Unable to change cash flow distribution
Posted: Sun Jan 12, 2025 7:49 am
Problems with this situation:
inappropriate use of loans;
increase in the cost of paying interest on loans;
decrease in income due to placing deposits at less favorable rates;
additional costs for fines and penalties for late payments;
reputational losses and problems with credit history.
When restructuring a company, it is advisable to implement a cash flow management system. If the accounting system allows for consolidation of information, centralized planning of cash flows within a group of companies will allow for obtaining loans on more favorable terms (as a major borrower and by redistributing collateral), which will reduce interest expenses.
Lack of unified tools for analysis
Errors in comparative analysis caused by differences in approaches can lead to incorrect management decisions. Accounting data serves as the basis for analysis. With the same methods for calculating profitability and turnover ratios, the interpretation of individual elements of these may vary.
To ensure that operating profit tongliao phone data and margin/profitability are compared correctly, a group of companies must adhere to a uniform approach to income and expense recognition, costing, and cost allocation.
Read also!
"Marketer's KPI - Key Indicators and Accurate Calculation"
Read more
Risks of company restructuring
The effectiveness of a company's restructuring may be reduced by various factors that hinder its successful implementation.
The influence of the social factor cannot be ignored. A sharp reduction in staff causes tension among employees and affects the overall employment structure in the company.
Risks of company restructuring
Source: shutterstock.com
In conditions of economic instability, replacing an outdated economic mechanism with a new model can lead to results that not only fail to meet expectations, but also turn out to be the exact opposite of what was planned.
Subjective circumstances such as a lack of government support, a shortage of qualified personnel, limited material resources and the difficult financial situation of the enterprise can slow down the change process.
The company restructuring procedure is very complex and labor-intensive, requiring high qualifications and responsibility from the management and the team. Without this, there is a risk of serious losses for the company.
To minimize potential risks it is necessary:
Define specific goals and objectives of restructuring : business development, strengthening competitive positions, improving economic indicators.
Select the appropriate transformation method , taking into account the need for operational or strategic reorganization.
Correctly distribute the resources that will be involved in the company restructuring process and take into account the qualifications of employees.
Take into account the potential for conflicts between different stakeholders in the change process , such as management, employees, partners and trade unions.
Negative social consequences associated with a possible reduction in the number of personnel.
Legal risks need to be considered separately. If entrepreneurs perceive restructuring as a method of increasing the company's efficiency, supervisory authorities may view it as a way to avoid tax payments, withdraw assets, or eliminate debt problems.
As a result, the company will likely face a number of compliance audits. Therefore, to avoid problems with regulatory authorities, efforts should be focused on ensuring the transparency of accounting operations, correcting tax discrepancies and eliminating any suspicious transactions.
Risks of company restructuring
Source: shutterstock.com
Choosing the right team to implement the change is key, as relying solely on your own efforts is not always effective.
Heads of individual departments may not have sufficient qualifications to carry out structural changes, and in-house lawyers may not be able to cope with comprehensive legal support.
In the case of a major restructuring of the company, the manager may consider the option of engaging third-party specialists. Independent experts will conduct an audit, develop reorganization methods and help minimize risks. Their intervention will not affect the current work of the enterprise, which contributes to the rapid and smooth implementation of changes.
inappropriate use of loans;
increase in the cost of paying interest on loans;
decrease in income due to placing deposits at less favorable rates;
additional costs for fines and penalties for late payments;
reputational losses and problems with credit history.
When restructuring a company, it is advisable to implement a cash flow management system. If the accounting system allows for consolidation of information, centralized planning of cash flows within a group of companies will allow for obtaining loans on more favorable terms (as a major borrower and by redistributing collateral), which will reduce interest expenses.
Lack of unified tools for analysis
Errors in comparative analysis caused by differences in approaches can lead to incorrect management decisions. Accounting data serves as the basis for analysis. With the same methods for calculating profitability and turnover ratios, the interpretation of individual elements of these may vary.
To ensure that operating profit tongliao phone data and margin/profitability are compared correctly, a group of companies must adhere to a uniform approach to income and expense recognition, costing, and cost allocation.
Read also!
"Marketer's KPI - Key Indicators and Accurate Calculation"
Read more
Risks of company restructuring
The effectiveness of a company's restructuring may be reduced by various factors that hinder its successful implementation.
The influence of the social factor cannot be ignored. A sharp reduction in staff causes tension among employees and affects the overall employment structure in the company.
Risks of company restructuring
Source: shutterstock.com
In conditions of economic instability, replacing an outdated economic mechanism with a new model can lead to results that not only fail to meet expectations, but also turn out to be the exact opposite of what was planned.
Subjective circumstances such as a lack of government support, a shortage of qualified personnel, limited material resources and the difficult financial situation of the enterprise can slow down the change process.
The company restructuring procedure is very complex and labor-intensive, requiring high qualifications and responsibility from the management and the team. Without this, there is a risk of serious losses for the company.
To minimize potential risks it is necessary:
Define specific goals and objectives of restructuring : business development, strengthening competitive positions, improving economic indicators.
Select the appropriate transformation method , taking into account the need for operational or strategic reorganization.
Correctly distribute the resources that will be involved in the company restructuring process and take into account the qualifications of employees.
Take into account the potential for conflicts between different stakeholders in the change process , such as management, employees, partners and trade unions.
Negative social consequences associated with a possible reduction in the number of personnel.
Legal risks need to be considered separately. If entrepreneurs perceive restructuring as a method of increasing the company's efficiency, supervisory authorities may view it as a way to avoid tax payments, withdraw assets, or eliminate debt problems.
As a result, the company will likely face a number of compliance audits. Therefore, to avoid problems with regulatory authorities, efforts should be focused on ensuring the transparency of accounting operations, correcting tax discrepancies and eliminating any suspicious transactions.
Risks of company restructuring
Source: shutterstock.com
Choosing the right team to implement the change is key, as relying solely on your own efforts is not always effective.
Heads of individual departments may not have sufficient qualifications to carry out structural changes, and in-house lawyers may not be able to cope with comprehensive legal support.
In the case of a major restructuring of the company, the manager may consider the option of engaging third-party specialists. Independent experts will conduct an audit, develop reorganization methods and help minimize risks. Their intervention will not affect the current work of the enterprise, which contributes to the rapid and smooth implementation of changes.