprise management before taking office, during the period of employment, post transfer, and resignation, and carry out comprehensive or spot-check supervision activities on a regular or irregular basis.

Article 6 Financial indicator system. 1. Consumption indicators. Production Cost Manufacturing Expenses Selling Expenses Administrative Expenses Financial Expenses Taxes and Surcharges 2. Fund occupation indicators. Amount of fixed assets Amount of working capital Long-term investment Intangible assets and deferred assets 3. Outcome indicators. Gross output value Net output value Sales revenue Sales profit Investment income Tax payment 4. Benefit efficiency index. (1) Current Ratio = Current Assets/Current Liabilities (For industrial enterprises, the ratio should preferably be doubled).

(2) Express ratio = quick assets/current liabilities (for industrial enterprises, the ratio should preferably be 1 times). (3) Accounts receivable turnover ratio = net credit sales/average net accounts receivable. (4) Inventory turnover = cost of goods sold / average inventory. (5) Asset-liability ratio = total debt/total assets. (6) Return on net assets = net profit after tax / net assets. (7) Sales profit ratio = pre-tax profit / net sales value. (8) Profit rate of cost expenses = profit before tax / cost of goods sold. (9) Total labor productivity or per capita profit. (10) Average annual sales (profit) growth rate.

Article 7 Types of financial status. According to the three indicators of quality, consumption and benefit, eight financial models are combined. Model platform 1: Low quality, low consumption and low efficiency. There are many product quality problems, and cutting corners or shoddy manufacturing, resulting in low corporate efficiency. The countermeasure is to focus on the implementation of total quality management, and quickly reverse the situation of poor product quality. Mode platform 2: Low quality, low consumption and high efficiency. It appears in a market environment where the products sell well and the supply exceeds the demand, and the competition is extremely low. Enterprises are soberly aware that low-quality high-yield (speculative) cannot last. Invest profits as quickly as possible in quality-improving investment projects. Mode platform 3: Low quality, high consumption and low efficiency. This is a typical manifestation of the gap in all aspects of the enterprise and serious mismanagement. For enterprises with no hope of turning losses, they may go bankrupt, be auctioned or be acquired. Mode platform 4: Low quality, high consumption and high efficiency. It also appears in the shortage market, and internal consumption management is more fatal. At the same time, two major problems of improving quality and reducing consumption should be solved. Mode platform 5: High quality, low consumption and low efficiency. It indicates that the company's products have entered a recession period, sales are sluggish, products are backlogged, or capital turnover is not working. The focus is on market research and forecasting, rapid adjustment of product structure, and elimination of obsolete products. Clean up the overstocked products in time to speed up the return and turnover of funds. Mode platform 6: high-quality, low-consumption and high-efficiency. This is the best operating financial status and the ultimate model that all types of enterprises should pursue. We should move towards a higher goal, prevent problems before they happen, and continue to innovate. Mode platform 7: High quality, high consumption and low efficiency. The main reason is that the improper management of internal materials leads to high consumption, or the product structure is unreasonable, or the simple pursuit of quality ignores the cost. Strengthen basic management, eliminate waste and reduce consumption. Use value engineering methods to improve product design, process design, and raw material procurement. Mode platform 8: High-quality, high-consumption and high-efficiency type. Relying on high-quality products and sales at ideal prices brings high benefits, and conceals the truth of serious waste with superficial prosperity, which is not in line with lean, economical, and sustainable growth methods. The focus is on improving product and process design, strengthening basic management of materials and quotas, and reducing material consumption. 1. Institutional settings The financial management organization of a general enterprise adopts a functional organization under the leadership of the chief financial officer of the enterprise, which consists of relevant functional departments such as the finance department, audit department, and investment department, and is directly responsible to the chief financial officer.Each functional department sets up corresponding functional posts according to the needs of the work. (1) Finance Department.According to work needs, the following staffing can be adopted: 1. The manager of the financial department is responsible for the overall work of the financial department. 2. Financial assistant, assisting the manager of the financial department to do all kinds of daily work. 3. Budget supervisor, responsible for all kinds of budget preparation work of the enterprise. 4. Cash flow supervisor, responsible for the monitoring and management of corporate cash flow. 5. Bidding supervisor, responsible for the bidding work of enterprise projects and products. 6. Cost control supervisor, responsible for enterprise product cost control and management. 7. Statistical supervisor, responsible for all kinds of financial statistics of the enterprise. 8. Financial analysis supervisor, responsible for all kinds of financial analysis of the enterprise, and providing financial basis for decision-making to enterprise decision makers. 9. Tax supervisor, responsible for corporate tax declaration and other tax-related work. 10. Head of capital operation, responsible for the capital operation of the enterprise and all kinds of work related to it. 11. Creditor's rights supervisor, responsible for the management of the company's external creditor's rights. 