Small and medium-sized health enterprises have tightened their capital supply chain and are unstable

China's economic growth has slowed down, the external driving force of the industry has declined, competition in the Red Sea has intensified, and the majority of sanitary ware companies have experienced sluggish growth in their main business. Profits have been diluted, and SMEs are facing a severe crisis of survival. In the next 3 to 5 years, 70% of SMEs will be able to escape.

In 2011, in the context of the deep adjustment of the property market, the pan-family industry in China is facing enormous competitive pressure. Some experts predict that in the next year and a half, with the further increase in real estate control efforts, China's home furnishing industry will face unprecedented pressure and challenges. In today's "cash is king", especially in the context of tightening monetary and credit environment, the more cash the sanitary enterprises hold, the better the operation and the stronger the risk resistance.

At present, many sanitary ware companies are active implementers of the “expansion model” and believe that the greater the scale of the company, the better it will be in an invincible position. However, from the perspective of capital structure theory, the scale does not necessarily have benefits.

In the past three years, on average, thousands of Chinese companies have closed down every day, and 90% of private enterprises have failed to achieve the fifth year of their development. What are the reasons that lead to the high death rate of private enterprises in China?

According to a survey, 78% of China's failed businesses were caused by the breakage of the capital chain.

Neglecting financial risk control is the main reason leading to short-lived companies. In small and medium-sized sanitary ware companies, most of the company's bosses are factories based on their feelings. Their investment is most concerned with market prospects, investment budgets, sales goals, profit targets, and personnel input, while not paying enough attention to risk management and control. As the previous investigation was not in place, the market assessment was inaccurate, and even the plan was severely divorced from reality. Various financial indicators were easily beyond the company's expected planning. The capital investment of the project could not be effectively controlled because the plan was disrupted. As a result, the income of the previous plan has shrunk, and the investment in the later period has been increased, and the capital chain is naturally prone to break.

Finance is the heart of a business, and cash flow is the bloodline of a business. Small and medium-sized sanitary ware companies must standardize their financial systems and manage their cash flow.

Strictly control costs, break ice, and motivate any business to grow and the ultimate goal is to make profits. When there is little difference between the sales revenue of a company and a competitor, the control of cost becomes the key for a company to obtain a competitive advantage. Therefore, reducing costs is the only way for Sanitary companies to survive the ice break. Especially in the era of 'cash is king', cost control is particularly important.

So, how should sanitary companies control production costs and operating costs, so that the cost of the company to a minimum, in order to maximize the expansion of cash flow?

1. Establishing a reasonable budget final account system Sanitary companies should establish a reasonable budget final account system so as to effectively estimate the overall cost of the company and all departments, and implement the production cost control measures to specific personnel, specific positions, and specific issues. Refine cost indicators.

2. The formulation of the cost control standard "has no rules, and it is not a good idea." Formulate relevant regulations and procedures so that each participant in cost control knows what to do, what effect and degree to achieve, and give them a direction and goal.

3. The formation of a cost management and accounting system, whether it is sanitary enterprises or other industries, there are more or less some waste of company property or erode the company's property. In order to curb the occurrence and spread of such phenomena, and thus eliminate such incidents, companies need to increase their internal audit efforts and establish an effective supervision system.

Control costs should include full monitoring before, during and after the event. An enterprise may establish an internal audit team, strengthen internal cost audits, conduct a rigorous review of all expenses that will occur or have occurred, evaluate its rationality, and provide feedback.

4. Enhancing the Purchasing Transparency Any economic activity of sanitary ware companies can not be separated from the purchasing department. It is the key and core of cost control for sanitary ware companies. However, whether it is procurement of raw materials, machinery and equipment, parts and components, or the purchase of other office equipment and office supplies, it is impossible to avoid the "grey area." It can generally be limited in two ways: (1). The centralized procurement method means increasing the transparency of procurement through a variety of methods, selecting more cost-effective companies for cooperation, and regularly re-screening selections; (2). An enterprise may adopt a "splitting and quoting" method, that is, quoting prices one by one according to the costs required for the production of various raw materials and components. The cost of each process plus normal profits is the quotations of raw materials and components, if it exceeds the normal range. , you can abandon the re-election.

5. Refining the cost of each link Sanitary companies from raw material procurement, product design, production, quality inspection, inventory, and then to product sales, cost control goes through every link. The cost control of each link must start from the subtleties. The large amount of capital loss in the enterprise is often caused by the details. Therefore, control costs must start from the details, so that every employee in the company pays attention to details to prevent some bad events from happening, and really put cost control into practice.

6. Cultivating Cost Control Awareness The cost control of sanitary ware companies is very important. It is not only a behavior, a habit, but also a reflection of employees' responsibilities. The formation of such a culture requires the leadership of the company and all departments and employees to work together.

In short, only by strictly controlling corporate costs, investing cautiously, and not blindly expanding, can we create more cash flow.

Investing cautiously, cash is king to go out to see the weather, invest to see the situation. From the perspective of the investment environment this year, it is very unfavorable for the development of the enterprise. For some sanitary ware companies with weaker strength or less cash flow, it is best to keep them as the mainstay. Try not to invest in fixed assets or large-scale expansion, and you must ensure good cash flow. Because of inflation, tightening monetary policy, rising raw material prices, increasing human resource costs, falling stocks, sluggish real estate, depreciation of the US dollar, and taxation, the unfavorable factors that restrict business development cannot be solved in the short term. In the next 3-5 years, 70% of SMEs in China may not be able to escape this disaster. Therefore, the small and medium-sized sanitary ware companies must pay attention to the preservation of their own strength, and take it as their offense, and they must also be prepared to fight a protracted war. Once the situation has improved, consider the issue of expansion.

“How much more property is difficult to realize, diverting money to kill the hero Han.” If the sanitary ware company is still “left-handed and right-handed”, or if the fund repatriation is much lower than or equal to the capital output, in the current economic context, this Businesses may not be far from death.