What Is Financial Consolidation?

Financial integration refers to the unified management and monitoring of the financial system and accounting system of the acquiree. The goal of corporate mergers and acquisitions is to create more added value through the enhancement of core capabilities and the strengthening of competitive advantages. Therefore, in the financial integration process, companies must also tightly focus on this goal, with cost management, risk control and financial management The optimization of the process is the main content. Through financial integration, the company strives to make the post-merger companies unified management in operating activities and unified planning in investment and financing activities. To maximize the integration and synergy of mergers and acquisitions, the financial integration after mergers and acquisitions should follow the following principles: timeliness, unity, coordination, innovation, and cost-effectiveness.

Financial integration

Right!

Financial integration refers to the

Financial integration, different mergers and acquisitions companies have different approaches, but generally can be summarized as: "one center, three in place, seven integrations."

The financial integration of the M & A company must

Principle of unity

The purpose of financial integration is to adjust the resources and systems of both parties in the merger and acquisition, form a reasonable structure, and form

Successful financial integration is a key factor in the success of mergers and acquisitions, but there are also many risk factors in the process of mergers and acquisitions. These factors come from the financial integration process and have an impact on the financial integration of the enterprise. This requires us in the financial integration process. Preventive measures must be established.

Financial integration risk sources

1. Outbreak of previous financial problems

On the one hand, there is always the question of whether it is appropriate to pay for an M & A activity in M & A. If the M & A pays too much, and in the later financial integration, the acquirer will face the deterioration of the financial structure due to high debt. If it is a stock payment, it will bear the loss of the stock price after dilution of the equity; on the other hand, any case of M & A activities inevitably involves the use of a large amount of funds, and any kind of funding source channel has potential risks. After companies use various financing methods to complete mergers and acquisitions, they will face their own problems. Improper handling will lead to the failure of financial integration and the failure of mergers and acquisitions.

2. Asset restructuring of target companies

This requires the merger and acquisition enterprise to deal with the assets and liabilities of the target enterprise in a timely manner. For example, after the acquirer takes over a company with a poor asset current ratio, it does not immediately take measures to properly dispose of its non-performing assets, the loss of the target company will increase the debt burden caused by the company's previous financing, resulting in the failure of merger and acquisition financial integration.

Financial integration impact

First of all, the important role of financial management in company operations cannot be brought into play. Without a sound and efficient financial management system, any enterprise cannot grow up healthy. The financial system is damaged to a certain extent, and it will eventually lead to bankruptcy or mergers and acquisitions.

Secondly, the financial synergy of corporate mergers and acquisitions cannot be brought into play. As mentioned earlier, the main reason why companies merge or restructure is to pursue financial synergies. Financial synergy is a pure capital benefit that arises from the inherent regulations of tax law, accounting management, and securities trading, all of which need to be achieved on the basis of financial integration.

Finally, weak financial integration. The acquirer shall effectively control the production and operation of the acquiree and make timely and accurate decisions. The important prerequisite is that it has sufficient information. Finance has information function, and it is also an important way for the acquirer to obtain the information of the acquiree. But generally speaking. The accounting systems, quota systems, assessment systems, and financial systems of the two parties to the merger are not exactly the same. Therefore, the merger and acquisition enterprise objectively requires a unified accounting standard in order to implement effective control. And financial integration is very complicated, far more than the consolidation of financial statements.

Financial integration precautions

1. Conduct a thorough financial review before integration

It mainly includes the review of the resources and management capabilities of the M & A enterprise and the review of the target enterprise. The purpose of the review: First, to provide a feasibility analysis for the operation of the M & A enterprise; second, to find out the financial problems of the M & A enterprise through the review, so as to facilitate targeted integration during the integration process. Improve integration efficiency.

2. Strict financial control after integration

The financial review before the integration is the prerequisite to ensure the success of the financial integration, and the financial control after the integration is the basis to ensure the effective implementation of the financial integration. The integrated financial control generally includes four aspects: control of M & A corporate responsibility center, cost control, cash flow control and risk control.

