Financial logistics is a system of management, planning and control over financial flows based on information and data on the organization of material flows.
Financial flows mean directed movement of funds or resources in logistics systems and between them, necessary to ensure material and information flows.
Financial flow- this is the directed movement of financial resources associated with the movement of material, information and other resource flows both within the logistics system and outside it. Financial flows arise from reimbursement of logistics costs and expenses, attraction of funds from financing sources, reimbursement (in monetary equivalent) for products sold and services provided to participants in the logistics chain.
The task of managing financial flows in logistics systems is complete and timely provision of volumes, timing and sources of financing. These funding sources must meet minimum price requirements.
Financial logistics faces the following tasks:
Studying the financial market and forecasting sources of financing using marketing techniques;
Determining the need for financial resources, selecting sources of financing, monitoring interest rates on bank and interbank loans, as well as interest rates on securities and government bonds;
Construction of financial models for the use of funding sources and an algorithm for the movement of cash flows from funding sources;
Establishing the sequence and links of the movement of funds within the business and project;
Coordination of operational management of financial and material flows. First of all, the costs, for example, of delivering goods by vehicle, are assessed. The logistics manager builds material flows taking into account costs;
Formation and regulation of free balances in ruble, foreign currency and budget accounts in order to obtain additional profit from transactions in the financial market using high-yield financial instruments;
Creation of operating systems for information processing and financial flows.
The principles of financial logistics include:
Self-regulation to achieve a balance between the flow of cash resources and the movement of material resources, production and minimization of production costs;
Flexibility associated with the possibility of making changes to the financing schedule for the acquisition of materials necessary for the implementation of the finished product project and when adjusting the order conditions from consumers or partners;
Minimizing production costs while maximizing short project implementation cycles;
Integration of financing, supply, production and sales processes in a single project implementation body;
Modeling the movement of cash flows from funding sources to project implementers with the circulation of free funds with maximum efficiency;
Correspondence of financing volumes to the volumes of necessary costs;
Use of software and computer networks for financial management;
Reliability of sources of financing and provision of financial resources for the project;
Cost-effectiveness (through assessment of not only costs, but also the “pressure” on these costs);
Profitability when placing funds.
For each scheme of movement of material resources, several options for organizing financial flows, varying in cost and risk, can be provided. Financial institutions, third-party enterprises, consumers, the state, and foreign entities are involved as investors and lenders, each of which offers resources on different terms. By calculating the moment when a financial deficit occurs, it is possible to attract resources in the required amount and within the required time frame and return them when sufficient income is received.
The choice of suppliers and sources of resources, methods of payment for services to carriers, the order of location of goods in the warehouse is also most rationally carried out according to financial parameters, since they ensure the comparability of heterogeneous estimates. You can assess the feasibility of refurbishment of a warehouse terminal by comparing the expected increase in cargo flow and revenue per unit of time with the size of the required investment. By comparing losses and income, the cost of hedging risks and the possibility of eliminating them, it is possible to construct such schemes for the movement of financial and material flows in which logistics costs will be optimal. Control and correction of deviations in the parameters of financial flows are necessary both for individual participants in logistics activities and for the system as a whole.
The parameters of financial flows also serve as indicators of the well-being and sustainability of enterprises, indicate the effectiveness of logistics activities, and are necessary when planning and organizing relationships with counterparties. Thus, when drawing up the budget for the current year, they predict the size of future revenues and necessary investments, calculate profitability and profitability indicators, which are used in preparing financial statements, justifying the attraction of investments and loans, concluding contracts and agreements.
Thus, financial flows perform a number of important functions in ensuring, accounting and coordinating the movement of resources in logistics processes. Financial parameters largely determine the economic viability of enterprises, stability in the market, and the strength of relationships with suppliers and consumers. It is difficult to overestimate the importance of financial flow management for logistics systems.
Butrin Andrey Gennadievich Doctor of Economics, Professor of the Department of Economics and Finance, Faculty of Economics and Management, South Ural State University (NRU), Chelyabinsk
Yarushin Dmitry Leontievich Associate Professor of the Department of Economics and Law of the Federal State Budgetary Educational Institution of Higher Professional Education "South Ural State University" (NRU), Head of the Economic Department of Zlatoust Electrometallurgical Plant LLC
Despite the already sufficient period of development of the science and practice of logistics and the concept of SCM in Russia, financial logistics remains the least studied area. At the same time, significant reserves for cost reduction lie not only in the material flow functionalities “Supply”, “Production”, “Sales”, but also in the interaction of the enterprise with financial market entities as the financial infrastructure of the logistics system. The author reflected significant progress in this direction in his articles. Currently, the state of financial logistics is characterized by the following provisions:
The financial flow is considered only as “accompanying” (interpretation according to the Specialty Passport of the Higher Attestation Commission of the Russian Federation). The term “accompanying” has the character of a certain inferiority, of secondary importance. At the same time, within the framework of a pull logistics system (most enterprises in the real sector of the economy operate on the pull principle), the financial flow in the form of prepayment for future delivery is, on the contrary, primary; Secondary in this case is the material flow. In our opinion, it is more appropriate to talk about managing a triune flow, in which material, financial and information flows are equal;
In the works of most authors, financial logistics is no different from finance and financial management. Thus, in some works of respected colleagues from St. Petersburg, an ordinary, well-known bank loan is the subject of banking logistics! Transportation of funds by cash collectors is also included under financial logistics! The activities of the stock exchange are revealed as logistics! In our opinion, this approach is a profanation of financial logistics. It is necessary to clearly define the object of research. Obviously, the last two concepts are broader than financial logistics. If financial management in a broad sense can be interpreted as a system for managing the finances of an enterprise, then financial logistics is a device (a set of methods and means) that makes it possible to increase the efficiency of financial flows in an enterprise;
Financial logistics is recognized as a functional type for the object of analysis. At the same time, an analysis of educational and scientific literature showed an almost complete lack of analysis of specific financial logistics tools, methods and models for their optimal use in the activities of enterprises.
