- a specific sphere of economic relations determined by the movement of money. They are based on the processes that occur as a result of the creation, distribution, exchange and use of national income.
The movement of income of organizations is accompanied by the formation of their financial relations with other economic entities.
Types of financial relations by directions
Everything can be grouped into four groups:
- with other enterprises and organizations;
- within the enterprise;
- within associations of enterprises and organizations;
- with the financial and credit system of the state.
Financial relations with other enterprises and organizations
Include relationships with suppliers, buyers, construction and installation and transport organizations, post and telegraph, foreign trade and other organizations, customs, firms foreign states. This is the largest group in terms of cash payments. The relationship of enterprises with each other is related to the implementation finished products and acquisition of material assets for economic activity. The role of this group is primary, since it is in the sphere of material production that is created, enterprises receive and.
- financial relations between the founders at the time of the establishment of the organization during the formation of the authorized capital, as well as during the distribution of dividends;
- financial relations between organizations in the process of production and sale of products, creation of added value; it is primarily financial relations between suppliers and consumers;
Financial relations within the enterprise
They include relations between branches, workshops, departments, teams, etc., as well as relations with employees and owners. Relations between the divisions of the enterprise are associated with payment for work and services, distribution of profits, working capital, etc. Their role is to establish certain incentives and liability for the qualitative fulfillment of the obligations assumed. Their volume is determined by the degree of financial independence of structural units. Relations with workers and employees are payments, benefits, material assistance, as well as the recovery of money for damage caused, withholding taxes.
- financial relations between the organization and the personnel employed in it in the form of payments wages, bonuses, provision of social benefits;
Financial relations within associations of enterprises and organizations
Financial relations within associations of enterprises and organizations are the relations of enterprises with a higher organization, inside, and also.
The financial relations of enterprises with higher organizations are relations regarding the formation and use of centralized monetary funds, which in the conditions of market relations are an objective necessity. This is especially true for financing investments, replenishment of working capital, financing of import operations, scientific research, including marketing. Intra-industry redistribution Money, as a rule, on a repayable basis plays an important role in financial management and helps to optimize the funds of enterprises.
- financial relations between the organization and its divisions in the distribution of resources, as well as between organizations within the financial and industrial group, holding, union or association, of which the organization is a member; such relationships are usually associated with the internal redistribution of funds or the financing of corporate events;
Relations with the financial and credit system of the state
Relations with the financial and credit system of the state are diverse. This system includes the following links: budget, credit, insurance, and the stock market.
Relationship with budgets various levels and with extrabudgetary funds are associated with transfers and deductions.
Financial relations of enterprises with banks are built in relation to both the storage of funds in banks, the organization of cashless payments, and the receipt and repayment of short-term and long-term loans. The organization of non-cash payments has a direct impact on the financial position of enterprises. is a source of formation, expansion of production, its rhythm, improvement, helps to eliminate temporary financial difficulties of enterprises.
Banks currently provide businesses with a number of so-called non-traditional services: trust. At the same time, there may be independent companies specializing in the performance of these functions, with which enterprises have direct relations, bypassing the bank.
Financial relations of enterprises with the stock market suppose .
- financial relations between the organization and the financial system of the state when part of the primary income is withdrawn in the form of taxes and fees, as well as when receiving appropriations from the budget;
- financial relations between the organization and other participants in the financial system. Relations with banks arise when organizing non-cash payments, obtaining and repaying short-term and long-term loans, as well as obtaining banking services. Relations with the insurance link of the financial system occur when insuring property, commercial and entrepreneurial risks, compulsory insurance workers. Relations with stock market participants — when placing temporarily free cash in securities and privatization.
Types of financial relations by degree of obligation
From the point of view of obligation, all financial relations of the organization should be classified into:
- voluntary;
- voluntary-compulsory;
- forced.
To voluntary include financial relations between the founders at the time of the creation of the organization, between organizations in the process of production and sale of products, between the organization and staff regarding consumption, in the distribution of resources within the organization, between the organization and stock market participants.
To voluntary-compulsory financial relationships - relationships that organizations enter into voluntarily, and then are forced to fulfill their obligations or conditions for forming relationships with others. legal entities. An example of such relations can be financial relations within a group, holding, association, union, as they are regulated by internal documents adopted voluntarily. Such relations also include financial relations in the organization of interaction with counterparties (suppliers and contractors), the terms of which are reflected in contractual obligations. In market conditions, the choice of a counterparty and the law-establishing norms of interaction with him are carried out voluntarily, but sanctions for violation of voluntarily accepted contractual obligations are already mandatory. Implementation of responsibility for obligations is expressed in the payment of fines and penalties for violation of the terms of contracts, compensation by personnel for material damage caused by their actions.
