What Are Insufficient Funds?

The so-called shortage of funds means that the amount of funds owned by the enterprise is less than the amount of funds required to maintain the normal production of the enterprise. Funds are a necessary condition for enterprises to carry out production and operation activities. If the capital is short and cannot be raised in a timely manner, the enterprise cannot purchase production materials, stop production and stop work, and the strategic objectives of overseas investment and management cannot be achieved, and the solvency will decline, resulting in a debt crisis , Affect the credibility of the enterprise and put the enterprise into trouble. The shortage of corporate funds is affected by internal and external factors.

Shortage of funds

Insufficient understanding and application of funds movement laws

The various capital forms of the enterprise have spatial coexistence and temporal succession, and they pass through their respective cycles one by one, and each form must pass through the phases of the cycle in turn, and any part of the cycle of funds occurs. A pause will make the whole

1. Establish the fund management consciousness of modern enterprises and explore new fund management mechanisms

Improve understanding of the laws of capital movement. Enterprises should enhance their understanding of the law of capital movement, and use the law to rationally allocate funds to ensure unobstructed capital turnover, achieve a balanced purchase, production and sales, and reasonably allocate operating activities, investment activities, and financing activities according to the nature and purpose of capital expenditures. funds.

Establish the concept of time value of funds and enhance cash flow awareness. When investing in a project, the time value of the funds must be taken into account. On the premise of ensuring the quality of the project, production should be started as soon as possible to recover the funds. Accelerate capital turnover and promote capital savings. Reasonably use the term policy in the credit policy of the other party to obtain products and raw materials of other enterprises. In the import and export trade, the seller's credit and the buyer's credit can be used to raise funds. Establish the concept of cash flow, and can prepare cash flow plans and short-term and long-term cash flow predictions according to different situations of the enterprise; scientifically predict the cash inflow of the project when investing in the project to avoid investment mistakes; forecast the cash requirements for repayment of long-term and short-term debt.

2. Optimize the fundraising structure, scientifically predict the funding requirements, broaden the funding channels, and choose a reasonable financing method

Enterprises should include all activities in the forecast range, and the forecasting method selected must consider the actual situation of the enterprise and not follow the formula. When predicting the amount of funds required, also consider the time value of the funds and the time invested. In particular, it is necessary to forecast the cash recovery amount and time of the sales of goods and the provision of labor services. No matter which financing channel is chosen, integrity should be emphasized, the legitimate rights and interests of investors should be protected in accordance with the law, and refinancing difficulties should be reduced. Scientifically select fund-raising methods and fund-raising portfolios, and maintain an appropriate ratio of own funds to debt funds.

3. Optimize the structure of capital use, carefully study the direction of capital investment, and reduce capital consumption

First, the occupation structure of funds should be reasonably allocated, and the ratio between funds for operating, investing, and financing activities should be reasonably determined. Secondly, it is necessary to reasonably determine the occupancy ratio of various capital forms within the working capital. Carefully study the direction of capital investment, and analyze whether the project is technologically advanced, what kind of economic effects it has, and whether it has competitiveness. It is necessary to predict the product life cycle according to market dynamics and update the product in a timely manner. Formulate scientific cost and cost quotas, conduct cost and cost analysis on a regular basis, and timely find waste in the use of funds. Innovate and adopt new technologies, improve processes, improve labor organization, strengthen production management, and reduce capital consumption.

4. Optimize fund allocation structure

The distribution of funds must take into account the interests of investors, creditors and other parties, and properly handle the relationship between distribution and accumulation. The profits distributed to investors should basically meet their expectations, and for employees, their income and benefits should be increased or improved as the company's benefits increase.

5. Establish and improve the system of fund control and use

The fund circulation process should be controlled before, during and after the event, and the capital status and market information of the fund circulation process should be timely fed back to relevant departments in order to take timely measures. The backlog of funds formed must be activated in a timely manner. Establish and improve the internal control system of funds and strictly enforce them to ensure the safety of funds. According to the actual situation of the enterprise, the company will implement the paid use of funds, the unified management of income and expenditure, and the unified settlement system. For example, CNPC implements paid use of the cash flow supplemented by regional companies due to insufficient operating funds and allocated capital expenditure negative interest funds to divide financial expenses. In particular, since the company's centralized management of funds and debts from the beginning of its listing, it has saved 2 billion yuan in annual financial expenses alone.

6. Improve the financing environment of enterprises

In addition to establishing a good corporate culture and providing a good funding environment for corporate development and fundraising, the state should create conditions for corporate funding, and should foster, standardize and improve financial markets, ensure the smooth flow of funds, and crack down on disrupting financial order Illegal acts provide a good financial environment for enterprises to raise funds.