We consider it appropriate to understand the object of financial logistics as existing financial flows in the logistics cycle (accounts receivable, payable), closely related to material flows. It is the inextricable connection with material flows that is the criterion for classifying a financial flow into the sphere of financial logistics! The subject of financial logistics is regulating (regulating discrepancies in the logistics cycle) financial flows (injection flows) coming from the external financial environment. The effect of financial logistics is generated in three directions: firstly, the reduction of transaction costs for attracting financial resources (transactions of avalanche, acceptance, bill of exchange loans, interaction of the focal company of the supply chain with the financial infrastructure in the form of a bank); secondly, reduction of the logistics cycle (factoring and forfeiting transactions); release of working capital (securitization transactions with bills of exchange and warehouse receipts for settlements between supply chain counterparties). Let's look at each toolkit in detail.
1. Aval loan is aimed at improving the quality of debt on the part of the buyer, when the supplier does not trust the buyer and asks, before delivery, to provide a bank guarantee in the form of an aval - the seal and signature of the avalist (guarantor) on the promissory note of the debtor. In this scheme, the buyer bears logistics costs in the form of aval fees (from 0% to 2% of the debt amount).
2. Acceptance credit involves the use of a bill of exchange (as opposed to a simple one in the previous transaction). There is a non-resource nature of lending when the loan repayment period is less than or equal to the term of the bill, i.e. The bank pays the bill from the borrower's loan money without investing its own funds. This allows the bank to sharply reduce the interest rate on the loan, which means a reduction in the logistics costs of the enterprise under study. The disadvantage is a reduction in the repayment period of accounts payable, when the initial repayment period of the debt to the supplier, equal to the term of the bill, is replaced by a shorter period of debt to the bank. This reduces stability.
3. Bill of exchange credit combines features of previous transactions. The subject of the loan is not cash (as with a classic loan), but a simple term bill of the bank, which has a pronounced flow nature, which allows it to repay the debt, moving from one participant in the supply chain to another (operations 1,2) (Fig. 1 ). The object of the loan is the buyer (the enterprise under study). The object of lending is debt repayment (1), i.e. financing its working capital in the supply chain. The resourceless (moneyless) nature of the transaction is similar to the previous transaction, which reduces logistics costs. However, there is a second, most significant element of cost - the supplier's discount as a payment for a non-monetary form of payment. Therefore, when assessing the effectiveness of a bill of exchange loan, it is necessary to evaluate and reduce the total costs that are multidirectional in dynamics: with an increase in the term, logistics costs increase in the form of a supplier discount in the logistics cycle and interest (transaction) costs for financial support of the bank decrease (Fig. 2).
Rice. 1. Bill of exchange loan scheme
Thus, we have an optimization task: to find the value of the “injection” flow into the logistics chain of the enterprise under study in the form of the best bill lending term t*, at which we obtain an economic reserve in the form of a reduction in logistics costs when attracting financial resources (Fig. 2):
Rice. 2. Graphic formulation of the problem of optimization of bill credit
It is advisable to interpret transactions of avalanche, acceptance and bill of exchange loans as tools of banking logistics, which is a type of financial logistics.
4. Interaction of the focal supply chain company with the financial infrastructure in the form of a bank. In our study, the system complex is a set of participants (narrow links) in the supply chain of the bank as a regulator of deviations in the parameters of its financial flows (Fig. 3).
Rice. 3. System complex “focal company-bank”: (1) – supply of raw materials; (2) – delivery of finished products; (3) – payment for finished products; (4) – payment for raw materials; (5) – provision of financial resources; (6) – return of resources
Features of the complex: no affiliation between participants. This distinguishes it from financial industrial groups and supply chains, which can be vertically integrated; contractual relations of participants; mobile composition of participants, when the complex can “move” up or down the chain depending on the presence of “narrow links”. Pairs of flows (1) and (4) in the “Supply” functionality must be consistent with each other; (2) and (3) in the “Sales” functionality. The key stability reserves lie in the coordination of a pair of flows (3) and (4). Their discrepancy causes the formation of a cash gap (“leakage” flow, for example, delay in payment for products 3) and dictates the need for coordination through the organization of regulatory flows – “injection” flows (flow 5). These include modern banking products aimed at reducing the cost of forming working capital (bill credit) and increasing sales by accelerating capital turnover (factoring). Thus, the bank is the financial infrastructure of the supply chain of an industrial enterprise, generating “injection” flows into the “narrow links” of circulation funds, thereby ensuring, depending on the type of chain, firstly, its continuity and stability, and secondly, cost reduction along the entire chain. Modeling and implementation were carried out at the Chelyabinsk branch of VTB Bank and OJSC Chelyabinsk Forging and Press Plant. The balance of interests of the bank and the focal company was achieved at an interest rate of 18% per annum, while the economic effect of the complex (added value in the supply chain) amounted to 2.2 billion rubles. .
5. Factoring. The supplier company under study in a factoring transaction pursues the goal of accelerating the logistics cycle through the early sale of debt, when the proceeds are directed to a new, more profitable transaction. When assessing the effectiveness of a factoring transaction, it is necessary to evaluate and reduce the total costs that are multidirectional in dynamics: as the period increases, the costs of insourcing increase (costs of capital loss in accounts receivable, logistics risks, inventories of finished products in the logistics cycle) and the costs of outsourcing in debt management decrease (transaction costs for financial support of the factor company) (Fig. 4).
Rice. 4. Factoring organization
We have an optimization task: to find the value of the discount rate of the “injection” flow from the factor company into the logistics chain of the enterprise under study, at which we obtain an economic reserve in the form of a reduction in logistics costs and a reduction in the logistics cycle by the amount (t-t*) (Fig. 5).
Rice. 5. Graphical formulation of the factoring optimization problem
6. Securitization. Today, the enterprise has three main tools for structuring financial flows: a bill of exchange, a warehouse receipt, the legal institution of changing persons in obligations (transactions of assignment of rights of claim and transactions of debt transfer) (Table 1).