12. Accountant. 13. Cashier. 14. Statistician 15. Budget clerk. 16. Branch accountants. 17. Financial director of branch offices. 18. Branch teller. 19. Cashiers of each business department. (2) Audit Department.According to work needs, the following staffing can be adopted: 1. The manager of the audit department is fully responsible for the work of the audit department. 2. Audit supervisor, organize the enterprise audit work under the leadership of the audit department manager. 3. Auditor. (3) Investment Department.According to work needs, the following staffing can be adopted: 1. The manager of the investment department is fully responsible for the work of the investment department. 2. Investment supervisor, organize the investment work of the enterprise under the leadership of the manager of the investment department. 3. Investment analyst. (4) Financial management organization system table: Name Chief Financial Officer Departmental Establishment Manager Number of Finance Department Manager of Finance Department 1 Number of people in audit department Audit department manager 1 Number of people in investment department Manager of investment department 1 Supervisor Finance Assistant Audit Supervisor Investment Supervisor Budget Supervisor Cash Flow Supervisor Bidding Supervisor Cost Control Supervisor Statistics Supervisor Financial Analysis Supervisor Tax Supervisor Capital Operation Supervisor Claims Supervisor General Staff Accountant Auditor Investment Analyst Cashier Budgeter Statistician Branch Accountant Financial Supervisors of Branch Offices Cashiers of Branch Offices Total Cashiers of All Business Units 2. Division of Financial Management Responsibilities (1) Scope of Responsibilities of the Finance Department The Finance Department is led by the Chief Financial Officer and reports directly to the Chief Financial Officer. The subordinate departments are the finance departments of each branch factory, each office, and each business department.The finance department works under the unified leadership of the finance department manager, mainly including financial management, accounting, planning statistics and other functions. 1. Financial management (1) Formulate and implement the company's various financial management systems. (2) Formulation, decomposition and implementation of financial budgets and various financial plans. (3) Formulation, adjustment and revision of financial quotas and expense standards. (4) Formulation and implementation of internal control system. (5) Participate in the formulation of internal prices. (6) Financing. (7) Fund allocation and scheduling. (8) Tax planning. (9) Cost control and management. (10) Financial activity control to ensure the implementation and completion of financial plans. (11) Financial assessment and rewards and punishments. (12) Other related duties. 2. Accounting (1) The formulation and implementation of the accounting system. (2) Accounting, report preparation and report analysis. (3) Daily management of cash deposits, withdrawals, transfers, settlements, etc. (4) Completion of accounting vouchers for the company's first-level accounting unit (headquarters), auditing, reporting for daily accounting processing, and business settlement within the company. (5) Guidance and supervision of the accounting business of the company's secondary accounting units (branches and offices). (6) Review departmental reports, prepare and submit company summary reports. (7) Analyze regular financial statements. (8) Other related duties. 3. Planning statistics management (1) The formulation and implementation of the company's planning and statistics system. (2) Daily statistics, statistical analysis and statistical forecasting, providing statistical reports, statistical analysis reports and statistical forecasting reports. (3) Responsible for the compilation of external statistical reports. (4) The establishment and adjustment of quotas. (5) Forecast of the company's production and operation status. (6) Propose, revise and formulate the company's business objectives. (7) Preparation of the company's operating budget. (8) Responsible for the formulation, decomposition and implementation supervision of the company's production and operation plan. (2) Scope of Duties of the Audit Department The Audit Department is led by the Chief Financial Officer and reports directly to the Chief Financial Officer. Its main responsibilities are: 1. The formulation and implementation of the company's audit system. 2. Implement internal audit. 3. Cooperate with the audit work of external audit departments and audit institutions. 4. Conduct financial inspections on the economic problems of various departments and personnel of the company, and submit inspection reports and handling opinions. 5. Carry out financial supervision over the daily business of the Finance Department and the Investment and Securities Department. 6. Publicize audit regulations. (3) Scope of responsibilities of the Investment Department The Investment Department is led by the Chief Financial Officer and reports directly to the Chief Financial Officer. The main responsibilities are: 1. Draft the company's various investment management systems and implement them after approval. 2. Draft the company's various securities management systems and implement them after approval. 3. Draft the company's dividend distribution system and implement it after approval. 4. Participate in the feasibility analysis and demonstration of various investment projects of the company. 5. Investment supervision. 6. Investment risk control. 7. Implement the foreign investment that has been decided. 8. Assist the Finance Department in the company's investment planning. 9. Establishment and maintenance of investment information database. 10. Other related responsibilities Article 1 Budget management. 