3. Develop remedial strategies for merger and acquisition failures

Failure to achieve financial synergies after mergers and acquisitions will severely affect the success of mergers and acquisitions and the development of enterprises after mergers and acquisitions. Therefore, before the merger and acquisition of the company to develop an effective financial strategy, once financial integration failure occurs, you can calmly deal with it, so as not to cause greater losses. These financial strategies include:

First, arbitrage is sold. After completing the merger and acquisition, the acquirer properly handles the assets of the acquired enterprise, and can sell assets that do not comply with the business strategy to offset the debts caused by the financing: various methods can also be used to transfer the non-performing assets to reduce financial risks.

Second, decisive divestment. After the merger and acquisition, if there are some unexpected circumstances that make the results of the merger and acquisition integration and the strategic plan formulated originally envisaged a large gap, or due to changes in the company's living environment and the merger and acquisition goals can not be achieved, the company should decisively withdraw capital to reduce financial Risk to avoid continuing to cause more serious losses.

Financial Integration Case Study

Case 1: Analysis of financial integration after mergers and acquisitions [3]

I. The necessity of financial integration after corporate mergers and acquisitions

1. Financial integration is the basis for effective implementation of corporate strategy

Perfect financial system is the guarantee for the effective implementation of corporate strategy

After the merger and acquisition is completed, the business development strategy of the new enterprise is determined based on the operating conditions of the merger and acquisition parties. Therefore, the new enterprise must manage the finances of both parties in a unified manner, so that they have a unified financial guarantee and a unified allocation and use of financial resources. The unity of financial management is a support for the unity of business strategy

2. Financial integration is the guarantee of effective allocation of corporate resources

The internal resource allocation of modern enterprises is based on certain financial indicators. The new enterprise as a whole will inevitably need a unified financial benchmark to ensure the efficiency of its financial activities, thereby maximizing the efficiency of its internal resource allocation. In addition, since any resource allocation within an enterprise must be reflected financially, financial management is also an important means of monitoring the effectiveness of internal resource allocation within an enterprise. In order to make use of this monitoring method, the new enterprise must make the financial management uniform and consistent, so that the efficiency and reliability of financial supervision of resource allocation can be reflected.

3 Financial integration is the prerequisite for companies to obtain financial synergy

Financial synergy refers to a purely monetary benefit that results from the inherent role of tax law, accounting practices, and securities transactions after the completion of a merger. This benefit is not achieved by rationally arranging the internal resource allocation of the enterprise and improving production efficiency.

For example, new enterprises use the deferred loss provisions of the tax law to achieve reasonable tax avoidance. This is all based on a unified financial management

4 Financial integration is an important way for the M & A enterprise to control the M & A enterprise

How to effectively control the merged and acquired enterprises is an important issue faced by the merged and acquired enterprises. Although the M & A enterprise can control the M & A enterprise through personnel arrangements, this method has limited effect.

In addition, excessive personnel intervention can sometimes undermine merger and acquisition integration. And by grasping the financial information of the M & A company's production and operation, the M & A company can well control the M & A company, which cannot be achieved by pure personnel control. To accurately understand the financial information of the acquired company, there must be unified financial management.

Second, the principles of financial integration after corporate mergers and acquisitions

The goal of corporate mergers and acquisitions is to create more added value through the enhancement of core capabilities and the strengthening of competitive advantages. Therefore, in the process of financial integration, companies must also closely focus on this goal, with cost management, risk control, and optimization of financial management processes as the main content, through financial integration to strive for unified management of the company's operating activities after mergers and acquisitions, Unified planning on investment and financing activities to maximize the integration and synergy of mergers and acquisitions. For this reason, the financial integration after corporate mergers and acquisitions should follow the following principles:

1. Timeliness

Financial integration is different from the penetration and gradual nature of cultural integration, and needs to be carried out in a timely and prompt manner. That is, once the merger and acquisition parties have signed the merger agreement, the acquirer should immediately send senior financial personnel to the acquiree to conduct financial integration. This can effectively prevent and avoid The slow transition has a significant potential negative impact on corporate profits and losses.