Table 1 Comparative characteristics of securitization instruments
|
Comparison sign |
Warehouse |
|||
|
Advantages |
Flaws |
Advantages |
Flaws |
|
|
1. Tool type |
Security |
Security |
||
|
2. Ability to serve as a means of payment |
||||
|
3. Ability to serve as a commercial loan instrument |
The holder's claims are not secured by a pledge of property |
Yes. The holder's claims are secured by a pledge of goods, which improves his position in the queue of creditors |
||
|
4. The ability to serve as a tool for low-cost replenishment of working capital |
||||
|
5. Possibility of making a profit during operations |
||||
|
6. Nature |
Debt instrument |
Storage relationships |
||
|
7. Form of repayment |
Money, goods, |
Scheduled item |
||
|
8. Occupancy |
May not be |
Always real |
||
|
9. Filling item |
Item, works, services |
|||
|
10. Risk to the holder |
High due to the issuer’s business risks |
Low in effect |
||
|
11. Risk for the issuer |
High, because may be presented for payment in cash, which was not intended by the issuer |
Low, because “repayment” occurs with planned production |
||
|
12 Method of handling |
Through endorsement (unilateral transaction) |
By means of an endorsement" - an assignment agreement (bilateral transaction) |
||
|
13. Market development |
||||
|
14. Adjustability |
||||
Securitization is based on a synthesis of innovative and financial types of logistics, according to which financial flow processes are restructured through the introduction of innovations to achieve additional effect. The development of commodity markets, means and methods of timely and complete satisfaction of demand for goods has led to the need to optimize material and financial flows through improving the tools for their structuring. As a result, the class of documents of title has been expanded.
By their economic nature, warehouse receipts are an innovative tool for transforming material flow into financial flow and vice versa. In Fig. 6, the process of formation of a supply network is proposed, formed as a result of the multiplication of the basic (“horizontal”) CPU 1 (operating in the supply-pull mode) and the “vertical” supply chain of CPU 2 (operating in the delivery-pushing mode). In the proposed supply network, capital accelerates simultaneously along two chains: within the boundaries of the “horizontal” chain, the movement of financial flows accelerates (links 11, 12 and 15); within the boundaries of the “vertical” chain – the movement of material flows (13). This acceleration leads to the formation of a positive synergy effect, which consists in increasing sales volume and, as a consequence, the profit of the enterprise.
Rice. 6. Algorithm for forming a supply network based on financial and innovative logistics. Legend: DCC – double warehouse certificate, SCh – warehouse part; ZCh – collateral part
The subject of optimization is the delay between the order for finished products and the delivery of products to the consumer. The optimization criterion is integral costs. Modeling at a large enterprise in the Chelyabinsk region - OJSC Zlatoust Machine-Building Plant - allowed us to obtain the following results: the minimum cost is achieved with the amount of prepayment i= 50% (logistics leverage leverage) and the optimal delivery delay is 64 days. This means that through the introduction of innovative financial logistics, sales can be increased by 50%. In this case, the supply chain compliance coefficient in the network reaches its maximum value (1).
Thus, the scientific significance of the proposed models is that they form the methodological basis for managing financial flows in the concepts of financial and innovative logistics; The practical significance is that they allow enterprise management to improve the quality of financial flow management in the direction of reducing costs and accelerating capital turnover.
References
1. Afanasenko I.D., Borisova V.V. Economic logistics: a textbook for universities. Third generation standard. – St. Petersburg: Peter, 2013.- 432 p.
2. Barykin S.E. Theory and methodology of managing material and related flows in a micrologistics system: dissertation for the academic degree. Doctor of Economics degree Sciences/S.E. Barykin // State Educational Institution of Higher Professional Education "St. Petersburg State University of Engineering and Economics", 2009.
3. Butrin A.G. Criteria for managing interconnected flow processes/A.G.Butrin//Logistics.– 2001.– No. 4. -P.29-31.
4. Butrin A.G. Toward an integral assessment of the efficiency of flow processes/A.G.Butrin//Logistics. – 2002. – No. 1. – P. 29.
5. Butrin A.G. On the optimal lag of financial flow / A.G. Butrin // Logistics. – 2002.– No. 3.– P. 21.
6. Butrin A.G. About the logistics service at the enterprise/A.G.Butrin//Logistics. – 2003. – No. 3. – P. 13.
7. Butrin A.G. About teaching financial logistics /A.G. Butrin // Logistics. – 2008. – No. 1. – P.39-40.
8. Butrin A.G. Again about financial logistics / A.G. Butrin // Logistics. – 2008. – No. 2. – P.16.
9. Butrin A.G. Management of flow processes in the logistics system of an enterprise: monograph / A.G. Butrin. – Chelyabinsk: SUSU Publishing House, 2008. – 132 p.
10. Butrin A.G. Logistics for the financial director: textbook/A.G. Butrin. – Chelyabinsk, 2009. – 180 p.
11. Butrin A.G. Financial flows in the supply chain of an industrial enterprise/A.G. Butrin, A.I. Kovalev, D.A. Polyunas//Finance and Credit. –2009.– No. 45.–P.22-28.
12. Butrin A.G. Management of circulation funds in the supply chain of an industrial enterprise: monograph / A.G. Butrin, S.A. Suslov. – Chelyabinsk, 2009. – 99 p.
13. Butrin A.G. Modeling the supply chain of an industrial enterprise: textbook / A.G. Butrin. – Chelyabinsk: SUSU Publishing Center, 2010. – 184 p.
14. Butrin A.G. Management of mutual settlements in the supply chain of an industrial enterprise: monograph / A.G. Butrin, A.I. Kovalev. – Chelyabinsk, 2010. – 112 p.
15. Butrin A.G. Design and optimization of business processes of integrated enterprises: monograph / A.G. Butrin. – Chelyabinsk: SUSU Publishing House, 2011. – 313 p.
