Financial management of SMEs in China Problems and Solutions

Abstract: The SMEs are an important part of the national economy, but because of its own factors, their economic development will be restricted. Especially the SMEs Financial Management problems, not with large enterprises to open, fair and equitable competition.

Keywords:: quality of Financial Management for SMEs
1 Status of Financial Management for SMEs
At present, nearly 10 million SMEs, accounting for 99% of total number of enterprises, it provides the industrial output value and profits and taxes accounted for 60% of the national total and 40%, and provides about 75% of urban employment opportunities , and below the county to become a major source of revenue. However, due to the small size of SMEs, capital and technology constitutes a low-impact external macroeconomic factors such as changes in its existence, its presence in Financial Management and self-development and are not suited to the conditions of market economy, leading to fierce competition in the market in response to face enormous difficulties. Analysis of SME Financial Management problems and to explore solutions to this problem, in order to promote reform and development of SMEs.

2 Problems in Financial Management for SMEs
2.1 The funding problems in the management
Sustainable production and business enterprises to carry out and adjust the capital structure of foreign Investment necessary to raise the funds required. Now prevailing financing difficulties of SMEs, borrow nowhere phenomenon. According to statistics, the scale of SME loans account for only about 8% of total credit , the difficult funding is mainly reflected in: �� the lack of specialized banking services for SMEs organizational system. �� lack of security mechanisms for SME development, �� the lack of support for SME development fund and the Investment risks of direct financing channels for small and medium enterprises, especially private SMEs can neither issue corporate bonds, we can not as BOT project financing more difficult as the state-owned enterprises as listed shares outstanding.

2.2 The weak Investment and the lack of scientific
First, the shortage of funds required for Investment in SMEs. Second, the pursuit of short-term goals. Because of its small size, the proportion of loans to invest much more than large companies, faces greater risk, so they always return on Investment as soon as possible Few consider extending its scale. Three blind Investment, the Investment direction is difficult to grasp.

2.3 The poor awareness of financial risk, business is always running in high-risk areas
This is reflected in three aspects: First, over-indebtedness. Enterprises to develop, inevitably, to debt management, full use of financial leverage. However, some companies regardless of cost, at all costs, regardless of their ability to repay and do everything possible from the banks to obtain loans. In the borrowed funds can not effectively play the role of the circumstances, some companies rely on loans to survive into the vicious circle. The second is long short-term debt Investments. in national implementation of strong macroeconomic control conditions, the enterprises should be Fixed asset loans more difficult. some companies to adopt alternative, without changing the use of the loans, the payback period will be short-term borrowing for long term Investment, which causes much higher than current assets current liabilities, so that enterprises face great potential payment crisis between the three is the enterprise security, repeat the same asset mortgage, or to finance the continued Investment in new projects, or even "shattering" to form a complex debt chain. This will not only increase the banks business the difficulty of judging the financial position, but also caused great difficulties to the financial control, resulting in constantly raising the overall debt ratio, business costs and increasing financial costs, ability to pay increasingly fragile chain of tight money and fracture may occur at any time.

2.4, weak financial control
First, cash-poor management or inadequate formation of idle funds. Second, do not establish a strict credit policy, the lack of effective collection measures, accounts receivable can not be cashed, or the formation of bad debts, accounts receivable turnover is slow, difficult recovery of funds. Third, inventory control is weak, resulting in financial slack. many companies end stock funds often take several times more than its turnover, the formation of stagnant funding, working out of order. Fourth, money is not heavy weight, loss of assets, waste. many SMEs managers, for raw materials, semi finished goods, fixed assets management in place, financial management, unclear responsibilities, assets waste.

2.5 Financial Accounting processes are not standardized, not strictly
First, the original documents, accounting entries, subject applications, settings, and financial revenue and expenditure account books and other work is not standardized, there is no strict system, and second, neither the preparation of financial statements fully reflect the actual production and operation enterprises, but also not completely accordance with relevant state laws and regulations to do, leading to distortion of accounting information. Third, enterprises do not or can not establish an internal audit department, if any, it is difficult to ensure the independence of internal audit, lack the necessary financial monitoring mechanism.

