What Are the Best Tips for Effective Financial Management?

Financial management capability refers to the ability to coordinate and control the financial management cycle of an enterprise and integrate a complete financial management work system, including financial forecasting capabilities, financial decision-making capabilities, financial planning capabilities, financial control capabilities, and financial analysis capabilities.

Financial management capabilities

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Financial management capability refers to the ability to coordinate and control the financial management cycle of an enterprise and integrate a complete financial management work system, including financial forecasting capabilities, financial decision-making capabilities, financial planning capabilities, financial control capabilities, and financial analysis capabilities.

Chinese name

Financial management capabilities

Foreign name

Financial management capacity

Nature

Management terms

Be applicable

enterprise

Financial management ability and financial ability

Financial management ability and financial ability are two different concepts. Generally speaking, financial ability is a comprehensive evaluation of the financing ability, investment ability, and profitability of an enterprise. The difference between financial management ability and financial ability is: financial ability is a tangible resource, and financial management ability is an intangible resource. Financial ability is the concentrated reflection of the overall business activities of an enterprise, and is evaluated through financial ratios calculated through financial analysis. Financial management ability is the centralized performance of the knowledge and financial management-related knowledge accumulated by an enterprise. The evaluation method is more qualitative And combined with fuzzy evaluation method to reflect.

The internal relationship between financial management ability and financial ability is shown as follows: financial ability is the result of the joint effects of various capabilities of an enterprise in the past business activities. Financial management ability is one of the foundations of financial ability, and its ultimate value is reflected in the enterprise Among the future financial capabilities, the direct goal of financial management capabilities is to form good financial capabilities.

The basic components of financial management capabilities include:

l. Learning ability.

Learning is a process of knowledge acquisition, knowledge sharing, and knowledge utilization. Learning ability is the basis of financial management ability. Financial management ability is the result of long-term accumulation and learning of an enterprise, and it exists in the employees' physical, strategic planning, organizational planning, and cultural atmosphere. The key to the accumulation of financial management capabilities is to make the financial management department a learning organization, and constantly play a "doing to learn", so that financial management can flexibly adapt to changes in the external environment.

Changes in the operating environment of enterprises require financial managers to become composite talents, who should have basic analysis capabilities, system conception capabilities, organizational organization integration capabilities, planning capabilities, etc., and the acquisition of these capabilities must be based on learning capabilities. Financial managers must not be limited to the analysis of financial statements only. They must understand the relevant situation of various departments of the enterprise to expand the field of financial analysis; they must not only understand the operation of the enterprise, but also master the product process. In order to adapt to new requirements, financial managers must make improvements in several areas, including product and market knowledge, leadership, understanding of the interconnectedness between business segments, and communication skills. Therefore, financial managers must frequently contact department managers, purchasers, customers, and suppliers to gain a deeper understanding of industry knowledge and the best procurement solutions for this industry and other industries, as well as participate in negotiation skills, communication skills, and effective Training for team work.

2. Financial relationship capabilities.

Financial relationship ability is the external performance of financial management ability in the capital market. Financial relationship is a cooperative relationship formed between enterprises and relevant financial institutions in the process of fund raising and dispatching. Financial relations are not only an important asset of an enterprise, but also the main basis for an enterprise to access funds in the capital market. Financial relationships cannot be established overnight. It is an important part of corporate financial management that is formed by the continuous two-way transmission of information in the continuous exchanges between financial institutions and financial institutions. From the perspective of capital supply, financial institutions are also important customers for enterprises.

The interaction with financial institutions is not solely based on the economic activities of enterprises, and the role of financial managers cannot be ignored. A complete financial relationship is the collective expression of financial managers knowledge of the capital market, their knowledge of financial institutions, and an accurate grasp of business operations, which also includes the public relations of financial managers in the capital market. In a sense, good financial relations play an active role in helping enterprises get rid of temporary capital turnover difficulties, and they can also find the best investment channels when enterprises have sufficient funds. The financial relationship established in the long-term exchanges between enterprises and financial institutions is the result of the continuous and in-depth understanding of financial institutions by enterprises, and the continuous understanding of financial institutions by enterprises. It is also the long-term interaction between financial managers and financial institutions, and the capital market The result of the effort.