16. Butrin A.G. Methodological foundations of cost chain management of integrated enterprises: textbook / A.G. Butrin. – Chelyabinsk: SUSU Publishing Center, 2011. – P. 105
17. Butrin A.G. Tools for managing circulation funds of an industrial enterprise/A.G. Butrin, E.I. Rogozhnikov// Bulletin of SUSU. Series “Economics and Management”. – 2011. – No. 28.. – P.165-169.
18. Grigoriev M.N., Dolgov A.P., Uvarov S.A. Logistics. Advanced course: textbook for masters. – 3rd ed., revised. and additional – M.: Yurayt Publishing House, 2014-734 p.
19. Moiseeva N.K. Economic fundamentals of logistics: a textbook for the specialty “Logistics” / N.K. Moiseeva. – M.: 2008.
Basic concepts and principles of financial logistics
Saint Petersburg
Specialty 080506 – Logistics and supply chain management
FINANCIAL LOGISTICS
S. E. Barykin
Department of Logistics and Transportation Organization
St. Petersburg State
Federal Agency for Education
State educational institution
higher professional education
University of Engineering and Economics
Lecture notes
Admitted
Editorial and Publishing Council of St. Petersburg State University of Economics and Economics
as an educational publication
Compiled by
Doctor of Economics Sciences, Associate Professor S.E. Barykin
Reviewer
Doctor of Economics sciences, prof. E.R. Schislyaeva
Prepared by the department
Logistics and transportation organization
Approved by the scientific and methodological council of the specialty
080506 – Logistics and supply chain management
submitted by the compiler
INTRODUCTION........................................................ ........................................................ 4
TOPIC 1. SUBJECT AND METHOD OF FINANCIAL LOGISTICS AS A SCIENCE. PLACE OF FINANCIAL LOGISTICS IN LOGISTICS MANAGEMENT................................................................... ........................................................ ............................ 6
TOPIC 2. CASH MANAGEMENT IN MICROLOGISTIC SYSTEMS......................................................... .. 19
TOPIC 3. DISTRIBUTION OF MONEY BY FINANCING OBJECTS................................................................... .................................... 44
TOPIC 4. SYSTEM OF CASH RESERVES AND MATERIAL FLOW MANAGEMENT MODELS..................................................... ............... 57
TOPIC 5. NEURAL NETWORK METHODS OF CASH RESERVES MANAGEMENT................................................................... ........................................................ .... 66
CONCLUSION................................................. ........................................... 78
REFERENCES................................................................... ........................... 79
INTRODUCTION
The purpose of the discipline “Financial Logistics” is to develop students’ knowledge about the implementation of finance functions in logistics systems, logistics models and methods for managing a company’s financial flows.
The objectives of the discipline are:
· Formation of the concept of financial flow, its purpose and place in the logistics management system;
· Studying the basics of strategic management of the company's financial resources;
· Consideration of issues of distribution of financial resources according to investment areas;
· Study of methods for grouping financing objects;
· Studying the methodology for introducing integrated management of financial and material flows in the logistics system;
· Logistic models for the formation of a company's cash reserves.
The discipline “Financial Logistics” is a discipline of specialization “Supply Chain Management”, specialty 080506 – Logistics and Supply Chain Management.
The discipline “Financial Logistics” is based on the disciplines “Fundamentals of Logistics”, “Strategic and Innovation Management”, “Financial Management”, “Operational (Production) Management”, “Supply Chain Management”, “Economics” basics of logistics and supply chain management, ʼSupply logistics, Production logistics, Distribution logistics, Inventory management in chains supplies, provides the disciplines “Project Management in Logistics”, “Logistics Risk Management in Supply Chains” and “Integrated Supply Chain Planning”.
The lecture notes offered to the reader are the basis for independent work in studying the discipline “Financial Logistics” aimed at forming a systematic understanding of the integrated management of interrelated material and financial resources in logistics systems.
The work program of the discipline includes five topics, on which the basic knowledge, skills and questions for self-control are revealed in the lecture notes.
TOPIC 1. SUBJECT AND METHOD OF FINANCIAL LOGISTICS AS A SCIENCE. PLACE OF FINANCIAL LOGISTICS IN LOGISTICS MANAGEMENT
Cash represents part of the company's current assets. Without this asset, the company's operating and investment activities are impossible. The company's cash includes money in current accounts with commercial banks and in cash. Different types of assets have different liquidity, which is understood as the time period required to convert a given asset into cash, and the costs of ensuring this conversion. Only cash corresponds to absolute liquidity. It is extremely important for an enterprise to have a certain level of absolute liquidity in order to be able to pay supplier bills.
Maintaining a company's liquidity level involves certain costs. If an enterprise has a minimum reserve of cash, then costs arise to replenish this reserve, the so-called “costs of attracting financial resources.” If the company accumulates a significant cash reserve, then the costs associated with unused opportunities (inventory holding costs) increase. However, the problem of determining the optimal cash reserve arises.
Not all of an enterprise’s cash needs are met solely from funds in the enterprise’s accounts. Some of these needs can be met by marketable securities, which are assets that are almost equivalent to money. From the perspective of investment theory, cash is one of the special cases of investing in inventory. For this reason, the general requirements that apply to inventories apply to them. The motives of enterprises should be divided into three groups:
1) the company needs a basic reserve of cash to carry out current payments;
2) certain funds are needed to cover unforeseen expenses;
3) the company is interested in owning a certain amount of funds for the planned expansion of its activities.
Consequently, models developed in the theory of inventory management are applied to cash and allow optimizing the amount of cash. The company should solve the following problems in the process of managing cash reserves:
– determine the total amount of funds;
– the timing when funds should be transferred into securities and vice versa.
Let's consider the most well-known models for forming an investment portfolio.
1. Model of G. Markowitz. In accordance with this model, the invested capital is distributed among different types of assets: stocks, bonds, real estate, etc. The Markowitz model is used at the first stage of forming an asset portfolio.
