In the 21st century, in economically developed countries, the contribution of scientific and technological skills to economic growth has reached as high as 60-80%. The era where "scientific and technological skills are the primary productive force" or the new economic era has already arrived or is about to arrive. The essence of the new economy is technology. Nowadays, competition among countries in the economic field has essentially evolved into a competition of technology. By seizing the golden key of developing science and technology, one can seize the key to developing the new economy. The new economy is an economy where the production, allocation, and application (consumption) of knowledge, with scientific and technological skills as the main subject, are the most important factors. The new economic era is a time that highly values management. With the help of management, scientific and technological skills can be transformed into productive forces. Only through the common development of science and technology and management can the new economy develop rapidly. Management is particularly important for enterprises in the new economic era. A people-oriented strategy is a prominent feature of the new economy. Therefore, human capital management naturally becomes the most important management object in enterprise management. Financial management is part of enterprise management. It is closely related to the management of human capital in enterprises. It is the management work concerning the acquisition and effective use of funds. Whether financial management succeeds or fails directly affects the survival and development of an enterprise. In the new economic era, due to the tremendous changes in the living environment of enterprises, the objectives, models, concepts, and content of enterprise financial management have all been greatly influenced and impacted.
1. Advancement in Enterprise Financial Management Methods
The arrival of the new economy has further informatized and digitized the financial management of enterprises. Computer technology, especially network technology, has been widely applied to financial management. For example, MIS (Management Information System) is increasingly widely used in financial management. It can make routine decisions based on predetermined principles by digitalizing each piece of financial and financial planning data and inputting it into the database, and then implementing them using the financial management information system, making financial management more precise. It eliminates most human interference factors, reduces the arbitrariness of management, and can also provide a basis for non-routine financial decision-making. The application of MIS in financial management helps optimize and simplify financial management. The application of network technology, such as building a local area network in a company, allows company managers to conduct financial management without leaving their homes. Especially for large group companies, remote financial management can be achieved through the Internet. Of course, technologies such as system models and simulations, strategic information systems, etc., can also be applied to financial management. The application of these technologies is conducive to achieving high-efficiency, flexible, and intelligent financial management.
2. Diversification of Enterprise Financial Management Objectives
In the old economic era, the ownership of enterprises belonged to equity capital owners, i.e., all shareholders. The objective of enterprise financial management was the maximization of shareholder wealth, and employees' labor was compensated through wages. In enterprises of the new economic era, the principle of putting people first is emphasized. The objective of enterprise financial management should not exclude the interests of employees. Enterprises must rely on employees' innovative labor to achieve survival and development. Employees' labor is no longer mainly repetitive labor as in the industrial society. Therefore, enterprises in the new era must also include the "maximization of employee benefits" in their financial management objectives. At the same time, satisfying the interest needs of groups closely related to enterprises, such as creditors, customers, suppliers, the general public, potential investors, governments, strategic partners, etc., is also a component of enterprise financial management objectives. This is guided by cost-benefit principles, aiming to maintain the enterprise's good reputation or obtain business licenses, ultimately enabling the enterprise to achieve returns higher than its investment. The financial management objectives of enterprises in the new era are not a complete denial of the original objectives but a development of the financial management objectives during the industrial economic era. Enterprise financial management objectives are moving towards diversification, ultimately achieving win-win objectives.
3. Enterprise Financial Management Strategies Oriented Towards Survival
In the industrial economic era, enterprise financial management was based on the model of income-risk-cost. In the new economic era, the resources owned by enterprises are a total resource vector R, R={L, K}. Once an enterprise goes bankrupt, only financial capital K can be used to repay debts, while human capital L will return to the labor market and cannot be used to repay debts. Shareholders will suffer enormous losses because they cannot utilize L. For example, Microsoft Corporation in the United States has a similar amount of tangible assets as small enterprises, but its market value exceeds the total of the three major U.S. automobile companies. If such an enterprise goes bankrupt, it will cause great losses to its shareholders. Therefore, the bankruptcy cost of enterprises in the new economic era will be greater, requiring enterprises to adhere to "survival" orientation and emphasize sustainable development.
