Causes and prevention of financial risks in enterprises

Causes and prevention of financial risks in enterprises

The capital operation risk of an enterprise refers to a series of financial risks, not a certain financial risk. The credit risk of an enterprise is the risk caused by breach of contract in cooperation, which means that the partners fail to fulfill their due cooperation obligations in accordance with the signed contract, resulting in the inability to complete the signed content.

abstract:

At present, the rapid development of small enterprises in China has promoted the continuous improvement of the market economy, and enterprises at all levels may face financial risks. For the management of a small enterprise, this is a problem worthy of attention. The development of small enterprises in China and the improvement of economic benefits will be more or less affected by financial risks, which is an important reason to hinder the economic development of small enterprises. The premise of small business activities is to prevent and control the formation of financial risks. This paper analyzes the causes of financial risks of Jiangsu Hanjia Textile Co., Ltd., puts forward suggestions for improvement, and discusses more reasonable and perfect preventive measures.

Key words:

Small enterprises; Financial management; Financial risk; counter-measure

The research background and significance of 1

As an indispensable part of enterprises in China, small enterprises are an indispensable part of national economic construction. During the period of high-speed economic development, various problems in financial management of small enterprises have gradually emerged, such as weak financial management foundation, loose financial system, weak capital accumulation ability of enterprises, unreasonable capital structure and imperfect cost control system. Therefore, attaching importance to the financial management of small enterprises is very important for the innovation of financial management. Under the new situation, improving the level of financial management has become an urgent problem for enterprises. By standardizing fund management, the level of fund management can be improved. Financial management is the most important part of enterprise management, and fund management is an important part of financial management. The improvement of fund management level can promote the improvement of financial management level, realize the harmony and unity of economic and social benefits of enterprises, and is of great significance to the sustainable development of small enterprises.

2 the concept and content of financial risk

2. 1 concept of financial risk

Financial risk refers to the financial risk that improper financial management and unreasonable financing lead to the loss of repayment ability of small enterprises and reduce the expected income of shareholders. Financial risk includes two aspects. One is that the generalized enterprise financial risk refers to the uncertainty of economic loss and profit, and the advantages and disadvantages of enterprise financial risk are relative; Second, the narrow sense of enterprise financial risk refers to the uncertainty of economic asset loss. The primary challenge faced by enterprises in production and operation is financial risk. The financial risk of an enterprise does not exist with people's subjective consciousness, but exists objectively with external factors. The financial risk of an enterprise can only reduce its risk rate, but cannot be completely eliminated.

2.2 The content of financial risks

2.2. 1 financial investment risk

The financial investment risk of an enterprise refers to a kind of financial risk that the enterprise has uncertain factors about the future economic development, which may lead to an increase or decrease in investment income, thus reducing investment income or loss of principal. Investing in uncertain future earnings may lead to certain financial risks of gains or losses.

2.2.2 Financial interest rate risk

The interest rate risk of enterprise financing refers to the possibility that the uncertainty of market interest rate leads to the downward adjustment of bank interest rate in the process of economic development. The fluctuation of interest rate will make the actual income of enterprises differ from the expected income, and there will be a scene where the specific income of enterprises is less than the expected income, thus reducing the economic benefits of enterprises.

2.2.3 Risk recovery of financial funds

The risk of enterprise capital recovery refers to whether the enterprise has realized the transfer of cost funds to settlement funds when the main business income occurs, and then the transfer of settlement funds to monetary funds. In the process of financial risk transformation, there may be uncertainty whether the funds can be recovered, thus forming the risk of enterprise financial assets recovery.

2.2.4 Enterprise's credit risk

The credit risk of an enterprise is the risk caused by breach of contract in cooperation, which means that the partners fail to fulfill their due cooperation obligations in accordance with the signed contract, resulting in the inability to complete the signed content. The credit risk of an enterprise is the most easily encountered financial risk in the production process, operation process and other management processes.

2.2.5 Enterprise capital operation risk

The capital operation risk of an enterprise refers to the financial loss caused by business failure or incomplete expected development due to some external uncertainties during the production and sales of products. The capital operation risk of an enterprise refers to a series of financial risks, not a certain financial risk.

3 financial management status and examples of financial risks

3. 1 Financial Management of Jiangsu Hanjia Textile Co., Ltd.

Jiangsu Hanjia Textile Co., Ltd. is located in Pei County, a famous historical and cultural city in Xuzhou. It was established in 2009 and has more than 340 employees. Is a private enterprise with a registered capital of160,000, mainly producing industrial products shipped to Shanghai, with various products. For the measures to deal with financial risks, combined with years of prevention and response experience, the company has now formulated a relatively complete accounting management response system. Accounting and supervision are needed by enterprises. Seeking truth from facts is what accountants must abide by. Accounting should be true and specific. Bookkeeping, accounting and reimbursement should be complete, true in content, accurate in figures, clear in accounts and standardized in reimbursement. The company's financial position, operating results and income and expenditure should also be truthfully reflected. Real and reliable accounting information that can meet the requirements of all parties should be provided in time.