2. Model of W. Sharpe. In 1963 ᴦ. A student of G. Markowitz, W. Sharp, proposed a one-factor model of the capital market, in which “alpha” and “beta” characteristics of shares first appeared. The one-factor Sharpe model is used at the second stage of forming an investment portfolio, when capital invested in a certain segment of the asset market is distributed between individual specific assets.
3. Capital asset valuation model (CAPM). We should agree with the opinion of Yu. F. Kasimov that the main result of the CAPM model was the establishment of a relationship between the profitability and risk of an asset for an equilibrium market. Moreover, when choosing the optimal portfolio, the investor takes into account systematic risk, and not the entire level of risk associated with the asset, as in the Markowitz model. This risk is quantified by the beta coefficient (introduced by Sharpe in his one-factor model). The rest of the risk level is unsystematic risk, which depends on the choice of investment portfolio.
4. Arbitration asset valuation model (APM). In 1977 ᴦ. S. Ross proposed an alternative model for the valuation of capital assets - the arbitration model. According to supporters of this model, its advantage is that it allows for empirical verification to a greater extent than the CAPM model. The APM model is based on the principle, which essentially consists in the fact that the relationship between profitability and risk should be such that no individual investor receives unlimited income from a transaction, without taking into account the risk of investing money in the acquisition of an asset.
5. Black-Scholes model. In 1973 ᴦ. M. Scholes and F. Black developed an options model based on the possibility of carrying out a risk-free transaction with the simultaneous use of a share and an option written on it. The price of such a transaction must coincide with the valuation of risk-free assets in the market. The probabilistic assessment of the option value depends on the dynamics of the market price of the stock.
6. Cash management models. Financial management includes the study of actions related to acquisition, merger, financing, and asset management, but does not pay enough attention to the study of the formation of an optimal cash reserve. One of the areas of cash flow research is studying the possibilities of managing cash reserves in a similar way to managing inventories of material resources .
In this case, it is necessary to consider in detail the use of models and methods of logistics theory in the process of managing cash reserves. Logistic models of financial management allow you to combine methods of financial management (discounting and increasing cash flows) and methods and models of logistics theory.
Logistics financial management of a company considers the interaction of three basic flows (financial, information and material) and is not limited to financial management tools. The methodological apparatus of financial logistics includes three basic principles:
1. The principle of studying the interaction of flows of material, financial and information resources in the micrologistics system, taking into account their relationship and mutual influence.
2. The principle of similarity of the analytical description of material, financial and information flows.
3. The principle of finding a compromise between the costs of attracting material and financial resources and the costs of their maintenance.
In the process of studying the discipline “Financial Logistics”, we will rely on the definition of the logistics system given by V. S. Lukinsky:
A logistics system is a complex organizationally complete (structured) economic system, which consists of elements - links interconnected in a single process of managing material and related flows.
Financial flows accompanying material flows should be considered as a subsystem of the logistics system. Let us formulate the definition of a company’s logistics financial management system based on the categories “thing”, “property” and “relationship”. A system is defined as a set of objects on which a certain relationship with fixed properties is implemented. Let S means the property of a thing m to be a logistics system. Then the definition of the system can be expressed as follows:
Where P– property; R- a relation that has this property.
The rule for moving from one variable to another is formulated as follows: the values of the variable outside the square bracket are chosen arbitrarily; the values of the variable inside the square bracket but outside the parenthesis are chosen to satisfy the outer variable, and the symbol of the thing inside the parentheses can only have values that agree with the values of the other two variables.
The logistics financial management system (financial logistics system) of a company includes financial, material and information flows, the functioning of which is aimed at achieving the main goal of the logistics system. Let us choose as an integrating feature the degree of interrelation between the movement of financial, information and material resources. The corporation's material, information and financial flows are interconnected and interdependent. A high degree of interdependence allows us to speak of a high degree of “systematicity” of the single logistics flow under study.
Having defined a property, we can define a relation that has this property. All elements of the financial logistics system are in relationships that have a certain property - maintaining the structure of the logistics system. It is possible to provide several options for organizing financial flows for each scheme of movement of the company's material resources. The financial flow accompanying the material flow is aimed at implementing the company’s logistics activities. The goal of financial flow is subordinated to the main goal of the company’s logistics activities.
Micrologistics systems are usually understood as companies - corporations (legal entities) or a group of legal entities interconnected by a common business (corporate structures in the form of financial and industrial groups, holdings).
Basic concepts and principles of financial logistics - concept and types. Classification and features of the category "Basic concepts and principles of financial logistics" 2017, 2018.
Principles of financial flow management
Strategic and tactical tasks of financial logistics
Logistics costs, classification, evaluation and planning
Contents, functions and principles of financial logistics
In a market economy, the activities of business entities largely depend on the continuous movement and effective use of financial flows. Financial flows are closely related to the sale of goods and services, investments, supplies of material assets and equipment, banks, stock exchanges, insurance companies, technological processes, etc. Financial flow schemes are necessarily developed in all foreign corporations and banks.
In international business practice, financial logistics is understood as optimizing the company’s financial mechanism, coordinating financial flows and operations, ensuring orderliness and accurate “balancing”.
An important feature of financial logistics is the need to consider financial flows in connection with production, transport, supply, sales and other economic functions of the enterprise.
Thus, financial logistics is a management system (including planning and control) of financial flows based on information and data on the organization of material flows.
Principles of financial flow management
Financial and material flows are managed with the support of information technologies and systems. The function of information flows in logistics systems is to ensure communication interaction between participants in logistics relations. Financial logistics uses numerous indicators of information flows, for example, expected timing and volumes of deliveries, shipping time, payment methods, etc. In addition to information directly related to commodity flows, information is received about the external environment: data on market conditions, total sales volume of a given segment , market demand for finished products, price changes, strategies of possible competitors, etc. Information flows in the logistics system are determined by the specific needs of financial management when performing individual functions of planning, regulation, analysis and control.
Financial flow refers to: a) any movement of financial resources in the macro- or microeconomic environment; b) the movement of financial assets only in logistics systems or between them.
