Prudent monetary policy in the context of construction enterprises Analysis of financial risk prevention mechanism

[Abstract] loose monetary policy shift by the sound, which means significant changes in financial market conditions based on the adjustment of monetary policy, this paper, the construction enterprises of Industry characteristics, analyzes the main source of corporate financial risk, and the corresponding risk prevention mechanism.

[Keywords] monetary policy financial risk of construction enterprises

Corporate financial risk not only with the efficiency of the internal management of enterprises, more importantly, its external environment, especially changes in the policy environment has a high sensitivity current credit the extraordinary growth of expansionary monetary policy has been phased out, has become a strong prudential China's macro-control of the basic direction of the currency in this context, how to adapt to external changes in the environment, and strengthen the financial risk prevention and control, financial management is the process of construction enterprises face the reality of the subject.

First, the construction of the basic characteristics of corporate financial risk
Financial risk as a corporate form of monetization of risk, it refers to as internal and external environment and a variety of unpredictable or unforeseen factors, a period of time with the company's actual financial benefits expected financial return deviation occurs, which suffered losses possibility of financial risk always exists everywhere there is the inevitable product of business operations. to the construction, installation of the main business of construction enterprises, the financial risk typically have the following characteristics:
1. A comprehensive and systemic financial risk Financial risk is in the process of financing and the use of produce, beginning from the capital into the enterprise, transfer of use in the enterprise, to the capital repayment, the recovery of funds, all aspects of income distribution will have Financial risk Financial risk exists in the whole process of financial management and reflected in a variety of financial relations can be said that financial risk is the behavior of a variety of financial activities, a comprehensive reflection of systemic failures, such as in financing and Investment activities during the , financing, Investment decision-making mistakes, will cause difficulties in the recovery of funds; financing structure and Investment structure of the ratio of properly, will result in the repayment period is too concentrated in the production of construction, due to quality standards, may result in project acceptance and settlement of delay due to the combined effect of many factors, the cash outflow is greater than a certain period of enterprise cash flows, as well as companies can not repay maturing debt caused financial risk.

(2) the diversity of financial risk. Diverse business environment, the diversification of production and operation process and the diversification of financial behavior determines the diversity of the financial risk of construction enterprises from the business environment, macroeconomic policies in different periods adjustment of the construction business may be beneficial, it may be detrimental, even in a stable macroeconomic environment, the construction enterprises to face competition from domestic counterparts, may also face competition in international markets, diverse business environment bound to the enterprise caused by the diversity of crisis, from production and business process perspective, it is a continuous process, each process errors are likely to form a financial crisis. In addition, the financial behavior is diverse, it including capital raising and the use of capital cost, capital recovery, profit distribution and other activities, financial management can choose to working capital management as the core of the daily financial management, such as inflation can also be considered derivative financial management and other forms of capital mode of operation no matter what behavior, what kind of management in these activities in any part of problem areas, will lead to financial risk and even financial crisis.

3 Financial risk of sudden. Corporate financial risk of the occurrence is affected by many subjective and objective factors, some of which factors are internal to grasp and control, even predictable, but more factors are sudden, unforeseen, for example, due to unexpected natural disasters or other incidental factors, resulting in damage to the project results, or the extension of the project construction period, or appear suddenly stop business partner relationships, unilateral breach of contract, these factors may disrupt the existing financial arrangements, so that enterprises in financial difficulties when an enterprise sudden financial crisis, if the level of risk than the corporate limits of the highest short-term risk, then the business will fall into crisis.

4 Financial risk can be anti-controllable. Generally speaking, the occurrence of financial risk of construction companies has its objective necessity, because the financial risk is long-term production and management of financial conflicts acquired over time, but if you have a sound financial management system Most risks can still be early detection, early treatment, according to the principle of cost-effectiveness of its control in an acceptable range.

Second, prudent monetary policy in the context of construction companies of the financial sources of risk
Moderately relaxed monetary policy shift by the sound, meaning the contraction of bank credit and financial markets increase the cost of borrowing, which will of funds between various types of economic entities in the chain tension, greatly increasing the risk of Investment and financing of economic agents and payment risks . construction enterprises should be combined with characteristics of their Industry, from production and operation in various fields, all aspects of financial risk that may exist for effective identification and control.

1. Financing. The process of building construction enterprises in the project usually need to purchase, update a large number of machinery and equipment, continued to purchase large quantities of cement, steel, sand, fuel and other materials, fuel, financial dependence has obvious characteristics. This construction enterprises with Industry-specific requirements strong financial capacity to meet the normal capital project construction needs tightening in the credit market environment, enterprises will be subject to greater financing capacity constraints, and financing costs will increase, resulting in project financing risks.

2. Investment. Investment aspects of financial risk, refers to the resulting uncertainty is due to return on Investment may not achieve the desired goal. A project to obtain information from the bid contract to the completion of the project lasted more often long period of Investment in manpower, material and financial resources greater take up of funds, assets, the more, the heavier the burden on businesses. and because the Investment cycle is longer, these uncertainties could make the key asset is impaired, make the Investment The expected results are affected decision-making, construction restricting the improvement of economic efficiency of enterprises.

