Change: the financial management of SMEs

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					Change: the financial management of SMEs
SMEs are mainly two: processing and technology enterprises. Processing enterprises
is generally more primary products, the market is low; tech company's
products generally undeveloped state is still in the market, product technology to be
optimized; from the workshop process developed from the quality managers of SMEs
is generally low, The founder of Small and Medium invention generally people and
groups, the management approach is also more extensive. All this led to investors and
banks to worry about the development prospects of individual SMEs. But
China's future economic growth of SMEs is the leading force, not only
because 50% of SMEs in China created the ultimate product and service, hold the
potential of SMEs and the spillover of the technology market demand is growing for
large enterprises basis.
   With China's accession to the World Trade Organization, small and
medium enterprises will face more intense competition in the market. How to deal
with SMEs? I think the first should be on the current status of SMEs in financial
management and analysis of the causes and take appropriate measures to optimize the
financial management of SMEs, improve the quality of financial management, the
promotion of SMEs, healthy and steady development.
   1, Present Perspective
   Terms from the current situation of China, the existence and development of SMEs
is necessary and important, with the further development of SMEs, its status will be
important. However, China SMEs, because of its small scale, a single economic
activity, a considerable portion of Hu Shi's core financial management,
management, rigid thinking backward, so that production-management model
enterprise management limited administrative pattern among the enterprise financial
management role has not been fully realized. On the other hand, due to changes in the
macroeconomic environment and institutional effects, small and medium enterprises
in strengthening financial management blocked. For example, the policy of
"discrimination" to enable SMEs and large enterprises can not
be fair competition; local government departments in a large number of interventions
to target short-term financial management of SMEs based; financial management by
the impact of excessive corporate leaders, etc.. Weak financial management, so hard
to deal with small and medium intense, complex and volatile market competition.
   Second, analyze the reasons
   Small-sized problems in financial management by the macroeconomic environment
and its own double factors.
   (A) of the external financing difficulties and financial management by the
limitations of SMEs
   Capital is the lifeblood of any business, small and medium enterprises are more
deadly. On SMEs, the financing of the smooth production and operation enterprises
play a decisive role. At present the initial establishment of a more independent small
and medium enterprises, multi-channel financing system, but financing difficulties,
the security is still difficult to restrict the development of SMEs of the most
outstanding problem. The main reason:
   1, difficulty in financing, a shortage of funds. Banks and other financial institutions
is the main source of finance for SMEs, but SMEs to attract financial institutions,
investment or borrowing more difficult. Even if banks agree to lend to SMEs, but also
high risk due to increased lending rates, which increases the cost of financing for
SMEs 2, countries do not have dedicated SME management support organizations,
the state's preferential policies for small and medium enterprises are not
inclined to make long-term at a disadvantage.
   3, excessive debt, high financing costs and risks, resulting in lower credit rating of
SMEs, credit is relatively poor.
   4, intermediary institutions are not perfect, the lack of services specifically for SME
loans and loan guarantees financial intermediary institutions. "Corporate
Credit Loss" is a SME credit guarantee institutions of the most difficult
issues. First, no historical credit data business, banks do not credit credit history and
credit records of the public system; Second, corporate financial information is untrue,
do not have the feasibility of credit guarantee. This is a major factor in financing of
SMEs. In addition, the lack of mortgage assets, market uncertainty, business
management, not forming the majority of the important factors.
   (B) self-management is not high, so that the financial management of SMEs in
name only
   1, rigid management model, management concepts obsolete. On the one hand, the
typical management of SMEs is high degree of ownership and management unified,
business investors is also the operator, this model is bound to the financial
management of enterprises have a negative impact. A considerable part of small
business are individual and private nature of these enterprises, centralized leadership
is serious business, and financial management of the theoretical methods for lack of
knowledge and research, with the result, regardless of their duties, ultra vires act,
resulting in financial management confusion, lack of strict financial controls,
accounting information distortion. On the other hand, managers of management
ability and poor quality, management, backward thinking. Some business managers
based on their own reasons, not financial management into an effective mechanism of
corporate governance, lack of modern financial management concepts, so that
financial management has lost its rightful place in business management and role.
   2, weak financial management infrastructure, system is not perfect, mainly as
   ①, poor management of cash, resulting in idle or insufficient funds. Some SMEs
that cash as possible, resulting in idle cash, did not participate in the production flow;
some companies use the lack of program funding arrangements, over-purchase of real
estate, business can not cope with much-needed funds into financial difficulties.
   ②, accounts receivable turnover is slow, resulting in the recovery of funds difficult.
The reason is not a strict credit policy, the lack of effective collection measures,
accounts receivable can not be honored, or the formation of bad debts.
   ③, inventory control is weak, resulting in financial slack. Many SMEs are often
more than the end of capital stock of occupation, more than double its turnover,
resulting in sluggish capital, liquidity failure.
   ④, not heavy weight of money, assets waste. Many managers of small and medium
enterprises, raw materials, semi-finished products, such as the management of fixed
assets in place, a problem with no accountability, asset waste.
   3, management of low quality. At present, many small and medium accounting,
accounts are not, information distortion, chaotic financial management; enterprise set
of extra accounts, fraud, resulting in virtual loss of Profits and Losses or virtual reality
illusion of profit; and so on. The reason is, first, the weak foundation of corporate
finance, accounting, personnel quality is not high, they are constrained by the
leadership, can not exercise their right of supervision; Second, business leaders a
sense of law, ignore the financial system, financial discipline, seriousness and
mandatory .