3.2 Jiangsu Hanjia Textile Co., Ltd. Financial Risk

3.2. 1 The capital utilization rate is not high.

According to table 1, the turnover rate of current assets of the company is 0.73.

3.2.2 Difficulties in recovering accounts receivable

From Table 2 and Table 3, combined with the standard value of accounts receivable formulated by 4 companies, we can easily see that the turnover rate of accounts receivable is low and the turnover days are too long this year, which shows that accounts receivable are difficult to recover. The reasons can be divided into: serious credit sales; There is something wrong with the customer's credit, which delays the collection time; The company's management of accounts receivable is not strict enough.

3.2.3 Slow inventory turnover

From Table 4, we can easily find that the inventory turnover rate is slightly lower than the standard value of 3 set by the company, and the inventory turnover rate is slow. The reasons may be: the sales management of enterprises is not perfect, and the products produced by enterprises cannot be sold; Excessive use of the company's working capital in inventory; There are too many defective products in stock or too many unsalable products; High-cost raw materials are piled up and not produced.

4 Jiangsu Hanjia Textile Co., Ltd. Financial Risk Improvement Methods

4. 1 Improve the utilization rate of funds

(1) Centralized management of enterprise funds, and do a good job in centralized management of funds. Jiangsu Hanjia Textile Co., Ltd. should better improve the company's fund settlement system, try not to allow credit as much as possible, prohibit the state of multi-head account opening, rationally use the company's working capital, be able to manage it in a unified and centralized way, and not allow the phenomenon of scattered funds.

(2) Do not use the company's funds in violation of regulations, and rationally plan the use of funds. Jiangsu Hanjia Textile Co., Ltd. should regularly track the operation of funds, inquire about the management of funds anytime and anywhere, strictly control the entry and exit of funds, and maximize the efficiency of fund use. Plan the use of funds rationally, pay attention to the development trend of market economy, use funds rationally, invest in better projects, and do not invest indiscriminately or lose funds, thus greatly improving the utilization rate of funds.

4.2 Strengthen the management of accounts receivable to ensure its recoverability.

(1) cash discount is implemented. The company shall implement the cash discount method of 2/ 10, 1/20, n/30, that is, if the payment is made within 10 days, it will enjoy the discount of 1%, but not within 30 days.

(2) Customer credit evaluation. Evaluate and determine the customer's payment rate (receivable amount), payment ability (repayment ability) and business competition. Payment ability is an indicator that the company pays more attention to. The company should confirm the customer's ability to pay, mainly depending on the payment index.

(3) Strengthen recycling efforts. It is everyone's responsibility to formulate more perfect accounts receivable management measures and implement them layer by layer, strictly control the aging of accounts, and conduct reasonable and proper accounting treatment for those dormant accounts and bad debts after grasping clear evidence. For some passive accounts receivable, the company should take mediation, arbitration and judicial measures as soon as possible to recover the lost assets as much as possible, protect the assets that will be lost soon, and investigate the responsible person.

4.3 Strengthen inventory management and make the best use of it.

(1) Strengthen sales, and adopt appropriate preferential policies in sales, such as giving gifts and giving discounts, so as to greatly increase the sales volume, so as to solve the problem of inventory squeeze, and accordingly improve the inventory turnover rate.

(2) the reward and punishment system for employees, set the minimum sales and maximum sales for each salesperson, count the sales quantity of employees every month, carry out appropriate rewards and punishments, mobilize the enthusiasm of employees, and thus reduce inventory.

(3) Clean up unsalable inventory. Exchange the unsalable products of the company for the items needed by the company, such as exchanging products and services, to save money and help the company make up for the loss of profits caused by unsalable products; Or ask other companies with the same target customers if they are interested in combining your products with their own products, packaging and selling, and sharing profits; So as to reduce inventory and avoid the risk of sluggish funds.

(4) Reduce the cost of material procurement. Calculate the raw materials needed in a period of time, work out a reasonable inventory quantity, adopt batch concentration to get more discounts, and reduce the times of using enough materials by increasing the quantity of enough materials, thus reducing the expenditure of purchasing expenses.

4.4 Pay attention to internal control

If no one carries it out, the perfect internal control system will become empty talk and cannot play its due role. In order to successfully reduce financial risks, every leader and all employees in the enterprise are required to raise awareness and strengthen implementation. Therefore, we should strengthen the training of internal control, increase publicity, drive enterprise leaders and employees to realize the importance of internal control, correctly establish the concept of internal control, and reduce the financial risks of enterprises.

4.5 Improve the overall quality of employees

In order to improve the management level of enterprises and reduce the financial risks of enterprises, it is necessary to strengthen the training and education of employees. First of all, strictly control the employment conditions of employees, and comprehensively consider employees' academic qualifications, practical ability, problem-solving ability and moral character. Secondly, employees are required to participate in training and assessment, and strengthen professional ethics training while assessing their professional skills.

References:

[1] Cao Weizhong. Analysis and prevention of financial risks of small and medium-sized enterprises [J]. Modern economy (the second half of modern real estate), 2009(02).

[2] Lu Chaohui. Cause analysis and prevention research of enterprise financial risk [D]. Tianjin University, 2007.

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