2. Overall synergy

After the merger and acquisition is completed, the merged enterprise and the acquired enterprise form a new system. Without effective integration and the company does not have the characteristics of system operation, it will fail to achieve the purpose of integration. Finance is not an isolated subsystem in an enterprise. It is one of many subsystems. Therefore, the implementation of financial integration must be coordinated with the integration of other subsystems, such as cultural integration, human resource integration, marketing integration, and organizational integration, and coordinate with and promote the integration of other subsystems. At the same time, the post-M & A enterprise's production and operation process is a highly continuous and complex process, which not only requires its own assets and liabilities to be coordinated and reasonably allocated, but also requires its assets and liabilities to be consistent with the entire enterprise group (or the original M & A enterprise) The capital structure and its production and operation activities are coordinated and rationally allocated. Therefore, it is necessary to deal with the uncoordinated asset business in a timely manner, stop the production line with low profitability, restructure the non-performing debts in various ways in a timely manner, and give play to the overall synergy of the group.

3 Innovative principle

Innovation is an inexhaustible driving force for the development of an enterprise. The development of an enterprise is always in a dynamic process. Changes in the living environment and development conditions of an enterprise require that the management system of the enterprise change accordingly and adapt to the new environment and conditions. After the merger and acquisition, the development space, production scale, and competition conditions of the enterprise will change greatly with the realization of the merger and acquisition. In order to adapt to these changes, the financial system of an enterprise must be adjusted, reformed, and innovated in accordance with the principles of innovation, continuously improve the financial management level of the enterprise, and establish a financial management system adapted to the new environment after mergers and acquisitions.

4 Cost-effectiveness

When making any major decision, companies must consider and follow the principle of cost-effectiveness, and financial integration is no exception. Integration is only meaningful if the benefits it brings outweigh the costs. Therefore, before integration, companies must carefully compare the various options, make scientific and reasonable estimates of the cost and benefit of integration, and choose the financial integration solution that has the lowest cost and produces the most benefits.

Third, the content of financial integration after corporate mergers and acquisitions

The financial integration after corporate mergers and acquisitions involves a lot of content, mainly including the following aspects:

(I) Integration of financial management objectives

The goal of financial management is the starting point and ending point of financial work, and it is a theoretical description of the results of an enterprise's optimized financial management behavior. Its determination directly affects the construction of a financial theory system and determines the choice of various financial decisions. Enterprises in different environments will have very different financial management goals. One side of the merger and acquisition may be the goal of maximizing profits, while the other is the goal of maximizing corporate value or maximizing shareholder wealth. After the merger of the two companies, first of all, it is necessary to determine a unified financial management goal, because this directly affects the development direction of the financial management of the new enterprise and the technical methods used in daily financial activities, which helps the efficiency and standardization of the daily financial management of the company. ; Only when a unified financial management objective is determined, the new financial management organization can operate normally; the clear financial management objective is also the basis for judging whether the financial management mechanism of the enterprise is effective after the merger.

(B) the integration of property rights governance system

Standardize the corporate governance structure of enterprises after mergers and acquisitions, and realize the financial control of mergers and acquisitions. For different types of corporate mergers and acquisitions, different shareholding methods can be adopted. For core mergers and acquisitions, strong mergers and acquisitions can develop vertical shareholding methods. For groups that combine superior enterprises and advantageous enterprises, important member companies You can adopt circular mutual shareholding and exchange shareholding; you can also adopt a combination of circular shareholding and vertical shareholding. For example, if the parent company adopts vertical shareholding to subsidiaries, the subsidiary companies adopt Circular holdings. This not only guarantees the control of the parent company, but also closes the relationship between the subsidiaries, and enhances the cohesion of the merged and acquired company to the owner and the enterprise.

