Corporate financial management is the basis for decision-making for three business problems below:
- Optimal capital structure in business.
- Fundraising solutions following the selected structure.
- Financial figure and instrument-based capital management and utilization.
Every business transaction is relevant to and is made following financial decisions.
Corporate financial management serves as a useful tool for the Board of Directors in planning, appraising, carrying out and controlling business investment projects.
BUSINESS CAPITAL AND OPTIMAL CAPITAL STRUCTURE
An optimal capital structure will bring about a higher return on equity through saving interest expenses, benefiting from tax shields, reducing business risks and so on.
- Equity of founders, members and shareholders.
- Fund raised through loans from credit institutions, investment funds, and other organizations or individuals.
- Financial leases.
- Trade credit.
Thus, the total business capital is not necessarily merely attributable to the owners but can come from considerable different sources whose cost of capital is different from each other. A basis is needed for the Board of Directors to determine the structure and proportion of each source in the total business capital.
Failing to count, value and determine the actual total business capital makes it difficult for many businesses to calculate the cost of capital or have utilized it in an optimal manner, even exposing them to risks due to capital loss or improper utilization.
BASIS AND SOLUTIONS FOR CAPITAL RAISING ACCORDING TO THE SELECTED STRUCTURE
Capital raising solutions and plans should be designed upon determining the sources of capital to be raised, each’s cost of capital, and the optimal structure:
Basis for capital raising:
- Complete legal documents of the enterprise according to regulatory requirements: Especially, the assessments on incorporation and operation documents, capital and owners, management personnel and organizational structure as well as jurisdiction; Labor Relations Management and Policies; applicable contracts in force; Tax Compliance and Accounting Reports; Property List and disposition and use rights; Bank Relationship and Credit History; Conditional Business Licenses; List of Sanctioning Decisions; and Related Disputes and Proceedings.
- Corporate financial credit reports: Financial statements and performance in the past; current financial ratios; cash flows; credit history on CIC; credit history with suppliers; obligations to state authorities; property – validating value, condition, and ownership; enterprise value according to accounting books – actual value of the enterprise, including the total actual value of tangible and intangible assets under the enterprise’s ownership at market prices at the time of valuation; Enterprise valuation documents covering the value of tangible and intangible assets.
- Corporate governance credit reports: Information system; regulations – processes – tools of internal governance and administration; financial management; human resources management…
- Commercial credit reports: assessments of customers, competitors, industry sectors, macro policies, prospects and risks, usually based on the SWOT analysis model including Strengths – Weaknesses – Opportunities – Threats.
- Intellectual property records: assessments of ownership titles on copyrights, patents, industrial designs, and trade secrets.
- Sales and transaction management policies: including supplier obligations and commitments, trade credit policies, contract templates and forms, material terms of enforcement and dispute resolution…
Capital raising solutions:
- Determine the needs for and size of short-term and long-term capital in accordance with the business strategy and plan.
- Prepare supporting documents for the business project.
- Cess capital sources employing a combination of project documents and commercial credit reports.
FINANCIAL FIGURE AND INSTRUMENT-BASED CAPITAL MANAGEMENT AND UTILIZATION
Besides the determination of the capital structure and appropriate capital raising, how to manage and utilize it is also equally important and requires the ability to manage and perform the following professional tasks:
- Retain and manage business documents and reports as prescribed to ensure prompt and complete information recording, storage and provision.
- Develop and operate a financial accounting system and tax and accounting compliance procedures.
- Develop a tailor-made internal control system specific to the enterprise.
- Establish a system of forms and financial statements and internal management reports; Regularly and constantly keep the Board of Directors updated and reported for decision making.
- Conducting monitoring of data collection, analysis and assessment, and risk management.
- Carry out periodic and ad-hoc internal audits as required to ensure that reliable, prompt and tailor-made reports are submitted to the Board of Directors.
- Integrate management software – apps for the model expansion into new investment projects, and governance of subsidiaries and associates.
VIVA BUSINESS CONSULTING’S CORPORATE FINANCIAL MANAGEMENT SERVICE PACKAGE
Our professional solutions and resources are offered towards supporting enterprises in Vietnam in enhancing their business performance:
- Conduct internal audits and re-evaluate the entire corporate financial position under applicable regulations and business management needs of the Board of Directors. Prepare a management letter presenting potential risks, solutions, and construction and completion roadmap.
- Provide personnel and resources to restructure the accounting-financial apparatus as a mandatory foundation, manage business documents, develop and complete legal and commercial credit reports.
- Be involved in planning, consulting, and controlling transactions, accounting and financial reports when required. Provide direct support for capital raising, management and utilization towards compliance, safety, optimization and long-term development.
- Recruit and train proper personnel for process transfer and implementation.
VIVA is a business consulting company, specializes in business compliance procedures according to local business laws and regulations since 2006. VIVA has been continuously trusted by thousands of well-known clients since 2006.
The insights and consistent backgrounds in Business Laws – Accounting and Corporate Finance – Tax Management – Labor Relations and Payroll – Secretarial services help us build trust and confidence in the entrepreneurs’ community.
We have been successfully providing service for thousands of leading companies from Hong Kong, Japan, US, EU, Singapore, India, China, Korea…. in forms of FDI companies, Foreign representative offices, Foreigner working in Vietnam, Vietnamese SMEs, Chief Operation Officers.
Don’t hesitate to contact our representative to know how we can bring long-term benefits and business inspiration to you.
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