The decision on how to use capital depends on many factors such as: business stage, type of business, personality, experience of the business owner or financial director... In which, each business will need to make a business plan and a financial plan to understand the working capital needs, or need to specifically analyze the financial indicators performed in the previous period… from which to understand the trend and level of growth In the market, the fluctuations of the economy and other factors can affect the market, the field in which your business is operating... Based on this information, businesses will know how much they need. amount of working capital to serve the production and business activities of the next period, thereby balancing the current financial capacity of the enterprise with external mobilized capital, determining the time when additional capital is needed. , build an effective capital use plan to help reduce costs, avoid excess capital or the risk of lack of capital disrupting production, business activities, sales activities, etc. Financial planning will be necessary. take into account different contingency plans so that when actually deploying, no matter what the situation, businesses also have solutions to solve quickly, helping to keep financial problems under control.

Most businesses now use bank loans (short-term, medium-term, long-term). Depending on the field of operation, the ratio of bank loans will be different for each business. In which, commercial enterprises use few assets, so they often use short- and medium-term loans, while manufacturing, construction and real estate enterprises have to invest a lot in factories and equipment. production, construction works (construction usually lasts from 1 to 3 years, even longer)... will have a larger proportion of medium and long-term loans. Short-term loans are actually an additional source of capital for business activities and are often included in working capital (revolving for the business cycle) to ensure the production, import, sales cycle, pay short-term debts. Commercial enterprises with large turnover will often register for a 1-year limit with the bank instead of making a specific loan (due to the use of continuous capital rotation for each month of sales and import). The bank approves the overall limit for the whole year, so businesses will be financed quickly at any time of the year. Businesses that need to expand their production scale or do projects that require large total investment capital will often borrow medium-term or long-term capital. Some projects have a grace period for principal repayment, so businesses can take advantage of the grace period to complete the project on schedule.

Enterprises that want to get a bank loan need to meet a number of minimum conditions such as: Having a clear business plan, presenting a plan for effective use of loan capital; prove that they are capable of implementing the project (by the profile of the actual experience of the business, good liquidity (for many years, the company has always paid interest and principal to the bank on time). , has a good reputation for selling in the market, generating steady revenue)).

Enterprises can associate or enter into joint ventures with other units to optimize capital sources for project implementation when they are unable to finance, or appropriate capital from debt payment plans for sellers. sales policy for buyers to advance money, payables but be delayed... This capital appropriation reduces financial costs for the business and makes cash flow better in the short term, if transportation Good use of these policies will bring profits to the company, short-term capital surplus, financial loans can be used to earn financial income. This form is often applied in the field of distribution - retail of consumer goods.

At the end of each month in the business period, enterprises need to compare with the financial plan made for that period, in order to promptly adjust when problems arise, and have solutions to use capital appropriately. At this time of reconciliation, if the enterprise has excess capital, it can take advantage of the excess capital to increase the profitability of capital. At the same time, businesses need to continuously manage and control receivables, try to collect them on time to ensure that they are not misappropriated capital. Enterprises need to develop a reasonable sales program and debt policy both in terms of debt duration as well as debt limit, penalty for late debt, etc. to encourage sales, ensure regular debt collection for good circulation. cash flow in business.

For businesses with goods, inventory management as well as ordering activities to optimize sales rotation is also a problem that needs to be clearly planned. Good inventory control will help reduce capital accumulation in inventory, thereby helping to reduce financial costs, warehousing costs, goods preservation costs, and minimize the risk of damaged goods, near-date products, etc. The amount of inventory needs to be adjusted flexibly according to the fluctuations of sales to the market. When the market has a phenomenon of decreasing consumption, enterprises need to analyze the causes, have a plan to promote sales that are still in existence to recover capital, and avoid the case of large backlog of goods and expired sales, leading to must cancel the goods causing damage to the business.

For the development and expansion of the market, the enterprise will research the appropriate sales channel (identify target customers, characteristics of that customer, channels to connect with customers...) to increase the rate of successful orders, while continuously improving, investing in research and development activities to optimize the quality of goods, services and customer experience... The sales department will need to coordinate closely with the production and import department... to build a reasonable plan for this activity (it should be determined, sales is not just the business of the sales department).

One thing that small and medium enterprises have not paid much attention to is risk prevention, financial insurance for businesses such as buying insurance for inventory goods in case of fire and explosion, making financial provisions for inventory devaluation. , provision for doubtful debts, or some other appropriation of funds to ensure the financial safety of the company no matter what happens.

It can be said that one of the main reasons leading to bankruptcy or falling into debt of businesses is due to ineffective capital regulation decisions. Therefore, business executives as well as finance and accounting departments need to have a clear understanding of the characteristics of capital sources, and have the skills to develop effective capital use plans. Leaders should not completely entrust cash flow management to the accounting department, on the contrary, the accounting department also needs to determine that they are responsible for financial management, advising on capital use plans for the board of directors. , rather than simply recording cash in and out, processing invoices, documents, etc.

Author: Nguyen Phuong Hoa (MBFC Financial Consultant Company Limited）