Financial flows in one form or another have always existed in any way of organizing the entrepreneurial activities of economic entities. However, practice has shown that the greatest efficiency in movement is achieved by applying the logistics principles of managing material and financial resources.
Thus, under financial flow in logistics should be understood the directed movement of financial resources circulating in the logistics system, as well as between the logistics system and the external environment, necessary to ensure the effective movement of a certain flow of goods.
Financial logistics
Goals and objectives of financial logistics
Optimization of the movement of material flows in logistics systems is largely achieved by improving their servicing with financial flows. Only financial resources can be converted into any other types: use them to buy goods, services, information, pay staff, etc. In this regard, the effective movement of cash flows is an important condition for the functioning of a book publishing enterprise.
Changes in the magnitude, speed and other parameters of financial flows significantly affect the movement of material flows. For example, increasing the speed of cash flow due to faster payment processing can lead to faster receipt of goods in a bookselling enterprise and reduce the required level of inventory of goods. The lack of power of financial flows or the slow speed of their receipt by a publishing company can cause a reduction in the range of book products it produces.
All this indicates the importance of studying and optimizing the movement of financial flows of enterprises. At the same time, it should be noted that the movement of financial flows in relation to their servicing of flows of goods and services is the least studied area of logistics. In the literature on logistics, financial issues are only mentioned and do not receive sufficient coverage, however, financial management is showing increasing interest in the problem of managing financial flows.
Financial flows arise and are used in the book business to ensure the efficient passage of book products throughout the entire logistics cycle of its production and distribution, from the origin of the idea of a future publication to the purchase of the book by the consumer. Financial flows serve the processes of transfer of ownership and movement of raw materials and goods in space and time. Taking this into account, we can give the following definition of logistics financial flow.
Financial flow in logistics is the movement of financial resources circulating in the logistics system, as well as between the logistics system and the external environment, necessary to ensure the effective movement of goods flow.
The financial flow of an enterprise consists of receipts and payments of funds generated in the process of business activities distributed over time.
Any book business enterprise must earn money as a result of selling the products of its activities (book goods and services), and then invest (invest) the money received in the production of new goods (services). At the same time, a normally operating enterprise should make a profit from its activities. This constantly repeating process is called the “cash flow cycle.” The cash flow cycle accompanies the logistics cycle of the movement of goods (services)
Financial flows are varied in composition, directions of movement, purpose and other characteristics. In order to optimize their movement in logistics systems, flows must be classified. The classification of financial flows is given in table. 14.
The division of flows according to the direction of movement is of greatest importance. Positive and negative flows are interconnected. The insufficiency of the volumes of one type of flow in a specific period of time causes a reduction in the volumes of another type. Therefore, in the enterprise cash flow management system, they should be considered as a single (complex) management object.
Net cash flow is the most important result of the financial activity of an enterprise, largely determining its financial stability.
Classification of financial flows.
Classification feature
Direction of movement
1. Positive (cash inflow, cash inflow)
2. Negative (cash payments, cash outflow)
Calculus method
1. Gross - the entire totality of receipts and expenditures of funds
2. Net cash flow - the difference between positive and negative cash flows (between the receipt and expenditure of funds)
By purpose
1. Purchasing - servicing process of purchasing goods
2. Production - servicing production process
3. Sales - the servicing process of selling finished products
Frequency of occurrence
1. Regular - occurs regularly in business activities (salaries, tax payments, etc.)
2. Discrete - occurs when carrying out one-time, single transactions (for example, buying real estate)
Sufficiency level
1. Excessive - cash receipts significantly exceed the enterprise’s real need to spend them
2. Scarce - revenues are significantly lower than the real needs of the enterprise in their expenditure
Scale
1. For the enterprise as a whole - accumulates all types of funds of the enterprise
2. For certain types of activity of the enterprise
3. For individual structural divisions (responsibility centers) of the enterprise
4. For individual business transactions
Type of economic activity
1. Accompanying the movement of products (payments to suppliers, employees, tax authorities, receipts from product buyers, etc.)
2. Accompanying investment activities (sale and purchase of fixed assets, real estate, intangible assets)
3. Accompanying financial activities (receiving and paying loans, attracting additional share capital, paying dividends)
The main goal of optimizing the movement of financial flows in logistics is to ensure the movement of material flows (service flows) with financial resources in the required volumes, at the right time, using the most effective sources of financing, i.e. in accordance with the “seven H” logistic rule. This is achieved in two main ways: timely receipt of funds to the enterprise in the amount necessary to finance its further activities; ensuring efficient spending of funds that is profitable and consistent with the mission of the enterprise.
Financial logistics in the book business is a section of logistics that studies the optimization of financial flows directed to the acquisition of resources and received by book business enterprises from buyers of book products and partners in the movement of book products in the supply chain.
Let's consider what stages the cash flow cycle in the book business consists of.
Example
The publisher spends money to purchase copyrights for a finished work or finances the creation of a book manuscript. As a result, he receives the manuscript and the right to publish it. In advance, it is advisable for the publisher to spend certain funds on marketing research, which will provide him with information for making decisions about the acquisition of the manuscript, the form of its publication, circulation, and promotion channels.
The publisher spends money on preparing the manuscript for printing (editorial and publishing expenses). As a result, he receives the original layout of the publication.
The publisher purchases paper and other printing materials and pays printing expenses. As a result, he receives a copy of the book.
The publisher spends money on advertising and promotion of the book, its placement on the book market using supply chains that are most effective for selling this book.
In some cases, the publisher finances bookselling enterprises by providing them with trade credit.
In the book business, there are the following forms of financial relationships between publishing houses and bookselling enterprises:
Payment to the publisher only for book goods sold by the bookselling enterprise. In this case, unsold books are returned to the publisher after a certain period.
Purchase with deferred payment (with or without the right to return unsold books). In this case, a payment deadline is set.
Purchase with simultaneous payment and no right to return unsold books.
Purchase with advance payment.
Financing of publishing projects: a bookselling or some other company pays the publishing house for the publication of a book and becomes the owner of the circulation.