Forced financial relations of the organization arise when fulfilling tax obligations, carrying out (settlements between legal entities in cash are limited), compulsory insurance of professional liability (for example, in audit and construction activities), compulsory insurance of certain categories of employees or property defined by state legal acts. open joint-stock companies are obliged to enter into relations with participants and organizers of the stock market.
Each of the listed groups of financial relations has its own characteristics and scope. However, all of them are bilateral in nature and their material basis is the income of the organization.
Communication functions financial management.
Influence of inflation on the investment process.
The impact of inflation on the investment process is mostly negative. It manifests itself in the fact that depreciation of the depreciation fund occurs, and therefore, a lack of funds is revealed for the renewal of fixed assets. As a result, the investment fund decreases, the investment opportunities of the enterprise decrease. Such an impact can be reduced by using the method of accelerated depreciation of fixed assets, as well as limiting the growth of consumption funds. The negative impact is also manifested in the fact that in the future investors will receive investment income in depreciated money, and investment costs are currently being incurred. In an inflationary environment, priority should be given to investment projects with a fast payback period. It is also reasonable to invest in the most protected from it areas with a rapid turnover of capital - these are financial markets, speculative transactions with securities, trade, real estate transactions, etc.
Lecture #5, 6. Communication function - the implementation of external financial relations.
In modern concepts of strategic enterprise management, one of the main roles is played by the dynamics of its development and behavior during external environment. One of the main factors of communication is financial management. The communication function of financial management consists in the implementation of financial relationships with federal, subfederal and municipal authorities, contractors, customers, creditors, borrowers, investors, founders, etc. These relations should at least be conflict-free, and ideally they should contribute to the development of the enterprise and the solution of its strategic goals. Financial management at the enterprise should be adequate to the requirements of the external environment.
The financial environment of entrepreneurship is a complex of mutual multilateral business relations of an enterprise with subjects and objects of financial relations. The system of financial relations of an economic entity includes relations in the field of education, formation, disposal and use of financial resources. These relations can be both within the economic horizontal and vertical. Currently, relations with higher organizations are developed at enterprises with federal and municipal property and at state enterprises. Similar relations were revived on a new basis and within financial holdings. This is the relationship of subsidiaries and affiliates with the parent company - the holder of their controlling stake (shares). AT market conditions relations of the financial horizontal are of primary importance. Each business entity is, on the one hand, a supplier of products (works, services), and on the other hand, their buyer. Elements that form the business environment.
Entrepreneurial environment- social economic situation, including the degree of economic freedom, the presence of an entrepreneurial corps, the dominance of the market type of economic relations, the possibility of forming an entrepreneurial environment and the use necessary resources. The formation of an entrepreneurial environment is a manageable process. Management methods are based on measures that are not related to the impact on the subjects entrepreneurial activity, but with the construction favorable conditions for the emergence and rapid development of such subjects. Formation of the business environment includes the following elements:
Adoption of a national program to stimulate entrepreneurship, creation of an entrepreneurial infrastructure (of all institutions of entrepreneurial activity);
Changing public economic and socio-economic thinking;
Changing social psychology. The development of entrepreneurship leads to the growth of national wealth and the welfare of the nation.
FM is a system of principles and methods for the development and implementation of management decisions related to the formation, distribution and use of the financial resources of an enterprise and the organization of its cash flow.
The successful functioning of the FM is largely determined by the effectiveness of its organization, i.e. creation of a structure for managing the financial activities of an enterprise, which in turn is an interconnected set of internal structural divisions of an enterprise that ensure the development and implementation of management decisions on all aspects of financial activity and are responsible for the results of these decisions.
In maximizing wealth by increasing the market value of the company - the market value of the company's shares.
The owner (goals and strategies), financial director (general financial management) act as the subject of management; financial manager (performs the functions of FM).
control objects:
1. Enterprise financial resources- a set of own and borrowed funds accumulated by the enterprise and their equivalents in the form of trust funds intended to ensure its economic activities in the coming period, the sources of formation and specific areas of use of which have clearly established regulation.
2. Sources of formation of financial resources: own, borrowed and borrowed.
3. financial relations: always mediated by money. By its nature, the entire set of financial relations of the enterprise is divided into external and internal
§ The system of external financial relations of the enterprise includes:
1. Financial relations of the enterprise with public finance authorities (state and local budgets; state non-budgetary trust funds; other public finance bodies).
2. Financial relations of the enterprise with partners in operating activities (suppliers of raw materials, materials and semi-finished products; buyers of finished products; enterprises of industrial and commercial infrastructure).