(3) Integration of financial organizations and functions

As far as the financial organization is concerned, if the business process of the enterprise is complex and the financial management and accounting business is large, the financial organization should be correspondingly larger, and the internal division of labor should also be more detailed, and the financial management and accounting organization can be considered according to its functions. On the contrary, if the business process of the enterprise is relatively simple, and the financial management and accounting business volume is small, the financial and accounting institutions should be smaller, and the internal division of labor can be appropriately rough. The division of responsibilities and powers of financial organizations must be clear and mutually restrictive. Each department within the organization and each employee should clarify their responsibilities, responsibilities, and specific tasks, so that the responsibilities and tasks between departments and between personnel are clear, so as to avoid talking to each other.

The setting of the financial organization should meet the requirements of streamlining and efficiency, prevent overlapping of posts, people floating around, avoid waste of manpower and material resources and an inefficient working environment. Only by forming a financial organization system that can mobilize the initiative and creativity of all departments and employees, and can implement unified command and effective control, can the economic resources of enterprises after mergers and acquisitions be reasonably allocated and fully utilized.

In addition, in the process of integrating financial organizations, we must also pay attention to the setting of the institutions to suit the degree of centralization and decentralization. Which functional departments are set up by the financial management organization of the acquiree should be compatible with the financial management powers and responsibilities it assumes. This is an important guarantee for the financial department to effectively perform its responsibilities.

In the process of realizing the financial control of the acquiree, the M & A enterprise can draw on the financial controller system of the enterprise group and assign financial personnel to the acquiree to realize the financial control of the acquiree. The appointed financial personnel play an organizational and monitoring role in the daily financial activities of the acquiree; they have decision-making power when major events affecting the entire enterprise are involved; they make important decisions about the acquirer's related structural adjustments, resource allocation, major investments, and technology development Carry out the budget of the acquiree and supervise and control the implementation of various budgets of the acquiree; review the financial report of the acquiree; be responsible for the business management of the financial accountants of the acquiree; regularly report to the acquiree's enterprise Report the asset operation and financial status of each acquiree.

(IV) Integration of financial management system

After the merger and acquisition parties have realized the integration of financial institutions and financial personnel, the next priority is the integration of financial management systems. Only when the integration of personnel, institutions, and systems is completed, can the merger and acquisition company treat the acquired company. Lay the foundation for effective financial control. In the final analysis, the integration of the financial system is the choice of a series of financial policies implemented by the enterprise. Because the financial policy is an autonomous and selective policy, the companies before the merger and acquisition are based on their overall goals and realistic requirements to formulate or choose a financial policy that is conducive to their own development. The financial policies of the former will be very different; after the merger, the parties merge into a corporate group, which is consistent in overall goals. Therefore, when choosing a financial policy, it is no longer possible to start from the perspective of a single enterprise. After the merger and acquisition, the interests and goals of the entire group are used as a basis to choose or formulate financial policies.

The integration of the financial system is an important part of ensuring the effective operation of the M & A company. The integration of financial systems includes the integration of financial accounting systems, internal control systems, investment and financing systems, dividend distribution systems, and credit management systems. Regardless of the form of the merger, if the acquirer wants to merge the operations of the two parties, the financial accounting system such as the setting of books, the management of vouchers, the use of accounting subjects, and the preparation of accounting statements need to be unified to meet the interests. Stakeholder demand for accounting information. In the process of integrating the accounting systems of both parties in the merger and acquisition, first of all, the basic elements such as accounting vouchers, accounting subjects, and accounting books must be integrated, and then the accounting procedures and statement preparation must be further integrated.

(V) Integration of existing assets and liabilities

The purpose of enterprises' mergers and acquisitions is to reduce operating costs, expand market share, realize re-optimized allocation of resources, and enhance core competitiveness. After the acquirer acquires the target company, the target of corporate mergers and acquisitions is far from being achieved. Whether the corporate group after the merger and acquisition can achieve the merger and acquisition goals, the integration of the existing assets and liabilities of the corporate group is very important. The integration of existing assets and liabilities refers to the optimized combination of the merger and acquisition of enterprises as the main body, the assets and liabilities of the parties to the merger and acquisition, and the optimization of the combination. It is an important part of financial integration.

