How to manage your Finance department Part I

If there is a department with constant pressure is this one along with the operation management department. As you may know, 2/3 of Foreign Invested Companies (FIEs) are loosing money in China and the ratio of bad debt is very in the country.

Foreign companies are not here for charity but for profit; however, depending on their size they face different dilemmas:

- Stock-listed companies can take a more long-term approach when they enter the China market, they have the financial strength but they are also more accountable;

- SMEs/SMIs have limited financial resources therefore they are more cautious when they enter the market and need to break even much sooner than the big ones.

In both cases, you need to have a strong financial department with clear processes. Here are some of my tips coming from my 10-year personal experience:

- Work closely and make personal contacts with representatives of the State Administration of Foreign Exchange (SAFE);

- Keep yourself updated on China laws & regulations for financial matters. This area is in constant evolution.

- Bring Foreign expertise in this department to implement transparent and ethical corporate procedures then localize;

- Train your Chinese finance staff to corporate ethics;

- With new clients, develop the strategy " cash for goods".

- With reliable clients, give them discounts on products for good financial behavior or ease the payment terms;

- Be aware that few companies are willing or can open L/C;

- Make frequent internal audit of your staff;

- Certify your accounts every year by a big 5;

- Check your cashflow on a daily or weekly basis;

(To be continued)

Comments

[Term Papers]

Thanks for the post! I'll use it on my blog now...

[Small Business Finance]

Simple but definitely direct to the point. Thanks for sharing these great tips.

[chat rooms]

Thanks for the marvelous posting! I actually enjoyed reading it, you can be a great author.I will always bookmark your blog and will often come back in the foreseeable future. I want to encourage that you continue your great job, have a nice evening!