The bookselling (or some other company) finances part of the costs (for paper, printing, transport services) and participates in an agreed share of the profits from the sale of the edition.
Only after these costly flows (investment of funds) does the publisher begin to receive money from bookselling enterprises for the book goods they bought (or sold).
As we can see, the expenditure and receipt of funds by enterprises is characterized by significant unevenness (Fig. 43). Therefore, if business managers do not pay due attention to financial logistics, they may periodically discover that at the right time there is not enough money in the company’s accounts. You have to take out a loan, and since this needs to be done urgently, there is no time left to search and select the optimal conditions for borrowing money, the amounts and terms of the loan. The development of this negative situation further leads to a violation of the loan payment schedule, and, consequently, to penalties.
Another situation is also possible - the uncontrolled flow of money into the company’s accounts makes it difficult to optimize tax payments and leads to the formation of temporarily free funds. Available funds lose their value over time due to inflation and other reasons. Consequently, optimization of cash flows should include balancing them by type, volume, timing and other characteristics, as well as increasing the net cash flow of the enterprise. At the same time, cash flows must be subordinated to the fulfillment of the enterprise’s mission and the goals of its activities in the book market.
The need to optimize the cash flow of an enterprise is determined by the following basic provisions.
Cash flows are the “financial blood circulation” of an enterprise; they serve almost all aspects of business activity. Properly organized cash flows are the most important condition for obtaining effective results from an enterprise.
The financial stability of an enterprise is largely determined by how different types of cash flows are synchronized with each other in time, in the direction of movement, etc. Insolvency can occur even for enterprises that receive a sufficient amount of profit due to an imbalance of receipts and payments over time.
Rational formation of cash flows helps to increase the rhythm of all logistics processes of the enterprise. Any failure to make payments has a negative impact on the formation of inventories of raw materials, labor productivity, sales of finished products, etc. Effectively organized financial flows create conditions for optimizing the movement of all other types of flows (material, information, personnel, service).
By actively managing cash flows, you can ensure a more rational and economical use of your own financial resources and reduce the need for borrowed capital.
Cash flow management ensures acceleration of the enterprise's capital turnover by reducing production and financial cycles, reducing the need for capital serving the economic activities of the enterprise.
Synchronizing the flow of receipts and payments of money allows you to reduce the real need of the enterprise for free cash balances, which contributes to the formation of additional resources that can be directed to investments that are a source of profit.
The following stages of financial flow management are distinguished:
Accounting for their movement. Like the management of all other types of logistics flows, cash flow management must be provided with the necessary information. Accounting provides this information.
It should be noted that external consumers should also have financial information about the company’s activities. Owners (current and potential), government organizations, creditors (for example, suppliers of goods who sell them on credit), and consumers (clients) are interested in obtaining information about the financial condition of a company. Each of the interest groups uses financial information for its own purposes. Potential owners - to decide on the acquisition of shares, suppliers - to determine the terms of delivery, government agencies - to monitor the correct payment of taxes, etc.
Analysis of cash flows based on accounting data.
It is determined whether the enterprise has enough funds, whether they were used effectively, whether a balance was achieved in the flow of receipts and payments of funds, etc.
The analysis should be carried out both for the enterprise as a whole and for individual areas of its activity, as well as for individual structural divisions. As a result of the analysis, opportunities are identified:
- reducing the enterprise’s dependence on external sources of raising funds;
- balance of receipts and payments in terms of time and volume;
- relationships between cash flows by type of economic activity of the enterprise;
- increasing the amount of net cash flow (profit).
Cash flow planning is carried out both for the enterprise as a whole and in the context of its various types of activities. Since the development of the financial situation in the future is a process characterized by significant uncertainty, it is advisable to carry out planning in the form of developing several options corresponding to different scenarios for the development of events (optimistic, realistic, pessimistic).
Control of cash flows: fulfillment of planned indicators, uniformity of cash flow formation over time, efficiency of use of cash flows, solvency of the enterprise, net cash flow.
As already noted, the main goal of optimizing the cash flow of an enterprise is to ensure its financial stability and competitiveness in the book market. The most important prerequisite for optimization is the study of factors affecting financial flows. There are external and internal factors, or factors of the external and internal environment of the enterprise.
The main external factors include:
Book market conditions. The market environment has a significant impact on the receipt of funds from sales of products. The higher the demand for book products, the better they sell and the greater the revenue stream from sales. A decline in demand, on the contrary, reduces the flow of revenue from the sale of goods, which can lead to a shortage of funds for the enterprise and the accumulation of significant inventories of products that cannot be sold.
Industry practice of lending to suppliers and buyers of products. This practice determines the established procedure for purchasing products - on the terms of prepayment, cash payment, deferred payment (commercial loan). As we have already mentioned, the main form of relationship between publishers and booksellers is the supply of products on deferred payment terms.
Tax system. Its changes affect the volume and nature of tax payments of the enterprise. Recently, value added tax has become important in the book business. The fact that book products were not subject to this tax allowed the industry to allocate significant funds to the development of the book business.
Conditions of the financial and credit markets. The state of the financial market affects the price of the company's shares. In addition, financial market conditions determine the possibility of effectively using the enterprise's free funds by purchasing shares, and also affects the receipt of funds from the securities it already owns (dividends, interest).
Depending on the conditions of the credit market, the volume of banks’ supply of “expensive” or “cheap” (interest rate), “short” or “long” (loan terms) money increases or decreases, which affects the possibility of generating cash flows of the enterprise from this source.
The main internal factors influencing the cash flows of an enterprise are:
Duration of the logistics cycle. The shorter the duration of the logistics cycle, the faster the purchased materials are converted into finished products and sold to customers, and the more money turns around, bringing profit as a result of the completion of each cycle. At the same time, the acceleration of financial flows not only does not lead to an increase in the need for working capital, but even reduces the size of this need.