(6) Integration of performance evaluation standards

The integration of performance evaluation and assessment system refers to the re-optimization and combination of the financial utilization index system by the M & A company. The main merger and acquisition enterprise should re-establish a complete set of performance evaluation and assessment system for the acquired enterprise, including quantitative index assessment and qualitative analysis, which not only evaluates their respective business indicators, but also their contribution to the parent company. The assessment is conducted every six months or one year . This evaluation and assessment system is an important means to improve the operating performance and operational capabilities of the acquired company.

In short, the financial integration after corporate mergers and acquisitions is a complex systematic project, which includes not only a wide range of content, but also requires close coordination with other aspects of integration. Only through successful financial integration can the maximized target profit be achieved for the enterprise group after the merger and acquisition, the optimized allocation of resources within the enterprise group, and the "financial synergy effect" for the enterprise group; Effective control to ensure that the strategic intention of mergers and acquisitions is realized as scheduled. Therefore, both parties of the merger and acquisition must do a good job of financial integration.

Case 2: Analysis of the financial integration of auto trade companies [4]

Shanghai Materials Group Automobile Trading Co., Ltd. (hereinafter referred to as Shangwu Automobile) is a professional automobile trading company established by Shanghai Materials Group Corporation since 2000 to integrate its subsidiaries related to automobile operations. In the past three years, Shangwu Automobile has expanded its market and business on the one hand, and focused on reorganization and integration on the other. Through three stock expansions and mergers, it now has a registered capital of 48.599 million yuan. How to consolidate the results of reorganization and further improve the management integration, especially financial integration after reorganization, is more urgent and important.

Since the reorganization of Shangwu Auto in 2000, the expected purpose has basically been achieved.

1. The scale of assets has gradually expanded. The wholly-owned, holding, and joint-stock subsidiaries have grown from 4 at the beginning to 19 at present. Total assets have increased by 60%.

2. Expanded business scale and increased market share. The total number of cars sold from 4,351 in 1999 to 10,799 in 2002 increased sales revenue by a factor of four. In 2001 and 2002, it was rated as a famous auto sales company in Shanghai for two consecutive years, and its market share and visibility have improved significantly. .

3 The degree of professionalism and collaboration in management has increased. With the reorganized enterprise platform of Shangwu Automobile, it not only consolidates the traditional industrial advantage of automobile sales, but also enables the linkage of automobile sales, service, and maintenance, and the linkage between new car sales and used car operations. And space, so that the company's overall marketing planning, implementation and actively respond to fierce market competition has a more solid foundation. The effect of these aspects has shown the scale effect of reorganization.

Financial consolidation is the reallocation and adjustment of resources. We operate mainly through the following channels and methods.

First, the goal of financial integration of Shangwu Auto

In order to effectively play the company's asset operation efficiency and realize the strategic synergy and financial synergy effect after reorganization, it is necessary to carry out post-reorganization management integration. This integration should be guided by the integration theory, combined with its own specific practice, design and conceive an effective integration mode, and plan, step and creatively implement it.

1. Analysis of the characteristics of financial integration of Shanghai Automotive

When choosing a management integration mode, Shangwu Automobile must consider both the current status of these integrated companies and analyze their historical evolution. Specific analysis from the aspects of business operations, human resources, financial management, and corporate culture can be seen as follows Features :.

(L) There is a great deal of relevance in operating the business;

(2) The internal organizational culture of the company, that is, the value concept system, business philosophy, and code of conduct shared by the company's employees have strong independence.