3 Financial control.

Financial control ability is a concentrated expression of the role of financial management ability in the internal management of an enterprise. Due to the unique basic and comprehensive characteristics of financial management in enterprise management, financial control is not only an important content of financial management, but also a powerful tool for the implementation of corporate business strategies. Strategic management includes strategy formulation, strategy selection, and strategy implementation. Practice has proven that most strategy failures occur during the implementation phase. The essence of the strategy implementation process is control, and the only thing that can be controlled within the enterprise from a global perspective is financial control.

Financial control involves all levels of corporate governance structure and organizational management, and the entire production and operation process. It covers all departments and positions of the enterprise, and requires financial managers to fully understand the business activities of the enterprise, and from the perspective of corporate strategy, form a financial account that conforms to the actual situation of the enterprise. Control Method. Handan Steel's "simulation of market accounting, implementation of cost veto" concentratedly reflects its financial control ability, forming a unique control method of "moving the whole body with one touch".

4 Information processing capabilities.

In the era of knowledge economy, the financial department will become more prominent as an enterprise information center, and the information processing capacity directly affects the effect of financial management. In a world full of information, information processing capacity is a process that transforms data into decision-making wisdom, and the financial department changes from an information store to an information provider and sharer. Financial managers need to learn how to turn data into information, and then turn information into knowledge. Finally, decision makers turn knowledge into decision wisdom, and use the financial department to make decisions into action through information.

1. Identify.

The premise of effective management of financial management capabilities is that the managers have a clear understanding of financial management capabilities. First, whether the company has financial management capabilities and then determines the direction of efforts. Second, for companies that already have financial management capabilities, the identification process is a process to further improve financial management capabilities. The identification criteria of financial management capabilities need to be based on the basic elements of financial management capabilities, to develop detailed evaluation indicators, and to select them in combination with the characteristics of financial management capabilities.

2. Nurture.

The cultivation of financial management ability is a combination of ideas and processes. Without the concept of financial management ability, the process of cultivating financial management ability will not occur. Therefore, the enterprise management department must recognize the importance of financial management capabilities to enterprise management, and make the cultivation of financial management capabilities in a proactive manner. The process of cultivation is the process of continuous investment and integration of resources, especially the accumulation of knowledge resources. As a result, this process is often long and complex and requires sustained efforts by the business.

3 application.

Application is the value of financial management capabilities and the best yardstick for judging financial management capabilities. The application process of financial management capabilities runs through the entire process of corporate strategic management, continuously optimizes the allocation of resources, and extends the company's strategic intent to various departments and employees, maximizing the potential value of human resources. At the same time, the application process makes the financial management capabilities continuously transfer and spread within the enterprise, and the exchange of ideas and experience of all employees is conducive to the further improvement of financial management capabilities.

4 Consolidation and reconstruction.

The financial management capabilities created by the enterprise may be lost. One is the subjective reasons of the enterprise, such as the lack of financial management capability management. The other is that other enterprises generally have similar financial management capabilities, and their unique advantages no longer exist. . For example, the promotion of Hansteel's experience has led many companies to adopt target cost management and become a basic condition for competition. Therefore, enterprise managers must pay attention to the protection of existing financial management capabilities, and reconstruct financial management capabilities that have gradually been lost due to objective reasons. Periodic evaluation of financial management capabilities is the main means of consolidating and rebuilding financial management capabilities. The evaluation process is a process of finding and solving problems, which is conducive to the continuous evolution and improvement of financial management capabilities.

Finally, it needs to be explained that it is necessary not only to understand the independence of financial management capabilities, but also to pay attention to its connection with the core capabilities of enterprises. Financial management capability is one of the foundations of an enterprise's core competence, and its core capability is the goal of financial management capability. This connection requires that the management process of financial management capabilities must be combined with other capabilities of the enterprise to form and maintain the core capabilities of the enterprise.