1. Budget control A budget is a widely used effective control tool and a plan for monetization.Every department of a business needs to prepare a budget and cover all business activities as exhaustively as possible. (1) Enterprises should implement a comprehensive budget management system to clarify the scope, content and responsibilities of the budget. (2) Budget preparation is generally determined from top to bottom or combined with consultations, and is approved and issued for implementation after aggregation and coordination. (3) In the budget control, the relevant actual performance data is regularly collected and sorted out by the financial personnel, and the real reason for the deviation is explained or correction suggestions are made, and finally fed back to the relevant managers. 2. Main budget content (1) Sales budget.Compiled according to the enterprise's target profit plan and market conditions, it can be divided into product categories and reflected in sales volume, sales tax, sales cost, and sales profit. (2) Production budget.Determine the sales volume based on the sales budget, consider the beginning and ending inventory levels, and calculate the consumption of production factors per unit or total, including budgets for material consumption, direct labor, and manufacturing costs. (3) Expense budget for the period.Prepared according to the scale of operation, sales level and liability status, including the budget of management expenses, sales expenses and financial expenses. (4) Operating capital budget.It mainly reflects the short-term income and expenditure related to the normal operation of the company. ①Income mainly includes: current income, recovery of previous receivables and bills, short-term funds to be raised, etc. ② Expenditures mainly include: materials to be paid, wages, fees, taxes, payables, loans and interest, and capital purchases, etc. (5) Capital budgeting.Reflect the expected changes in the company's liabilities and equity and the investment direction of increasing capital, conduct feasibility analysis according to the two contents of financing and investment, and reflect in detail. (6) Profit and loss allocation budget.It reflects the company's total profit and its distribution during the budget period, and is compiled based on the company's sales, costs, expenses, investment, and non-operating income and expenditure, combined with the company's profit distribution method. (7) Financial status budget.It reflects the budget implementation results and changes of the relevant assets, liabilities and equity items of the enterprise at the end of the budget period.All budgets cover sales, costs, expenses, profit and loss, cash flow, long-term investment and other financial and operational areas. 3. Key points of budget management (1) For the parent company, branch companies, wholly-owned and holding subsidiaries, mainly the budget and control of costs, expenses, and income and expenditure status. (2) For shareholding subsidiaries and affiliated companies, it is mainly the budget for capital, liabilities, and long-term investment. (3) For the entire enterprise group, focus on the budget, centralized scheduling and balance of capital flow and flow direction. 4. Budget preparation method It depends on different departments, the nature of subordinate enterprises and the type of expenses. (1) Traditional budget method.It is obtained by adding and subtracting the estimated change factors of the current year to the budget of the previous year. ①The feature is that the compilation is simple and labor-saving, but the irrationality is hard to return. ②Applicable to enterprises with stable business and little fluctuation. ③ The production department can adopt the standard cost method. (2) Flexible budget method.Based on the normal situation, several budget plans with different levels in the range of 70% to 110% are designed respectively. ①Specifically, tabular method, graphic method and formula method can be used. ② Applicable to situations where the market is changing rapidly and the outlook is uncertain. (3) Zero-based budgeting.Do not consider the situation of the previous period, but analyze according to the current situation.Every time the budget starts from scratch and starts all over again. ① Zero-based budgeting process: Consider whether each item of income and expenditure is necessary. Prepare different levels of budget plans based on revenue and expenditure targets. Analyze, compare and prioritize budget plans. Choose the appropriate budget plan. ② Its characteristics are: reasonable budget and high efficiency, but cumbersome and time-consuming preparation. ③ The R&D department can adopt the zero-based budgeting method. ④Enterprises can mix the two budgeting methods and implement a comprehensive zero-based budget every few years. Article 2 Accounting management. 1. Accounting management principles (1) Enterprises generally implement a unified leadership, hierarchical, and departmental accounting system. (2) Independent financial accounting for subordinate enterprises with independent legal person status. (3) For branches, factory enterprises, and business departments that are not independent legal persons, the financial accounting is not independent, and the financial department of the headquarters will coordinate and simulate the internal accounting of legal persons. (4) The accounting system is combined with internal contract transactions and the economic responsibility system to reflect the symmetry and unity of responsibilities, rights and interests. 2. Main content of accounting management (1) Divide the types of internal accounting units: ① Profitable units, such as production workshops and transportation teams. ② Units occupying funds, such as purchasing, warehousing, and sales. ③ Expense units, such as various functional departments. ④Special fund units, such as research and development, technological transformation. ⑤ Balance budget units, such as internal welfare institutions. (2) Division of internal accounting levels: ① For productive enterprises, three-level accounting can generally be implemented at the factory level (headquarters, branch factories), workshops, and teams. ② Or establish an accounting management system for all staff and the whole process. (3) The internal accounting unit determines the three plans: setting the number and personnel, checking the funds, and determining the internal transaction relationship. (4) The internal accounting unit implements internal price settlement, which can use factory currency, transfer notices, and internal bank checks. (5) Give corresponding rewards and penalties to accounting units for calculating internal profits and losses. 