   3, Countermeasures
   Chinese SMEs in financial management problems in the harm is serious, these risks
may affect the continued development of small and medium enterprises, SMEs and
even home and kill. Join the WTO, SMEs are faced with a more formal competition,
there are no standard financial management system is unable to get permits to enter
certain markets.
   In order to solve the problem, to be from the government, market and the three
aspects of the enterprises themselves
   (A) The Government should strengthen relevant laws and regulations, as soon as
possible to develop or improve policies conducive to SME development.
   1, small-scale operation of these enterprises, poor ability to withstand market risks,
financial management capacity of poor Jueding its credit financing through the market
low of Tedian. This objective requires the State from a stable financing mechanism
through the provision of appropriate support. Many countries have enacted laws
aimed at SME development, regulations and preferential policies, such as
Japan's          "SME             Basic        Law"           and
"modernization         of     SMEs       Promotion      Law,"        U.S.
"Small Law" and "fair implementation of the SME
Act (1996), "and so on. In this regard, we should learn from international
experience. What is gratifying is that China has already begun work in this area. For
example, China has promulgated the "SME Promotion Law," to
develop its own development needs of SMEs, a market economy development. Is also
the need for China to enter WTO. All these will further the development of SMEs in
the future and create a favorable financing environment 2, the establishment of SME
fund. Including special purpose funds, guarantee funds, venture capital funds, mutual
funds, their funding sources can be various levels of government financial institutions
and SMEs membership fees, fund management, the implementation of closed
operation, focused on supporting the development of SMEs. SME Bureau, Zhejiang
Province, announced the beginning of this year, there will be 10 million yuan annually
to support a special fund to support SME growth of SMEs. Mainly used for business
enterprises to support growth of SMEs in training SME Credit Guarantee System in
Vocational and Technical staff training and improved social service system. This year,
10 million yuan to support this growing fund focused on small and medium
enterprises for the training, and service system for SMEs to give some support.
   3, accelerate the establishment of SME credit guarantee system. SME credit
guarantee institutions for the purpose of the intermediary is a service organization, not
for profit purpose, guarantee fees charged, not to increase the cost of financing costs
of SMEs. In order to meet the investment and financing system reform, national SME
authorities and the Ministry of Finance in coordination and other related departments
to actively brewing "SME Credit Guarantee Regulations"
("Measures"),                        the                  introduction.
"Measures" designed to promote SME financing to solve the
problems faced by lack of credit. Meanwhile, on another important SME development
regulations - "SME Development Fund Management Measures"
are worked out.
   (B) the right investment decisions, efforts to reduce investment risk
   1, should be the main domestic investment. Inward investment, mainly in the
following aspects: First, investment in new product trial. Second is investment in
equipment renovation. Third, investment in human resources. At present special
attention should be investment in human resources, in some ways that the
strengthening of investment in human resources, with some high-quality management
and technical talent, enterprise success and failure.
   2, scattered fund investment, reduce investment risks. SMEs in the accumulation of
capital has reached a certain size, you can engage in diversification, the eggs in
different baskets to diversify investment risk.
   3, investment procedures should be standardized. When the SMEs in the financial,
technical operations, management and so on have a certain strength, you can learn a
common practice in large enterprises, standardize project investment process, the
implementation of investment supervision, at all stages of the investment activities to
achieve well-designed and implemented. Also, pay attention and follow up strategy to
avoid investment risks.
   (C) strengthening financial management and strengthen financial controls
   1, to raise awareness, to strengthen the financial management of the
implementation of modern enterprise system as an important part of implementing the
various functional departments within the enterprise. As the use of the funds flow to
the enterprise involved in all aspects of business should change their ideas,
recognizing good job, with good control of the financial sector is not only good
financial responsibilities, but to the company's various departments,
various production and business links event. So want to see the implementation of
joint management of funds for enterprises to contribute.
   2, efforts to improve efficiency in the use of funds, the use of funds produced the
best results. To do this, first of all funding sources and to make effective use of tie.
Such as short-term loans must not be used to purchase fixed assets, so as not to cause
cash flow problems. Secondly, to predict recovery of funds and payment time. For
example when the recoverable accounts receivable, when can purchase, must be
aware of, otherwise, could easily lead to imbalances and capital, according to Orange.
Finally, a reasonable allocation of the capital, working capital and fixed capital of the
occupation should be effective coordination.
   3, to strengthen control over the property. Establish a sound internal control of
property and materials management systems, material procurement, requisitioned
from the sample management, sales and establish a standard operating procedure,
close the loopholes, to maintain security. Property management and records must be
separated to form strong internal constraints, will not be able to asset management,
records, inspection check by a person to do so. Regular inspection of property
inventory, supervision and record management personnel to maintain vigilance which
is not negligent.
   4, to strengthen the management of inventory and accounts receivable. In recent
years, many small and medium enterprises find themselves short of liquidity
difficulties, increased inventory and accounts receivable management is an important
measure at a time. Enhance inventory management, and possible compression of
inventory out of date, to avoid financial slack, and with the scientific method to
ensure the best structure of stock funds. Strengthen the accounts receivable
management, credit assessment of customer credit for research, regular checking
accounts receivable, collection development of sound management practices, strict
control of aging. On death accounts, bad debt, to obtain conclusive evidence, for
proper accounting treatment.
   IV, Conclusion
   The economy develops, the more important financial management. Emphasis on
financial management, will help improve the internal management system for SMEs;
help reduce costs, better financing; conducive to investment, and improve investment
returns. Suo Yi, SMEs should be and where the Government has introduced the Yi
Jilie Jiqiangchutai favorable policy basis, pay close attention to financial management,
the Government has introduced and will introduce a series of favorable policies, and
thus competition in the market in 激烈 健康, steady development of make greater
contributions to society.