3 bids present the basic construction market practice low bid method, the face of fierce market competition, in order to embrace the project, lowering the price between various companies to carry out vicious, if the tender stage regardless of their own strength, Costly blind for the project, which will lead to low project margins and even losses, triggering a series of performance risk, payment risk or the risk of litigation, so that enterprises are facing serious financial risk and credit crisis.

4 cost control. Cost management is the production and management of an important part of a direct impact on the economic benefits of the project, any improper process control, financial risk may have caused. Construction company with projects if you do not scale, characteristics, complexity and construction conditions, the development of a reasonable construction organization, it could lead to extended construction period, the necessary machinery and equipment increased input cost increases, eventually leading to project actual earnings below expectations, the formation of the construction project losses.

5. Settlement. In general, the construction project is completed, it should be promptly apply for project completion and acceptance, final accounts preparation work is completed, the final financial settlement in the financial markets under conditions of tight supply, the owner may have difficulty in funding, so Construction companies can not recover the settlement balance due in a timely manner, and work retention money back on time because of the difficulty also evolved into a collection risk, which will undoubtedly increase the financial burden of construction enterprises, induced systemic financial risk.

Links to free download http://www.hi138.com Third, the construction of prudent monetary policy in the context of corporate financial risk prevention mechanism
Tightening of monetary policy situation, the construction enterprises are facing increasing financial risk. In this paper, the special nature of construction Industry enterprises put forward the following precautions:
1. Establish and improve financial risk early warning mechanism. First, the cash flow budget based on a short-term financial early warning system would be the expected future earnings, cash flow, financial condition and investment plans and other quantitative expression, the establishment of enterprise-wide budgeting, forecasting future cash payments situation, to week, month, quarter, half period, the establishment of a rolling cash flow budget, timely control of the cash shortage, the second is based on financial analysis indicators, the establishment of long-term financial early warning system. Should be profitability, solvency, long-term development potential and other indicators as the core indicators of financial early warning system to strengthen analysis and monitoring. In addition, the risk was mainly due to corporate debt due. Therefore, to weigh the financial risk of leverage to determine the debt ratio, return on operating assets should be debt and debt ratio to compare the cost of capital, and enhance the robustness of debt financing.

(2) establish and perfect the financial internal control mechanism. Construction enterprises shall <<accounting>> requires the establishment of a sound system of internal financial control companies in the accounting, internal audit, internal constraints, property inventory, internal audit, the original records management, job transfer, accounting, records management, and accounting organizations and a series of fields to form an effective system of financial control by the internal control system to further strengthen the basis of accounting, financial management, process optimization, reduce cost of enterprise management to ensure the safety and integrity of corporate assets and efficient operation of business activities.

3, improve contract management. Construction enterprises first of all to form a preliminary investigation of the tender system, the owners reputation is poor, incomplete project approval procedures and the need to pay high deposits or funds are not available in the project to be cautious in the development of tender document the process, to conduct in-depth research and analysis, accurate quotes and capabilities, and decide whether or not the tender and the tender price. construction enterprises should be based on its construction program can withstand the highest cost estimates, estimates the process will not omissions, and leeway in the contract formed when a strict review system, each weighing terms of the contract, work experience related to the valuation of the time, manner and project settlement of breach of contract terms, each should bear the financial responsibility for such strict control to prevent unfair contract terms signing of the contract, the construction enterprises in a passive position.

4. Improve the financial management scheduling mechanism in operation funds to deploy a unified, centralized management, to meet the development needs of full funding on the basis of scale advantages in capital allocation system, should further strengthen the overall planning of construction projects funds, specifically related to processes, responsibilities and authority. In addition, the business case of insufficient own funds to try to broaden the financing channels, to avoid a single fund-raising mode to spread the financial risk.

5, improve cost control mechanism, first, with the contract schedule, construction site conditions and other specific factors, optimize construction design, construction program to develop science and economy, shorten the construction period to reduce costs. Secondly, the sound materials, supplies management, material procurement, storage , management, a database, consumption strictly, so that a planned purchase of materials, quality assurance, management have the means, consumption is fixed, the workers finished clearing material and finally, the implementation of responsible cost management, project cost objectives to further implement the responsibility system, the target cost down to every level can be decomposed into the horizontal unit project, division of engineering and construction sub-projects in different departments, can be decomposed into vertical construction preparation, the main construction, finishing at different stages of delivery, cost control and thus the cost of liability range. References:
[1] LI Jia-Lin: Analysis of highway construction and operation of the process of financial risks and countermeasures [J]. Henan Science and Technology, 2006 (8)
[2] Literature: On the highway construction fund financial risk [J]. Accounting, 2009 (8
[3] Chen Shaofei: Aspects of corporate financial risk control [J]. Finance and Accounting, 2008 (2
[4] Han Lijun: construction companies facing risks and preventive countermeasures [J]. Pearl modern construction, 2006 (4
[5] Tsang Shiu River: Construction of internal control [J]. China Building Industry Press, 2006 (7

Links to free download http://www.hi138.com