3. Determination of internal accounting price (1) Price classification: ①Material prices, such as raw and auxiliary materials, burning appliances, tools, spare parts, low-value consumables, ② Product prices, such as finished products, work in progress, and self-made parts. ③The price of labor services, such as maintenance, transportation, printing, logistics and administrative services. (2) Pricing method: ① Cost price, based on standard cost or planned cost. ②Based on the market price. ③Based on the profit rate of the enterprise. ④Based on the average (cost) profit rate within the enterprise. (3) Generally, the internal price is formulated (revised) once a year, and individual prices can be adjusted half a year or temporarily. 4. The enterprise (cost control center) should focus on implementing the three-level cost management model (1) Enterprise (factory) target cost management. (2) Responsible cost management of departments and workshops. (3) Process, team and individual standard cost management. Article 3 Internal transfer price management. Internal transfer prices are the prices used in internal transactions between related enterprises. 1. Targets using internal transfer prices (1) Regulating subsidiary profits to achieve desired levels or goals, such as maintaining the subsidiary's reputation, prestige, or reducing trouble. (2) Reasonable tax avoidance due to different local tax rates and different ownership tax rates of subordinate enterprises. (3) Transfer funds to disperse foreign exchange risk, political and economic risk. (4) Support the competition of subsidiaries, concentrate advantages and financial resources, dump at low prices, occupy the market, and defeat rivals. 2. Use the internal transfer pricing method (1) By adjusting the prices of parts and raw materials to affect product costs, the parent company sells to subsidiaries at a high price or the subsidiary sells to the parent company at a low price, reducing the profits of subsidiaries. (2) Through product sales, higher or lower commissions are given to subsidiaries, which affects the sales revenue of subsidiaries. (3) Affect the subsidiary's product cost through the sales price or depreciation period of the subsidiary's fixed assets. (4) The costs of subsidiaries are affected by labor costs such as patents, trademarks, technologies, consulting services, leasing, and transportation. (5) Request more or less management fees from subsidiaries. (6) Artificially creating bad debts and compensation for losses between the parent company and the subsidiaries, and increasing the expenses of the subsidiaries. Article 4 The distribution of benefits between superior and subordinate. distribution plan. Between the upper and lower level enterprises, there may be the following benefit distribution plan: Platform solution 1: Unify revenue and expenditure. The operating income of the subordinate enterprises is all turned over, and the expenses and expenses are budgeted and allocated in a unified manner. Advantages: The upper-level enterprise can obtain all the operating income, and the control of financial resources is strengthened. Disadvantages: bear all the expenses of subordinate enterprises, and the burden is also increased.Operator incentives are not strong. Applicable occasions: Mainly applicable to branch companies and wholly-owned subsidiaries (generally the main business, pillar enterprises and enterprises with good profits), and the annual salary system can be used to reward the management of lower-level enterprises. Platform scheme 2: contract system. Affiliated enterprises sign contracts with superior enterprises to determine the contracting indicators and the relationship of responsibilities and rights between the superior and the subordinate. The contracting system has several methods such as contracting base, incremental contracting, and excess revenue sharing. It can be contracted by the management and all employees. The contract system has been widely used in the reform of state-owned enterprises in our country, and its advantages and disadvantages are no longer discussed.Under the current trend of negating the contracting system, it can still be used within the company, but it needs to eliminate the disadvantages and strengthen daily supervision and management. Applicable to branch companies and wholly-owned subsidiaries or holding subsidiaries (enterprises with unsatisfactory benefits). Platform solution 3: leasing system. Asset leasing is carried out for subordinate enterprises, and leasing fees are mainly charged.The leasing system hardens and stabilizes the income of higher-level enterprises. Platform plan 4: asset occupation fee system. Similar to the leasing system, the higher-level enterprise charges the lower-level enterprise with a net asset occupation fee, which can be calculated based on the capital profit rate or the return on net assets.The state shall charge no less than the bank deposit interest rate for the occupied state-owned assets. It is mainly applicable to enterprises that need to recuperate, state-owned enterprises allocated by administration, or those directly negotiating with the government to obtain income in this way. Platform scheme 5: Franchise fee system. For enterprises that grant brand franchise rights, transfer technology and patents, or operate in the name of the company, they can be divided according to the turnover and profits of the subordinate enterprises. It is mainly applicable to collaboration and affiliated enterprises. Platform plan 6: equity dividend system. The superior enterprise obtains the corresponding investment income dividends from the subordinate enterprises according to the shareholding ratio. Mainly applicable to holding and shareholding subsidiaries.