Trade enterprises cannot operate without the basic element of capital in the process of business activities, and at the same time, capital is also a necessary condition for promoting the development of enterprises. With the continuous development of the economy, one of the main tasks of the financial management of trade enterprises is to carry out capital management.
At present, most trading enterprises do not pay enough attention to the management of capital operation, most of the enterprise’s funds are in circulation among customers, how to manage the funds in circulation is the focus of attention of trading companies.
Trade enterprises should continuously improve the measures of capital management, continuously enhance the efficiency of capital operation, and improve the advantages of trade enterprises in the same industry competition, so as to promote the sustainable development of enterprises. Trade enterprises need to continuously improve the operating capital management system to ensure the smooth flow of operating capital and continuously bring corresponding benefits to the enterprises.
Implementing comprehensive budget management
Comprehensive budget management is to achieve the goal of rational allocation of resources, continuous improvement of operation and steady increase of value through the integration of business, capital, information and personnel, clear and moderate decentralization and authorization.
Trade enterprises need to take cost control as the basis and cash flow control as the core, budget the amount of funds used for the whole year, subdivide the budget work to each department, and adjust the relevant budget through the monthly cash flow situation, and at the same time, cooperate with the management system for implementation and assessment.
1.Strengthen the cost control of trade enterprises.
The costs of trading enterprises are mainly in the main aspects of purchase and sales and management. By understanding the causes of cost generation, we can improve the relevant processes in a targeted manner, optimize the cost structure, and provide decision-making information services for budget management.
2.Improve the two-line management of capital income and expenditure.
Cash flow control is the key to ensure the timely return of project funds and reasonable expenditure of related costs. Only by realizing double-line management of income and expenditure can we bring into play the financial settlement function of trade enterprises, form a capital synergy, improve the efficiency of capital use, and ensure the steady operation of trade enterprises.
3.Forecast exchange rate risk exposure.
The risk arises from the mismatch of currencies and the mismatch of time of income and expenditure in the business of trade enterprises. Therefore, trade enterprises should fully consider the exchange rate trend of the currency involved in the relevant business when conducting comprehensive budgeting, and at the same time do a good job of measuring the risk exposure according to the different timing of income and expenditure.
4.Pay attention to budget execution.
Trade enterprises should review and analyze the budget execution every month, focusing on whether the monthly costs and expenses exceed the budget and whether the due accounts receivable are collected on time, etc. They should also pay attention to the control of capital shortage and the effective use of idle funds.
5.Implement the supporting management system.
In order to realize the budget, trade enterprises should formulate corresponding management systems and implement them, conduct assessments according to the system, and implement necessary constraints at the right time in order to improve the control and binding force of the budget.
The management of funds in the operation of trade enterprises
1.Fund pooling
Trading enterprises can pool the cash balances of their subordinate companies’ accounts into the parent company’s account, and the parent company will manage all the funds.
This is equivalent to the integration of capital resources, which turns external financing into internal financing, reduces interest expenses, and facilitates the improvement of capital management.
2.Promote open source and cut down on cash flow
Open source is the key to cash inflow. We promote open source by expanding product sales, continuously forming sales revenue, timely collecting accounts receivable, and continuously reducing inventory.
Saving money is the management of cash outflow. Through the purchase, sale and management of trade enterprises in the related costs and expenses of control to achieve savings. The trade enterprise is a big and thin business, open source and cut back on expenditure, in order to better achieve capital management and expand profit margins.
3.Revitalize idle funds
Trade enterprises should make reasonable use of internal idle funds to improve capital gains and avoid the deposition of large amounts of funds. There are multiple different ways to revitalize idle funds, and the main ones available are mostly financial and fiscal means, such as investment and deposit portfolio. What needs to be noted is the risk factor of different financial or fiscal instruments.
Trading companies should set reasonable expected returns in combination with their own risk appetite and ability to bear, so as to achieve effective use of funds.
4.Effective use of credit lines
Currently, many trading companies have introduced the concept of credit line in the banking industry.
The line of credit concept is a convenient and reusable credit product provided by the bank for customers. When the credit balance of the customer does not exceed the amount of the corresponding business, the funds can be issued to the customer again for a short period of time, regardless of the amount already issued and the number of times issued.
Trade enterprises must use the controlled credit limit as the upper limit of the enterprise’s operating funds, thus ensuring the normal flow of funds.
5.Construct scientific evaluation system for customers and suppliers
Trade enterprises, as intermediaries, should do a good job of two-way management of customers and suppliers, and should set up a scientific evaluation system for customers and suppliers according to their financial status, business status, and industry development prospects.
Trading enterprises should analyze and summarize the data of customers’ and suppliers’ statements in the past three years, and make regular evaluations based on the performance in the process of cooperation and annual audit reports, so as to make scientific and reasonable ratings for customers. For customers, trade enterprises should focus on their payment capacity, guarantee capacity and creditworthiness; for suppliers, in addition to their technical level and product quality, trade enterprises should focus on whether the nodes of their supply chain can be effectively connected and the use and deployment of production funds.
After formulating a scientific and reasonable rating, trade enterprises can provide different credit limits for different customers and set different payment nodes for different suppliers under the premise of risk control, so as to achieve effective management of project cash flow and promote the development of relevant business of trade enterprises.
In summary, through the implementation of comprehensive budget management, trade enterprises can make more detailed forecasts of the enterprise’s capital scale, cash flow, corporate profit and risk exposure, and provide effective information support for the development of the relevant business.
In the process of capital operation, trade enterprises should make full use of funds, improve the efficiency of the use of funds, give full play to the advantages of funds, keep the flow of funds in good condition, reduce the risk of funds as much as possible, and ensure the healthy operation of trade companies.