(3) In terms of management systems such as marketing and personnel, corporate operating structures, financial systems, accounting systems, and internal control systems, there are large differences. The above characteristics determine that the management integration should adopt the relevant integration mode. That is to maintain the relative independence of the organizational culture for the time being, and first integrate the business and management system levels. And financial integration is the key aspect. This integration, on the one hand, must reasonably reflect the company's development strategy, influence and formulate the company's financial strategy to support the company's development, maintain and improve core competitiveness; on the other hand, it must be based on the company's development and financial strategy Requirements, improve and improve the financial management system, formulate practical financial plans, allocate resources reasonably, and improve the financial accounting and control system to facilitate the effective implementation of the company's financial strategy and business strategy.

2. Target selection of financial integration of Shangwu Auto

(1) One center, that is, centering on maximizing the value of the company

For the evaluation of corporate value, different companies often have different standards, but from a financial perspective, it is mainly reflected in the maximization of the interests of corporate shareholders and relevant stakeholders. The financial integration of Shangwu Auto should be reasonably integrated with financial management activities and other management activities under the guidance of the company's development strategy and financial strategy, and pursue the optimization of the company's human, financial, and material configuration structure to comprehensively improve the company's resource operation. Efficiency to achieve the goal of maximizing company value.

(2) Three in place:

l) The financial management of the company's operating activities is in place. In the process of integration, in order to ensure that the company's strategy and financial strategy can be reflected, it is necessary to establish a company's financial management mechanism that meets the requirements of financial accounting and control in accordance with the requirements of the corporate governance structure. Management of risks, operating income and operating cash is in place. Quantitative analysis of financial data such as sales and internal management should be conducted in a timely manner to identify and resolve risk factors in a timely manner. It can also reflect the quality of the company's production and operation in a timely manner through the control and measurement of the company's costs and expenses, calculate the company's operating income, and provide a basis for the company to establish an internal operating management control mechanism. It is also necessary to strengthen the management of the company's receivables and payables through financial management activities to ensure the cash flows necessary for the company's operating activities.

2) The financial management of the company's investment activities is in place. The company's investment activities reflect the implementation of the company's financial strategy. Shangwu Automobile should unify its external investment. In the management of the company's investment activities, it must play the role of financial management in supporting investment decisions and controlling the evaluation of the company's investment direction. , Investment risk and return on investment. The company should establish an investment decision mechanism in line with the principles of the market economy, select and evaluate the company's investment direction in accordance with the company's development strategy, and reasonably plan the return on investment based on the company's investment opportunities and market returns. Promote the rational use of company resources and improve the use efficiency of the company's overall assets.

3) Financial management of the company's financing activities is in place. The company's financing activities must be guided by its financial strategy, taking into account the purpose of financing and the costs and benefits of financing. Centralize unified planning and management of financing activities. Under the current constrained environment, choose appropriate financing channels and methods to reduce financing costs, make full use of financial leverage to increase the return on own funds, and reduce financing risks. At the same time, regularly analyze and evaluate the use efficiency and benefits of funds, and timely adjust the surplus.

Measures for financial integration of Shangwu Auto

1. Improve financial management organization system

The financial management system is a model adopted by enterprises to deal with various aspects of financial relationships within the capital movement. The purpose of improving the financial management system is to properly handle the financial relationships between the vertical and horizontal levels within the company, to institutionalize the responsibilities and rights relationship, and to coordinate the financial goals and financial behaviors of the vertical levels.

Shangwu Automobile is an operating holding company that engages in both equity control and actual business operations. It has 11 wholly-owned and holding subsidiaries, 4 joint holding subsidiaries, and 4 joint-stock companies. According to the closeness of its property rights relationship, Different financial management models should be used.

(1) The centralized management system is mainly applicable to wholly-owned subsidiaries and non-independent accounting branches. The financial decision-making power, the fund-raising right, the fund dispatching right, and the financial distribution right are all controlled by Shangwu Automotive, and the financial personnel are controlled by Shangwu Car delegation.