3. Financial relations of the enterprise with partners in financial and investment activities (commercial banks; financial and credit non-banking institutions; investment funds and companies; insurance companies; bodies of financial and investment infrastructure).
4. Financial relations of the enterprise with other business entities and households.
§ The system of internal financial relations of the enterprise includes:
1. Financial relations of the enterprise within the association(holding, union, association). This group of financial relations of the enterprise is classified as internal due to the fact that they are largely regulated by internal regulations in force in a particular association (ie, they are a form of intra-industry financial relations). In addition, in such an association, an enterprise can act as a parent company, having financial relations with other subsidiaries.
2. Financial relations within the enterprise (with founders - shareholders, participants; with personnel; between the management bodies of the enterprise and its structural divisions; between various structural divisions of the enterprise - its "responsibility centers").
Financial management performs a set of functions: general - management and special finance:
General: - development of goals and strategies;
Creation organizational structure management;
Creation of an information system;
Analysis of the results of financial activities;
Financial planning;
Development of an incentive system;
Financial control;
special: - asset management;
Capital Management;
Cash flow management;
Investment management;
Financial risk management and anti-crisis management.
To achieve goals and perform functions, a mechanism is needed:
Financial mechanism: is a combination of the main elements:
1) Financial regulation system: state. regulatory, market mechanism and internal within the enterprise itself (accounting policy)
2) The system of external support for financial activities: external financing, lending, insurance;
3) financial methods: budgeting, planning, control, expert evaluation, balance sheet;
4) financial leverage (indicators): lending rates, taxation, prices, revenues, profits, dividends;
5) information support is necessary for the development and evaluation of the implementation of management decisions;
6) organizational support (personnel).
Finance is a set of monetary relations that arise in the process of production and sale of products (works, services) and include the formation and use of cash income, ensuring the circulation of funds in the reproduction process, organizing relationships with other enterprises, the budget, banks, insurers, etc.
Finance includes the formation of monetary funds, their distribution, analysis and control over their use and communicative financial relations.
The composition of finance includes public finance, corporate (industry) finance, the securities market (stock market), insurance, as well as credit and money circulation. Finances are divided into national, territorial, business entities and finances of citizens. Market transformations in Russia have increased the role of corporate finance, turning it into the most important indicator of economic efficiency, which has led to an increase in the importance of financial management.
The main functions of the finance of an economic entity include:
1) accumulating (mobilization of income, financial resources, capital formation);
2) distribution (optimization of financial proportions, proper implementation of expenses, transformation of financial resources into trust funds of funds);
3) analytical and controlling;
4) communication (financial relations with contractors, the state, etc.).
The financial mechanism is the ways of using financial resources, as well as the form of organization of the finances of the enterprise. For the use of financial resources, financial methods, techniques, levers, tools, principles and appropriate legal, regulatory and information support are used. Financial methods are a form of implementation of financial relations, their relationship with the production and economic process. These include: financial planning, investment, pricing, lending, insurance, taxation, incentives, advance payments, financial analysis, etc. In turn, the methods are made up of techniques. These are the types of planning, forms of lending, methods of investment, procedures, types of incentives, etc. The form of implementation of financial methods is the so-called financial leverage. Financial leverage - the combined impact on the level of profits from equity and debt financing. In the European model, financial leverage is calculated as the ratio of the total debt of the enterprise to the total amount of equity. In the American model, financial leverage is defined as the ratio of the change in net earnings per share to the change in the net result of the average market income from investments.
Financial instruments are market financial liabilities, financial resources, forms of advances and capital investment. Financial instruments correspond to three segments of the financial market. The main groups of these instruments are cash, their substitutes (cheques, bills, gold, etc.), capital market instruments, its substitutes and derivatives (credit instruments, debt securities, shares, etc.). The main difference between financial instruments and various payment, settlement and other financial documents is their market turnover in the financial market.
Traditional finance focused on controlling income and expenses, cash flow using financial methods, mainly budget planning and accounting. And in modern conditions of management, these methods and techniques have retained their significance, but the financial function is coming to the fore. This function in the company exists so that managers can successfully manage the business.
Financial function - a set of goals, competencies, procedures and systems of the company, which is designed to solve the problem of optimal organization of financial and economic business management and efficient use of resources. A well-organized financial function allows the company to respond to market and business changes in a timely manner.
As a rule, an optimally built financial function is understood as such an organization of the work of the company's financial unit, in which:
- defined the goals and objectives of the financial unit, the role of the financial director in the company;
- the organizational and functional structure of the financial unit meets the requirements of the business;
- the financial service effectively performs the full cycle of financial management: planning, accounting, control and reporting, including a well-organized system for obtaining information for budgeting and generating management reports;
- the interaction of financial services with other divisions of the company is clearly implemented;
- the document flow of the financial block has been optimized;
- the number of personnel in financial services has been optimized, the functions of employees have been distributed, motivational schemes and plans for the development of personnel have been determined.
