What Is Short-Term Financial Management?

The financial management model is the financial management system of an enterprise group company. It refers to the financial management model, management organization, and division of labor that are designed to achieve the overall financial goals of the enterprise group company. The organic combination of factors mainly involves the division of major financial decision-making authority between parent and subsidiary companies, including financing decision-making rights, investment decision-making rights, capital management rights, asset disposal rights, and income distribution rights. According to different ways of corporate financial rights allocation, financial management models are theoretically divided into "centralized management models", "decentralized financial management models" and "hybrid financial management models". It is undeniable that the centralized financial management model has a tendency to "stand alone".

Financial management model

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Financial management model

Financial management model

An ideal enterprise group financial organization should be a moderate centralized power decentralization, a balanced power, responsibility and profit, multi-level hierarchical separation control system. The so-called multi-level hierarchical split control system has a multi-level control relationship of group company (parent company) -subsidiary-sun company among member enterprises from a vertical perspective; and within each member enterprise,

1. The principle of centralization and decentralization. Too much centralization of the financial headquarters of the group company will affect the enthusiasm of the financial management of the subsidiary, but excessive decentralization will also easily lead to out-of-control. The usual choice is to first ensure that the financial headquarters of the group company concentrates the necessary financial management authority, especially the major financial management decision-making authority, and implements appropriate decentralization on this basis.

2. The principle of balance of power, responsibility and profit. Whether decentralization can achieve its purpose is closely related to the handling of the relationship between power, responsibility and profit. To the subsidiary, the authority of the branch is large, but the responsibility is small, it is easy to cause the abuse of power. On the contrary, the authority given is small, but the responsibility is large, which is not conducive to the motivation of the subsidiary and the branch, so Powers and responsibilities should be symmetrical and balanced.

3. The principle that the establishment of institutions should be compatible with the degree of centralization and decentralization. The functional departments set up by the financial management institutions of the member companies and their subordinate units in the group should be compatible with the responsibilities of financial management and enjoyment. This is also an important guarantee for the financial department to fulfill its duties.

For an enterprise group, leadership,

In order for the financial management of the enterprise to operate normally, a sound financial management system should be established.

Authorization appointment and removal system

The authorized appointment and removal system is the guarantee and basis for realizing the financial management decision mechanism. In the financial management activities of an enterprise group, the group company and its financial headquarters are in a dominant position, what form the financial leadership system of the subsidiary takes, how the financial leadership of the subsidiary is appointed and removed, and what financial management authority is concentrated in the group company's finance Headquarters, which financial management authority is delegated to subsidiaries, should be clearly defined through an authorized appointment and removal system.

Financial management work system

Financial management work systems include fund management systems, investment management systems, loan and fixed asset management systems, cost management systems, debt investment management systems, income distribution management systems, financial accounting, analysis, assessment systems, financial inspections, and internal controls Regulations, financial risks and avoidance systems, and basic rules of financial management. The establishment and improvement of the above-mentioned various systems is an important guarantee for corporate financial management to realize its self-decision mechanism, self-regulation mechanism, risk prevention and evasion mechanism.

Incentive and restraint system

In order to make full use of the overall advantages of enterprise groups, two issues need to be resolved, one is the attractiveness of the group's core enterprises to ordinary member enterprises, and the other is the issue of the core enterprises' control over ordinary member enterprises. To solve the above two problems is to achieve by establishing an incentive and constraint mechanism. In order to achieve the best incentive effect in the financial management of enterprise groups, the content of incentives should be highlighted in the formulation of financial management work systems, such as combining business objectives and budget constraints with the interests of member companies to form a performance evaluation system with clear rewards and penalties.

Financial information disclosure and monitoring system

An enterprise group is a joint enterprise organization composed of many member enterprises. In order to give full play to the advantages of the group's overall portfolio and unify the operating behavior of each member enterprise, a financial information disclosure and monitoring system should also be established. Therefore, on the one hand, it can enable the headquarters of group companies to obtain comprehensive and timely financial cost information and improve the scientificness of decision-making. At the same time, it can also monitor the performance of the member companies' fiduciary responsibilities. Member companies, because they have an interest relationship with the entire group, also need to understand the financial status and operating results of the entire group. Group companies need to establish a financial information disclosure system to enable them to understand the financial status and operating results of the entire group and accept their monitoring.

Allocation of various financial rights of enterprise groups

(1) Allocation of funds management rights

Financial management is the core of enterprise management, and fund management is the core of financial management.

Under the leadership of the chief person in charge of the enterprise group and the chief accountant, the group company established a capital department. Each independent accounting unit that has a bank deposit account within the group, in addition to keeping an expense settlement outdoor in the bank, the other accounts are in the Ministry of Finance. The Ministry of Finance uses funds internally through the internal financing function. Implement plan management of funds.

Formulate a complete set of fund management system, implement it conscientiously, and do a good job of daily fund management.

(2) Allocation of investment decision-making power

As the main investment entity, the parent company has significant investment decision-making rights. The investment decisions of the subsidiaries should be given appropriately. If the investment decisions are not given to the subsidiaries, the parent company's strong control power is not conducive to the self-development of the subsidiaries.

A, balance the group's investment arrangements as a whole, and invest funds in areas that require urgent development, so as to maximize the use of funds.

B. Use specialized methods and methods to predict the feasibility of investment projects, and invest funds in projects with potentially high returns.

C. Tracking and monitoring the implementation of investment projects.

D. Assess and evaluate the effect of the investment to ensure the profitability and safety of the investment.

(3) Allocation of asset management rights

The group company has set up a special asset management department to carry out macro management on the operation configuration of all assets of the entire group.

(4) Allocation of cost management right

The quality of the cost management system directly affects the level of economic benefits and the competitiveness of the enterprise. Therefore, the cost management right is monitored by the financial department of the group company. The Finance Department strictly regulates the cost classification and accounting content of the entire enterprise group. The finance department analyzes the reasons from the positive and negative differences in budget execution. The Ministry of Finance has formulated specific supervision and inspection, criticism methods, and regular supervision and inspection of the cost control management of each independent accounting unit.

(5) Allocation of profit management rights and distribution rights

In terms of profit management, enterprise groups implement financial plan management centered on target profits. The parent company, as the investor of the subsidiary, enjoys the right to benefit distribution based on the proportion of capital contribution. Subsidiaries have the right to distribute statutory common reserve funds and statutory public welfare funds from the after-tax profits after making up the losses of previous years in accordance with the "Company Law", and to distribute non-distributable profits to a certain extent.

Financial management model