1000 Business Lessons Every Businessman Must Know

Chapter 65 Financial Misconceptions: Some Bosses' Wrong Understanding of Financial Management
523. Financial management is accounting
The most basic information needed for financial management comes from accounting.Therefore, many bosses think that financial management is accounting.

In fact, there is a strict distinction between accounting and finance.Accounting is the post-event reflection of the economic activities of enterprises.Financial accounting needs to strictly abide by generally accepted principles, and those who are engaged in accounting work have strict work procedures and belong to "knowledge workers".The head of the accounting department is the "Chief Accountant", who can be competent with rich accounting knowledge and experience.

The financial management is engaged in management work, which is to provide decision-making support for the top managers of the enterprise, and is responsible for the investment, financing, capital planning, budget, asset use, capital operation and other work of the enterprise. The financial supervisor is the "chief financial officer". Not only to understand accounting, but more importantly, to understand management.

524. You Don’t Need Financial Knowledge to Be a Boss

Managers should have the most basic accounting knowledge.However, many business managers have not systematically studied financial knowledge, especially the managers of high-tech companies are mostly scientific and technological personnel, who become managers because of their good scientific research achievements.

For example, an excellent research and development expert becomes the general manager of the company, a doctor with superb medical skills becomes the director of the hospital, and so on.Such technical experts know little about management.More importantly, they often don't think they don't understand management, and think that management has no technical content.Facing such a manager, the financial director will have to work harder.

As a result, treasurers often complain that their jobs are not understood.

525. Only Looking at the Brightness on the Surface

There are many companies like this. With increased investment, the company continues to grow bigger, and the income is rolled into the company to continue to develop. After a few years, the company has indeed grown bigger, the total assets in the accounting statements have increased, and the number of employees has increased, and the company has also achieved success. .Therefore, managers do not think that they have management problems, especially in terms of financial management.They will ask, how can we be so successful when we have problems?
Think about it carefully, from small to large, the success of managers is beyond doubt.However, it is not enough to explain the success and effectiveness of financial management.From the perspective of financial management knowledge and theory, financial accounting is a kind of after-the-fact reflection. It can only tell us what the company has done, but cannot explain what the company should do.It is very dangerous for an enterprise to simply invest all funds in one field without realizing it for a long time, and this investment has no plan.

When an enterprise needs to withdraw cash from the operation process, the production scale will naturally shrink. It never thinks about how much money is needed in the operation, and what is the reasonable ratio between the fixed part and the current part. The embodiment of business blindness.Enterprises rely entirely on their own funds, neither borrowing nor conducting capital operations, and completely disregarding the role of financial leverage.If you know it but don't know why, the path of the enterprise will become narrower and narrower.

526. The Older the Financial Personnel, the More Valuable They Are
It is right to look at experience when recruiting employees, especially financial managers. Companies value experience more.However, we must note that experience is useful because we assume that repeated events will happen again, and experience is of no use if an event does not happen again.From the perspective of the acceptance speed of new knowledge and methods, no experience is sometimes better than experience.For example, when the accounting system was reformed, when the company's bookkeeping method was changed from the original increase and decrease system and the payment system to the loan system, many old accountants did not understand what a debit was and what a loan was.

So experience is not always the most important thing.Enterprises must also never think that everything will be fine if they have many experienced financial personnel.Because these people often become the biggest obstacles for companies to use new technologies and adopt new operating ideas.For some things that have happened in the past and are now recurring, experienced people can use them; for some new businesses, boldly using newbies and giving full play to their creative advantages is the key to success.In addition, in some problems, when experienced employees are puzzled, perhaps novices can give solutions.

Financial management is a complex subject, especially with the continuous emergence of modern financial derivatives, financial management will face many new topics.It is our best choice to eliminate misunderstandings in terms of consciousness and concepts, and to improve methods and methods.