(2) Decentralized and hierarchical management system, mainly applicable to 51% of subsidiaries of Shangwu Automobile, which is the parent company and subsidiary of Shangwu Automobile, and is controlled by Shangwu Automobile. The main financial decision-making power, fund-raising power, and income distribution right are controlled by Shangwu Automobile, and financial personnel are recommended by Shangwu Automobile, and the subsidiary is employed. Subsidiaries are responsible for implementing decision-making responsibilities, and have secondary financial decision-making rights, capital dispatching rights, and cost control rights. Its financial activities are included in the financial plan of people and vehicles, and are included in the scope of consolidated statements.

(3) The controlled decentralized management system is mainly applicable to Shangwu Automobile, which has a shareholding of less than 50%, but is the largest shareholder company or a subsidiary that is jointly controlled by other shareholders. Some of them are subsidiaries, some are Sun subsidiary, financially, is the relationship between investors and investees, partly controlled by Shangwu Auto. This type of company has independent financial decision-making power. Financial personnel can be appointed by Shangwu Automobile according to the articles of association and agreements. Shangwu Automobile can indirectly regulate the environment of its business activities by sending personnel (such as directors, senior officers, etc.).

(4) The decentralized financial management system is mainly applicable to participating companies. Due to the small shareholding ratio of such enterprises, Shangwu Auto has only the rights of ordinary shareholders without control of it, and financially only enjoys the right to income.

Once the above financial management system is determined, the company should institutionalize and procedurize it as soon as possible. During the implementation process, it is necessary to strengthen coordination, especially to communicate with minority shareholders, to gain understanding and support; and to rationally use administrative means to handle the relationship between centralized and decentralized power to ensure that the management system is in place.

2. Unified financial management system

(L) In accordance with the "Enterprise Accounting System" and related regulations, formulate a unified accounting system that meets the company's accounting requirements, and accordingly revise and improve the accounting management measures for each subsidiary, and gradually unify the company's accounting system.

(2) Improve and perfect the accounting system that meets the company's accounting requirements

In order to standardize the accounting of each subsidiary, it is mainly based on the company's operating characteristics, unifying the content, channels and methods of obtaining accounting information, and promoting the integration of the accounting system. Shangwu Automobile should strengthen the guidance of the integration of the subsidiary's accounting system.

(3) Standardize the company's business processes, establish and improve management control points for financial accounting, and prevent accounting risks. The company shall standardize the financial management of each company from the top down to form a unified model.

3 Adjust and improve asset structure

(1) Strive for targeted stock offerings, absorb diversified investments, expand equity, and reduce debt ratios. In view of the current situation of Shangwu Automobile's single equity, insufficient cash flow, and high debt ratio, the company may consider seeking investors through the capital market or other factor markets Or qualified partners can attract other social capital and private capital to participate in the formation of a multi-investment enterprise and strive for the effect of three birds with one stone. On the one hand, it will expand the share capital, strengthen the company's strength, and facilitate the company's further development; on the other hand, it will improve the shareholder structure and change A situation of dominance and lack of restrictions is conducive to improving the modern enterprise system. At the same time, by increasing capital and increasing shares, it will increase cash flow and reduce the debt ratio.

(2) Adjusting the structure of the company based on the market; Carrying out business diagnosis for the situation of many subsidiaries and different market performance, guided by market demand, and based on the input-output ratio. The principle of inaction. Carry out internal corporate integration, rationalize the allocation of marketing resources such as people, property, customer groups, outlets, and supply chains, make necessary shutdowns and transfers, rationalize the corporate structure, improve the marketing system, and maximize the efficiency of limited resources.

Third, the financial integration of Shangwu Automobile

Integration is based on the basic unit of management, through the coordination of various corporate management functions such as planning, control, and coordination to achieve the company's best operating efficiency. With integration as the premise, the improvement of the internal control system is the main way to achieve the goal of integration. According to the company's characteristics and relevant regulatory requirements, revise and improve relevant systems that meet corporate internal control requirements, such as internal control systems for cash and deposits, internal control systems for credit sales and prepayments, operating fund management systems, internal control systems for investment, asset acquisition, and asset impairment write-offs Internal control, guarantee internal control, etc.

