How To Effectively Implement Financial Control For Foreign Subsidiaries

No standardized and effective financial control system has been established.

This leads to ineffective financial control over the capital, assets, cost, income, profit and distribution of the subsidiaries, which means that the internal control of the subsidiaries is out of control, resulting in serious harm.

The financial control environment is complex and changeable.

The financial management environment of overseas subsidiaries is rather complicated, and their production and operation activities are greatly influenced by the economic, political, cultural and legal factors of their locality.

Once adverse changes occur, financial and operational risks will be formed.

The difference between financial management concept and culture.

Compared with foreign subsidiaries and domestic subsidiaries, there are great differences in economic, political, cultural and legal aspects, resulting in their behavior norms, business philosophy, thinking mode, values and management methods can not be simply applied to the established model within the territory.

This will easily increase the cost of enterprise management and affect the efficiency of operation.

The group company should formulate a unified financial management and internal control system to improve the efficiency of financial management and reduce the risk of management.

First, we must ensure that the leading bodies of the subsidiary companies perform their functions effectively, monitor and maintain the value of the capital; two, we should consider the characteristics of the subsidiary business and management; three, we should effectively supervise and motivate the management of the subsidiary companies, so that they can exercise the management and monitoring rights on behalf of the interests of the group companies, mobilize the enthusiasm of all the subsidiaries to maximize the company's efficiency, and the four is that the enterprise groups must establish and improve the risk management mechanism.

Appoint the chief financial officer to a foreign subsidiary to carry out financial control.

The group company should centrally manage the funds of the subsidiaries abroad, so as to authorize the major projects of the subsidiary companies. At the same time, the system of examination and approval, control and inspection of these major projects should be perfected and followed up.

The authorized management principle of the subsidiary is to give full trust to the behavior within the scope of authorization, and to strengthen the management and supervision of the behavior beyond the authorization.

The notice of authorization is issued to the foreign subsidiaries and the relevant departments of the group at the same time for mutual supervision and management.

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We must establish a feedback platform for financial information between group companies and subsidiaries abroad. We need to carry out budget analysis after the implementation of budget, and in the process of implementation, we must continue to track and control, and check the completion of the budget.

The deviation should be corrected in time to ensure that the group's financial objectives are realized.

Establish a sound decision-making mechanism.

Overseas subsidiaries

It should be more open and ensure that the directors have the power and ability to participate in the strategic development of the company in the form of system.

This requires the directors not only to manage the rich experience, but also to have the thinking of development and innovation, but also to ensure the independence of non executive directors.

Overseas subsidiaries

It can be employed in the host country, and the domestic group company as a shareholder can strictly monitor its independence.

Establish a sound performance appraisal system.

First, we should rationally determine the rate of return on investment, ensure that assets can be maintained and added value, so as to ensure the profits of foreign subsidiaries.

Two is to establish a financial index management system, so that the assessment and supervision and control system can be continuously improved and scientific.

The main indicators include total assets return rate and cost and profit rate, liquidity ratio and asset liability ratio index as well as accounts receivable turnover rate, inventory turnover rate, asset turnover index and so on.

We should set up a set of effective organizational structure and effective incentive and constraint management mechanism for foreign subsidiaries, clarify the work permissions and responsibilities of departments and posts, supplemented by regular and irregular personnel rotation system, and strictly regulate and implement the system of rewards and punishments.