A correctly formulated financial function is necessary for successful operation in a highly competitive business environment and will allow the enterprise to achieve tangible material results. A properly organized financial function of the enterprise minimizes the possibility of workplace abuse and fraud.
In a modern company, finance is required to continuously add value to the business, provide timely and quality information, and ensure the effectiveness of controls in the face of ever-changing corporate governance requirements. At the same time, company management usually seeks to reduce the costs associated with the finance function.
Modern requirements for the financial management system significantly change the traditional controlling role of the financial service in the company, shifting its priorities from finding those responsible for non-fulfillment of plans to a constructive solution to the problems of fulfilling these plans. The control of the past seems to be less effective than the desire to focus on the future and plan it correctly. There is a transition from control to controlling. A characteristic change in the financial sector is the desire for internal partnerships, and the main task is to provide other structural divisions of the company (internal clients) with services aimed at maximizing the overall market value of the business. Thus, controlling is more a way of thinking and a way of doing things. management activities than the set and application of individual control tools.
The relevance of a new understanding of the role of finance is also associated with the formulation of criteria for the effectiveness of their use and, ultimately, with the formulation of requirements for the competence of employees of financial services. To understand the modern role of finance, let's consider the general process of business management in the form of the so-called Deming cycle - planning - implementation - control - correction (Plan-Oo-Check-Ac1).
At the stage of strategic and current planning, the role of finance is in the methodological and organizational support of this process. As part of the planning strategy, a business model for long-term planning is defined, as well as key criteria for assessing the fulfillment of strategic objectives and setting goals as part of the annual ongoing planning. The organization of budgeting should be formalized by regulatory and administrative documents, have a schedule with fixed deadlines, responsible persons, as well as control measures and corrective decisions of the company's management.
During the planning phase, the following problems may occur.
Firstly, the lack of a strategy and strategic planning in a company often leads to chaos in the development courses taken, to a change in current tasks. It is necessary to adopt a development strategy and assign strategic planning to a specific division of the company.
Secondly, the lack of clearly delineated areas of responsibility, including financial, makes it difficult to manage based on key criteria and budgeting. This problem can be solved by approving the organizational and functional structure of the company and fixing the role and responsibility of functional units in internal (corporate) regulations.
Thirdly, the lack of competence of line and functional units for strategic and current planning can lead to a delay in the preparation of plans. This problem is solved with the help of centralized planning and subsequent estimated budgeting of linear and functional units based on approved basic standards and staff training.
In the process of implementing plans, the role of finance is to create conditions for achieving financial performance and to provide line and functional units with the financial resources, reporting and analytics necessary to achieve key indicators plan. In this case, the following problems are possible.
First, the lack of understanding among line and functional units of key performance management methods can lead to errors in their reporting. To avoid this, it is necessary to fix the reporting format in the regulatory documents of the company.
Secondly, due to the low significance (relevance) of the information provided in the reporting for management purposes, incorrect or belated management decisions leading to inefficient management. In turn, the reasons for this may be:
- untimely fulfillment of obligations to provide properly executed primary documents;
- incorrect work with databases (omissions of mandatory fields, input errors, reflection of the operation outside the established procedures, etc.);
- lack of agreed algorithms for the formation of indicators in reporting;
- the absence of a fixed list of report forms for use for certain purposes.
To eliminate these reasons, it is necessary to regulate the process of working with databases with the obligatory assignment of responsible persons and deadlines, establish report forms, deadlines for their submission and conditions of use. It is necessary to constantly monitor the submission of reports from structural units and their reliability.
The role of finance in exercising control is:
1) in controlling the safety of the company's assets through the organization of accounting, participation in the verification of physical availability (inventories);
2) in assessing the degree of achievement of those key indicators that were set for the financial services, and in identifying the reasons for deviations;
3) in providing line and functional units with reporting and analytics necessary to understand the reasons for deviations from the planned values of key indicators and to develop corrective measures;
4) in participation in the formation of control procedures for the implementation of key indicators of other divisions, their regulatory consolidation in the company.
During the monitoring process, the following problems may occur.
First, the lack of understanding among line and functional departments of key performance management methods, as well as at the implementation stage of plans, can lead to reporting errors. To eliminate this cause, it is necessary to regulate reporting and control procedures, as well as training.
