SMEs because of relatively small scale, less capital strength, development time normally is not long, by its own environmental impact of large institutional and external, financial control, there are some weak links, such as financial control systems, and improper cash management. To solve these problems, experts recommend doing a good job in various areas of financial control.
The establishment of financial control system
SMEs to improve financial control, we must establish strict financial control system, including the following aspects: the system of separating incompatible duties. This requires a reasonable set of SMEs and the related financial and accounting jobs, clear duties and responsibilities, the formation of mutual checks and balances. Incompatible duties include: authorize the approval, business managers, accounting records, property, custody, audit and inspection duties. Such as: the right to approve the procurement of personnel not directly involved in procurement, personnel engaged in procurement shall not engage in storage operations.
Authority to authorize the control system. This requires clear that SMEs involved in financial accounting and related scope of work approved by the authority, powers, procedures, responsibilities, etc, Internal managers at all levels must exercise his powers within the mandate and responsibility, handling personnel must within the scope of authorization to transact business. Such as: procurement staff must be approved in the amount authorized to handle their procurement operations, beyond this amount must be in charge of examination and approval.
Accounting system control system. SMEs should be based on "Accounting Law" and the national unified accounting system, set for the unit's accounting system, a clear accounting procedures, the establishment of personal responsibility, give full play to the supervision of accounting functions. Accounting system control system, including corporate accounting procedures, accounting procedures, accounting staff of personal responsibility, financial and accounting department responsibilities, the accounting records management system. Good accounting system control system is smooth corporate financial control of a strong guarantee.
Cash flow budget control
Financial management should first focus on cash flow rather than accounting profits.
Small businesses should be managed through the cash flow budget to make cash flow control.
Cash flow budgeting with the "fixed income support, and cost of matching" principle, using zero-based budgeting method, cash basis to reflect the cash inflow and outflow. Up and down repeatedly through the company summary, balance, eventually forming the annual cash flow budget. Meanwhile, according to the annual cash flow budget for establishing the time of the dynamic cash flow budget, the dynamic control of the daily cash flow.
Accounts receivable control
Increasing competition in the market today, SMEs have some or all of the form of credit, business transactions, operations are hard to reduce accounts receivable. Control of accounts receivable mainly from the following aspects to be: informative and accurate financial accounting, credit and debt relations clear. SMEs must have a complete accounting system, accounts receivable, and the original documents must be true and complete; evaluation of customer credit levels, to develop the appropriate credit policy. SMEs must be based on customer's credit level to develop standards for customer credit; usually from the credit quality and repayment capacity, capital, collateral, economic conditions five areas to assess the customer's credit level. SME credit according to the customer level of analysis of customers line up, select the credit level of good customer, but refused to credit the extent that poor customers.
Strengthen the accounts receivable aging analysis to determine the collection rate and the percentage of accounts receivable balances. SMEs based on aging analysis, combined with the sales contract, establish the balance of accounts receivable collection rate and the percentage of accounts receivable to ensure the safety, speed up cash flow, reduce bad debt losses.
Financial Risk Control
Financial risk mainly refers to the debt to the company gains are uncertain. Enterprises leverage their funds will affect the profitability, due to liability to pay interest, the debtor company's assets have priority rights, if operated properly, or have other adverse factors, the company's insolvency, bankruptcy will increase the risk. On the other hand, effective use of debt, can greatly enhance the company's revenue, when business is good, high profits, high corporate debt will bring high-speed growth. SMEs should be accurate, objective assessment of control of financial risks, a step by step to develop and expand.