Seasonality of demand and product sales. Significantly affects the formation of cash flows over time, causing the formation of both temporarily free funds and an increase in costs. An example of seasonal fluctuations in the book business is the need to produce and purchase educational publications by the beginning of the school year, an increase in sales for the New Year holidays and their decrease in the summer season.
Financial mentality of owners and qualifications of company managers. They affect the choice and implementation of the financial policy of the enterprise. The owners distribute the income of the enterprise and decide whether it will be actively invested in its development or directed to other needs. Managers implement the financial policies developed by the owners, so the level of their qualifications, which determines the effectiveness of their decisions, becomes important here.
Enterprise life cycle. Different stages of an enterprise's life cycle are characterized by different volumes and structure of cash flows. The following stages of a company's life cycle are distinguished:
1) Entering the market. At this stage, the enterprise has a small profit, and sometimes even losses, since sales volumes are small, and the costs of organizing production and sales are very significant.
2) Enterprise growth. This stage is characterized by a high rate of increase in the output of products (services) and its sales. This leads to a noticeable increase in profits. There is an active investment of profits in new areas of activity, in the development of new markets, products, etc.
3) Maturity. At this stage, the company’s economic growth rates may slow down, and its business goals and strategies may be revised. At the same time, the best enterprises are constantly looking for new competitive advantages and continuously improving their products. This position allows you to increase the duration of the growth and maturity stages indefinitely.
4) Decline in activity. The growth of the enterprise stops, sales volumes and profits decrease, competitiveness and financial stability decrease. All this can lead to the company leaving the market. The recession stage can be caused by both objective external factors (for example, a decrease in demand for these goods), and mistakes made by the management of the enterprise, unused opportunities, etc.
Optimization of financial flows
By selling goods or services, an enterprise receives revenue, which is used to cover costs and pay taxes. The remaining part forms the profit (or loss, if the revenue was not enough for the specified payments) of the enterprise. The profit of the enterprise is used for various purposes. At certain moments in the life of an enterprise, the need arises to attract borrowed funds to ensure its activities.
Optimization of financial flows consists of managing the stages of the logistics financial cycle: purchasing, production, distribution activities.
At the first stage, money should be optimally invested in materials, goods, information, labor and other production resources.
At the production stage, the invested money goes into finished products, and it is necessary to ensure the competitiveness of the goods (services) produced. The costs incurred must create a use value that ensures their coverage and the receipt of the planned profit.
At the sales stage, goods are transferred into cash as they are sold, cash flow begins, and net cash flow is formed. However, it should be remembered that this process determines not only the direct receipt of cash flows, but also the position of the enterprise in the market, its image, reliability as a business partner, which are also important for operating results.
Using the money raised, the logistics cycle is repeated again. The duration of the full turnover of working capital (from their advance into resources to the receipt of money for goods sold) is characterized by turnover. The financial position of the enterprise, its solvency, the need for additional sources of financing, etc. depend on the speed of turnover of financial flows. Thus, optimization of cash flow should be aimed at implementing the circulation of financial resources, their uninterrupted and prompt flow from monetary form to raw materials, finished products , goods and again into monetary form.
In addition to accelerating the financial cycle, optimizing financial flows involves maximizing the inflow of funds and minimizing the outflow (by reducing the volume or slowing down the speed of outflow).
There are three main ways to maximize cash flows received at the end of the logistics cycle of their movement, i.e. as a result of the sale of produced goods and services:
An increase in the difference between revenue from the sale of goods (services) and costs. This can be achieved by cutting costs and/or increasing product prices. This method must be used with caution, since reducing costs can lead to a decrease in the quality of goods (services) to an uncompetitive level, and increasing prices can lead to a reduction in the amount of goods sold and a decrease in the speed of cash flow.
Acceleration of cash flow. The faster finished products are produced from purchased raw materials, and the latter are converted into cash receipts as a result of sales, i.e. The faster the logistics cycle is completed, the faster the cash turnover occurs. The acceleration of cash flow, in turn, leads to the fact that more cash can be obtained from the same initial resources in the same time.
For example, in order to sell books worth 100 thousand rubles. per month, the bookstore can choose one of the following options. Purchase all goods at once, ensuring the planned sales volume. To do this, he must immediately spend 70 thousand rubles.
But this option is also possible: the store first buys goods in the same assortment, but in fewer copies, for example, for 35 thousand rubles, and then repeats this purchase again. As a result, the same result (sales worth 100 thousand rubles) can be achieved by using half as much money.
The acceleration of cash flow also occurs due to the acceleration of the sale of goods, so in some cases it is advisable to increase costs (for example, for faster delivery of goods) or reduce prices in order to reduce the duration of the logistics cycle and ultimately make a profit faster.
Eliminate unnecessary costs, loss and damage to goods. When improving the logistics process of an enterprise, it is necessary to constantly ensure that unnecessary operations, links, and structures do not arise that lead to unjustified costs. In addition, due care should be taken to ensure the safety of materials, goods and other property. When solving these problems, as well as those mentioned above, it is necessary to apply the concepts of trade-offs, total costs, and others. For example, free access of buyers to goods can lead to an increase in losses of goods due to theft and increased defects, but, on the other hand, it helps to increase sales and increase turnover.
In general, it should be noted that the costs of funds and other resources do not exist on their own. They always appear when you need to get some result. Based on this, it is advisable first of all to evaluate not the level of costs, but the relationship between them and the results obtained. Effective cost control requires the use of the total cost principle, otherwise costs can be reduced at a particular stage by simply moving them to another stage of the logistics cycle. For example, the purchase of cheaper raw materials leads to longer and more expensive processing, savings on transportation costs lead to higher costs for increasing inventory, etc.
All costs for the production and sale of goods should be considered integrally - as the amount that the consumer must ultimately pay in order to receive the goods and benefit from them. The buyer is not at all interested in how costs are distributed among the participants in the supply chain (publishers, printers, booksellers); he will buy a book if its price corresponds to his financial capabilities, and also corresponds to his assessment of whether the benefit he acquires in this product deserves the required financial expenditure.
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