Secondly, the lack of real authority for the financial director to participate in the formation of control procedures for the implementation of key performance indicators of other divisions, their regulatory consolidation in the company. This problem can be solved by fixing the order of management of individual key indicators in the general regulation of management. One more important point- issuance of exclusive rights to financial managers to carry out certain control actions within the framework of accepted procedures, for example, the right to access databases.
At the same time, excessive centralization of the control function and its assignment to financial services is dangerous and can lead to a decrease in the level of responsibility of the heads of linear and functional units for the results of their activities. This problem usually occurs in companies with low level management culture. It is almost impossible to achieve a correct distribution of responsibility and authority without a properly functioning management. Efficiency is the ideology of the entire business organization.
The role of finance in implementing corrective actions is to:
1) in organizing the work of the cost management service (budget committee);
2) in initiating changes in regulatory documents;
3) in substantiating and initiating the budgetary values of key indicators, assessing the impact of changes in the latter on the resulting performance indicators of the company.
During the revision phase of the plan, the following problems may occur.
Firstly, the absence of real authority from the financial director can cause the same problem as when monitoring the implementation of plans.
Secondly, the lack of understanding of the interaction of financial flows and key indicators (lack of a financial business model) can lead to a loss of controllability. The only solution is to build a financial business model and use it to assess the consequences of corrective actions.
In modern concepts of strategic management of a company, one of the main roles is played by the dynamics of its development and behavior in the external environment. And here financial management is one of the main factors in the organization of the communication system. The communication function of financial management consists in the implementation of financial relationships with federal, subfederal and municipal authorities, contractors, customers, creditors, borrowers, investors, founders, etc. These relations should at least be conflict-free, and ideally they should contribute to the development of the company and the solution of its strategic goals. Financial management in business must be adequate to the requirements of the external environment.
External financial relations:
relations of the enterprise with the budget and extra-budgetary funds (for example, the transfer of taxes by the enterprise);
relations of the enterprise with direct participants and institutions of the financial risk infrastructure (banks, stock exchanges, insurance companies);
relations of the enterprise with partners in operating activities (suppliers, buyers of finished products, sellers of fixed assets);
relations of the enterprise with the bodies of the production infrastructure (transport, communication institutions).
Internal financial relations:
relations between parent and subsidiaries arising within financial and industrial groups;
the relations of the enterprise with its founders - these relations are tripled regarding the formation of fixed capital;
relations with staff;
relations between the structural divisions of the enterprise.
State regulation of financial activity of an enterprise- this is the process of legal regulation of the conditions for the formation of their external and internal financial relations and the implementation of the main types of financial transactions by them.
State regulation includes the following areas:
regulation of the procedure for the formation of an information base for managing the financial activities of an enterprise;
tax regulation;
regulation of credit operations;
regulation of monetary circulation forms of payment;
currency regulation;
regulation of investment operations;
regulation of the securities market;
regulation of insurance operations in the financial market;
regulation of the order and forms of rehabilitation of enterprises;
Reorganization is the financial recovery of the enterprise.
10) regulation of bankruptcy and liquidation of enterprises.
Principles of organization of enterprise finance
The principle of economic independence, its implementation is ensured by the fact that business entities, regardless of the form of ownership, independently determine their costs of funding sources, as well as the direction of investing funds in order to make a profit.
Until the 90s. from above they established what to produce, to whom to supply and prices for products. The enterprise calculated on all obligations and if there was profit, then it was taken in the form of deductions of the free balance of profit to the budget.
At this stage, the independence of the enterprise is limited only by certain norms: the state establishes tax percentages, depreciation rates, etc.
The principle of independence and self-financing it means full payback of costs for the production and sale of products, as well as investment in the development of production at the expense of own funds and, if necessary, at the expense of bank loans. But self-sufficiency does not yet apply to industries where there is state regulation of prices: agriculture, transport, the coal industry, housing and communal services - subsidies are issued there.
The principle of material interest, its implementation can be ensured by decent wages, the optimal tax policy of the state, as well as the observance of economically justified proportions in the distribution of net profit to the consumption and accumulation fund. The tax at the enterprise should not exceed 30%. Decent wages should be provided at the expense of the wage fund and profit directed: for consumption in the form of bonuses, remuneration based on the results of work for the year, for length of service, financial assistance and other incentive payments, as well as payments to employees of interest on bonds and dividends on shares .
The principle of liability- means the presence of a certain system of responsibility for the conduct and results of economic activity, i.e. this principle is implemented in case of loss-making operation of the enterprise, its inability to satisfy the requirements of creditors. This principle is also reflected in fines and penalties.
The principle of securing financial reserves, the enterprise should form reserve funds in case of unforeseen circumstances.