The establishment of these systems must meet the needs of corporate development and the requirements of corporate financial strategic goals. At present, it is important to establish the following three control systems:

1. Budget control system

It includes two aspects: one is to formulate the company's financial budget system based on the financial objectives of the above-mentioned automobile; the other is to make up the budget control system with the staff of the financial department, supervision and audit office, marketing department and purchasing department at all levels. After the company's financial goals are determined, the overall target should be broken down into subsidiaries in accordance with the method of target management to implement layer-by-layer target control. Combined with the preparation of financial statements on a monthly and quarterly basis, regular analysis, inspection, and budget implementation are analyzed, the reasons for differences are reported in a timely manner, and control measures are adopted to ensure the achievement of the company's overall goals.

2. Fund Control System

(1) Cash control system. The company's financial department is an internal fund management organization, a complex of internal settlement centers, internal fund transfer centers, and internal information feedback centers, providing reliable financial information to relevant parties. For the operating activities of subsidiaries, settlement is handled through the internal settlement center to monitor the flow of funds. According to the amount of funds approved by the company for each subsidiary, allocate funds in accordance with actual needs, and implement differential interest calculations on the use of funds within the quota and over quota of each unit; the balance of funds between subsidiaries is uniformly adjusted and adjusted by the Ministry of Finance. Minimize idle cash balances.

(2) Funding control system. Under the centralized management model, the external financing of the parent company and each subsidiary is unified by the Ministry of Finance, and each subsidiary has no right to raise funds externally; under the decentralized management model, the subsidiary can raise funds externally within the scope of authorization, but must Deposit the raised funds into the company's finance department. The focus of the fundraising control system is borrowing control, including the control of loan approval procedures, total borrowing control, and debt ratio control.

(3) Investment control system. The investment control system under different management modes is basically the same as the loan control system. The difference is that in addition to the control of investment project approval procedures and total investment control, it also includes investment direction control and investment risk control.

3 Financial Information Control System

The smooth flow of financial information between the parent and subsidiary companies is related to the operating efficiency of the entire financial control system. Therefore, to establish an effective financial information control system, Shangwu Automobile should include the following:

(1) Financial information reporting system. The company shall establish a financial reporting system for its subsidiaries, including a pre-event reporting system and a post-event reporting system. Each subsidiary must report to Wuxi Automotive in advance before making major operating decisions.

(2) Internal audit system. The internal audit department of the company shall strengthen the inspection of the implementation of the subsidiary's system, financial audit, annual audit and audit of the departure of the operator of the subsidiary. Report problems in a timely manner, correct them in a timely manner, and punish those responsible to form a top-down supervision and restraint mechanism.

(3) Information control. The company should strengthen the construction of financial information system based on the existing conditions. 1. Consolidate and improve accounting computerization (AIS) work, uniformly adopt accounting software, strengthen system management, and gradually form a network to improve the timeliness of financial information and the coverage of computerized accounting; Based on accounting computerization (AIS), develop and construct a financial information system (FIS), using the three output subsystems of the system: forecasting subsystem, fund management subsystem, and control subsystem to query various internal control systems Financial data, and various statistical analysis materials and financial analysis reports are prepared at any time to provide timely and reliable data for the company's leaders' business decisions and reasonable allocation of resources.

The reorganization and integration of Shanghai Materials Group Automobile Trading Co., Ltd. has made a good start. To achieve the expected goals, we must pay attention to summing up lessons based on the existing foundation, careful planning, overall planning, and step-by-step implementation. Take appropriate regulatory measures at the appropriate time, by further improving the financial management system, improving the financial management system, adjusting and improving the assets and corporate structure, strengthening internal risk control, and coordinating the relationship with strategic integration, human capital integration, corporate culture integration, and business integration, Pursue integration and synergy. abc