4. Enterprise Financial Management Emphasizes Innovation and Risk
Adhering to the goal of putting people first means unleashing human initiative, releasing human innovation spirit and energy. Financial management personnel must possess an innovative spirit, actively learn innovative financial tools, strive to master and create financial skills to ensure the survival and development of enterprises. The survival risks of enterprises are mainly manifested in two aspects. First is operational risk. Due to fierce market competition and rapid updates of new products, enterprises must spend a lot of manpower, material resources, and financial resources on the development and research of new products. However, the risk of new product development is very high, possibly endangering the survival of enterprises. Statistics show that the success rate of high-tech in the United States is only 15-20%, and the success rate of some high-tech projects is less than 3%. Second is financial risk. In the new economic era, due to the comprehensive participation of information technology, continuous innovation of various financial instruments, reduction of transaction costs, and the dispatch of economic globalization, the allocation efficiency of financial markets will be higher, and the liquidity of funds will be stronger, providing broad space for the financial activities of enterprises. Enterprises can conveniently obtain the required funds from the financial market; through the reasonable use of financial instruments, enterprises can reasonably avoid financial risks; appropriate use of credit instruments can improve the efficiency of fund utilization and also channel the required funds; through investing idle funds in the financial market, enterprises can obtain investment returns to enhance the efficiency of fund utilization. The survival and development of enterprises will become increasingly inseparable from financial markets. However, risks and opportunities coexist, and the financial risks faced by enterprises will be greater. The market's comprehensive ability to digest and absorb information from various channels is stronger and can quickly respond. Financial markets will be more dynamic; in a dynamic financial environment, changes in interest rates and exchange rates will be frequent, and unfavorable changes to enterprises may put them in difficulties or even lead to bankruptcy; improper use of financial instruments such as futures, options, swaps can cause enterprises to suffer huge losses, or even fatal attacks; errors in investment portfolio decisions may cause enterprises to lose their capital in the financial market and fall into a financial crisis; improper use of credit instruments may cause enterprises to suffer great losses due to the bankruptcy of other enterprises. The Asian financial crisis shows that financial turmoil can have a fatal impact on enterprises. Improving the level of financial skills and enhancing the ability to prevent risks is the challenge facing financial management.
5. Reduction of Enterprise Financial Evaluation Indicator Systems
Indicators reflecting the value of intellectual capital will become an important part of enterprise financial evaluation indicators. Investors, potential investors, enterprise managers, and the general public urgently need to understand the state of enterprise intellectual capital to make a relatively accurate estimate of the enterprise's market value and provide a basis for their respective decisions. For this purpose, enterprise financial management personnel should promptly provide a set of financial evaluation indicators reflecting the value of enterprise intellectual capital, which is the challenge they face. Currently, the Western academic community places great emphasis on the study of indicators reflecting the value of intellectual capital and has achieved certain results. Among the most groundbreaking results is the book "Intellectual Capital" published in 1997 by Leif Edinsoon, Vice President of Sweden's largest insurance and financial services company (Skandia), and American business and high-tech writer Michael.Malone. They proposed 200 indicators applicable to Skandia itself and 21 indicators with broad significance. This has important reference significance for Chinese enterprises to establish an intellectual capital evaluation indicator system.
6. Cross-Disciplinary Nature of Enterprise Financial Management Objects
In the industrial economic era, financial management always emphasized clear responsibilities, rights, and interests, which was a linear management approach. With the arrival of the new economy, social division of labor has further refined, requiring enhanced teamwork. Knowledge also has the characteristic of sharing. Therefore, in the new economic era, to better adapt to the development of society and the economy, the boundaries of financial management between different departments within an enterprise, between enterprises, and even between industries are "penetrable" or "semi-penetrable." Financial management is no longer exclusively the responsibility of the finance department but requires viewing the entire enterprise as a unit rather than simply the finance department as a unit. This overall entity transcends the original functional units, which can be formed by horizontal functional departmental financial combinations or vertical functional departmental financial small group combinations, gaining cooperation from other departments. Financial management objects even consider customers, suppliers, and other talents who maintain benefit relationships with the enterprise. Cross-disciplinary management can fully tap into the financial potential of the enterprise while also effectively utilizing the strengths and weaknesses of related units in financial management.
In summary, in the new economic era, financial management is one of the most important components of enterprise management. Companies and organizations, especially corporations, will invest appropriate human, financial, and material resources in financial management to gain financial advantages and thereby competitive advantages. It can be judged that enterprises with successful financial management in the future will undoubtedly be successful enterprises.
This article is from: Corporate Culture is the Primary Source Affecting Execution_6629