3 to solve the financial management of SMEs Existing Problems
3.1 The operator must establish financial management concepts
In the modern market economy, managers must establish three concepts: first, establish the concept of professional management, diversification of investment risk avoidance. SME small and relatively weak, companies have limited resources, the leaders of the knowledge, limited capacity. coupled with rapid progress of modern science and technology, technology update cycle is short. In this situation, SMEs must focus limited resources, efforts in one industry to do it, do fine, and stronger, which is the conduct of the business is the basis of corporate finance. Second, establish the concept of financial risk. debt management must fully consider the businesses ability to repay and the efficiency of capital use, high debt and can not avoid the risk of payments due. Third, establish a cash flow concept. cash ordinary course of business is to maintain the flow of "blood." net cash flow is the driving force for business growth. For many companies, the significance of net cash flow even higher than the operating profit or loss. from operating activities net cash flow is negative, it is not implemented in cash income. Therefore, attention to cash flow, cash flow to master the situation and trend, including the ability of business to create cash and short-term efficient use of working capital loans is the business must keep track of basic information and decision-making important basis. reposted elsewhere in the Research Papers Download http://www.hi138.com 3.2 funding and a combination of funds
Both funding and funds mutual promotion and mutual restraint. The one hand, the use of funds business is based on the need to raise funds raised to fund the other hand, to ensure the effective use of inputs have output. To ensure that the anti-enterprise funds risks. use and interest in raising funds to match ratio, the ratio exceeded the ratio is bound to bring greater business risks of the operation, affecting the orderly operation of the enterprise funds. Therefore, when capital utilization decisions, both do investment decisions, but also to do the appropriate financing decisions, and focus on effective use of funds to ensure capital appreciation, improve their accumulation, in order to obtain the highest possible economic benefits.

3.3 The scientific investment decisions, and actively prevent investment risks.

Investment decision is a major issue facing small and medium enterprises. Most of the investment decision-makers of SMEs generally tend to choose low risk investments, would prefer a relatively stable, low-income and do not the kind of success of small high-return projects . SMEs should adopt the following investment: First, as soon as possible to recover the investment, the use of short-term investments. because the long-term investment despite a high rate of return, but its large-scale investment, uncertainty, therefore the investment risks are greater. Second, avoid weaknesses, the use of domestic investment. Third, foreign investment should be based on direct investments.

3.4 SMEs in their hard skills, and strengthen internal management
First, change their ideas and to strengthen the implementation of capital management as an important part of modern enterprise management. Second, to strengthen inventory management, and establish reasonable inventory reserves, the maximum compression sluggish inventory out of date, and the scientific method to determine the capital stock the best structure to ensure that the capital structure tend to be reasonable. Third, establish and improve the accounts receivable system, product purchase and sale agreement strictly regulate the operation. on the inevitable need to take credit in the form, should seek to enhance the degree of customer credit Research Consulting, on accounts receivable has been formed to regularly check and strictly control the aging of accounts receivable.

3.5 strengthen the accounting team building, improve the financial management organization system
SMEs in order to resolve ambiguous accounting records, information distortion, confusion and other problems of financial management, we must strengthen the accounting team building, professional training of accountants and the political and ideological education, and enhance awareness of the supervision of accountants. Strengthen the overall quality of education, First, business leaders from the start, and constantly improve the full legal awareness, strengthen the legal system.

SMEs should be in accordance with relevant accounting laws and regulations, and gradually establish a more standardized, complete and self-organization system of financial management, workflow and financial management system. The establishment of financial management organization system and the corresponding work agencies in the division of labor and cooperation under the principle of a clear management positions and personnel responsibilities, strict financial management, workflow and approval process.

3.6 improve the quality of accounting personnel
Accounting personnel to certificates, without qualification certificates, and to go through training, assessment, to request certification for employment, leadership positions are appointed accounting officers must have the appropriate job qualifications must not be a good impression on the accounting staff should always be professional ethics, professional and technical education, improve quality,
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