527. If the enterprise is small, the financial institution does not need to be independent
The survey shows that: 4% of the surveyed enterprises do not have an independent financial institution; 25% of the surveyed enterprises have no separate accounting and cashier posts.

From the perspective of the development stage of the enterprise, an enterprise with only three or five helpers has an annual output value of only a few hundred thousand yuan. There is no need to set up separate accounting and cashier positions. The financial system must be integrated with the development of the enterprise.But when the enterprise develops to a certain stage, accounting and cashier must be separated absolutely.

There is a concept in the internal control system of an enterprise called the separation of "accounts, money, and things". In fact, doing these separations will not increase the cost much. It just requires you to pay attention to the concept and consciousness. The original financial personnel clearly understand themselves. responsibilities.

Is there any fine-grained standard for judging the extent to which an enterprise should develop independent financial management?
From the perspective of the long-term development of the enterprise, the sooner the financial institution becomes independent and more standardized, the better.If you wait until the enterprise has developed, loopholes may have already occurred, and it will cost a lot of money to "fix the situation" at that time.

528. If You Don’t Understand Financial Management, Your Enterprise Can Still Grow Big

When it comes to finance, many small business owners will have a headache, because they don't know much about finance, and they don't understand financial knowledge.They believe that it is enough to do a good job in products and markets, but if they do not understand financial management, they can also start a business; financial management is the work of financial personnel, and it is of little use in business management.

Traditional financial management is generally just statistics after the fact, serving the business process of the enterprise.However, modern financial management talks about three kinds of control before, during and after the event, and extends to the entire operation and management process of the enterprise.The implementation of financial management can provide business owners with a scientific basis for decision-making analysis.

In the capital management of enterprises, some bosses will formulate plans for the use of funds based on personal feelings, experience, and hobbies.For example, a certain boss does business with two companies at the same time, but he has a better relationship with one of them, and when the money arrives, he will arrange for the better relationship first.But he owes a lot to the other company, and he has to postpone it until the next time.This will lead to bad credit of the enterprise.

Without a reasonable plan for the use of funds, it may cause the company's reputation to be bad.And if the enterprise has a strict financial accounting system, fund use plan, etc., these unnecessary hidden costs can be completely reduced.

529. Financial management increases costs

Some bosses believe that strengthening financial management means increasing management costs and other process costs, which is not cost-effective for small businesses. Such a conclusion obviously cannot withstand scrutiny.

The essence of financial management is to simplify complex management, standardize simple management, model standardized management, and digitize modelized management.

Cost and management are not incompatible, the key is to see how the enterprise does it.By simplifying the complicated things, standardizing the simple things, and making the standardized things model, it will be easier after the model is made, and finally the financial management will be digitized, making it easier for business owners to manage.

For example, McDonald's does not have many products. It uses financial analysis to find out which product model is better, and then compares the profit model to keep a part of the products. After modeling, it is reflected in a piece of data.So McDonald's is very simple, spreading a management model to all parts of the world.

From this example, it can be seen that financial management does not complicate a thing, but standardizes and models it.

530. Standardized management will reduce flexibility

Some bosses believe that one of the advantages of a small business is that it is relatively flexible. The boss makes the decision on what decision to make without going through all kinds of cumbersome links; if strict standardization and model management are implemented, the flexibility of small businesses will be reduced. sex.Is it really?
There is a process of change in the production and operation of enterprises. For example, at the beginning of the enterprise, extensive management and very simple human management are used; when the enterprise continues to develop, extensive management is definitely not suitable.When you are not used to it, you must introduce a standardized management system, formulate various rules and regulations, and then standardize the operation. In this way, you will need to invest a lot of labor and material costs.

When you use a simple extensive management system, standardized management, and process design to standardize the enterprise, the process of change is very difficult, because it violates people's regular thinking and actions.But when it is standardized, it is simplified later.They didn't get used to it at first, but when everyone got used to it, it became a habit of thinking.This is how complex management norms will be simplified in the future.

(End of this chapter)