"How much money do we currently have in our company's account?"
"This month's salaries have already been paid out, and there's still over 8 million yuan left. Boss, do you want to see the detailed records? If so, I'll go up and get them."
"No need, let's go up together."
A company's working capital refers to the cash funds it needs for its daily operating activities.
Working capital is an important guarantee for a company's normal operation and one of the core aspects of its business management.
The management and utilization of a company's working capital will directly affect the company's production, operations, and development.
Generally speaking, for a company with an annual output value of less than 1 billion yuan, having working capital between 20% and 30% is relatively healthy.
Within this, different industries and different payment cycles have further distinctions.
Take a Taobao store, for example; the payment cycle for a Taobao store is generally around 10 days.
So, a Taobao store with an annual output value of 100 million yuan basically only needs about 3 million yuan in working capital to operate effectively.
However, businesses like retail stores and platforms, which have large daily cash flows, do not need working capital at all and can even use the large amounts of money they collect to earn interest.
The reason why the manufacturing industry's capital chain is so tight is because their payment cycles are very long, requiring large reserves of working capital.
Once the capital chain cannot keep up, the company may face the risk of bankruptcy.
The capital circulation process for manufacturing enterprises is this:
1. Procurement process: Monetary funds are converted into raw materials;
2. Production process: Raw materials are converted into semi-finished products, and then gradually processed into inventory goods;
3. Sales process: Inventory goods are converted into monetary funds.
The reason for the tightness lies in the second and third steps.
Some companies' payment cycles even exceed one year, naturally leading to greater financial pressure.
As an aside, how can you estimate the net worth of a business owner in a tangible industry?
Generally speaking, conservative business owners in tangible industries usually have about 80% of their net worth tied up in working capital, while aggressive ones will leverage 2 to 10 times that for circulation.
So, by roughly estimating their working capital, one can estimate their net worth.
Therefore, for a business owner in a tangible industry with a net worth of 100 million yuan, having 20 million yuan in cash is already a considerable amount.
Their life is certainly not as carefree as those wealthy individual investors in the stock market who casually invest hundreds of millions.
It can't be helped; money must be used as working capital for business.
Otherwise, this 100 million yuan net worth would be nothing but an illusion.
Shanchi Vehicle Industry's sales revenue for 2005 should be around 60 million yuan.
With over 8 million yuan in working capital on the books, which is about 13% of its working capital, this is relatively dangerous.
However, considering that the current products are in short supply and the payment cycle is only one month, this 8 million yuan in liquid cash can still sustain operations.
From this perspective, Liu Meilin, the accountant, is still very competent.
Tan Jincheng has also put in a lot of effort regarding how to avoid financial problems and prevent accountants from absconding with funds.
Firstly, there's internal control.
Other departments can be a bit more relaxed, but Tan Jincheng is absolutely meticulous when it comes to the accounting system, control environment system, and control procedures.
With accounts receivable amounting to tens of millions each month, if not properly controlled, there's a real risk of funds being embezzled and absconded with.
Taking July, August, and September as an example, the company received over 24 million yuan in payments.
Any lack of proper control would be extremely dangerous.
Tan Jincheng cannot bring himself to gamble with human nature when it comes to such massive wealth.
Furthermore, the company's finance department has clear divisions of labor, with positions such as supervisor, accountant, and cashier all fully staffed.
Once the company scales up, these personnel expenses cannot be saved.
Clear division of labor between superiors and subordinates, with checks and balances alongside cooperation, is what makes it perfect.
Although Liu Meilin is the supervisor of the finance department, there is also a cashier.
Furthermore, the company seal has always been with Tan Jincheng.
When issuing checks, both the financial special seal and the company seal must be stamped simultaneously for them to be valid.
The same applies to online banking payments: Liu Meilin is responsible for payments, and Tan Jincheng is responsible for approval.
Funds can only be disbursed after being approved by both of them.
In addition, cash management is also very strict, adopting a system where the cashier is responsible, and indirectly received cash must also be handed over to the cashier immediately.
Of course, like Wang Guoxin, Tan Jincheng will also grant the finance department a certain degree of discretionary power.
This amount allows them to feel their work value and status without breeding greed.
There's no need to do anything that tests human nature; improving the system is the best approach.
Another aspect is that one must learn to read financial statements; a boss who cannot read financial statements can be said to be unqualified.
In this regard, Tan Jincheng had business experience in his previous life, so these are not big problems for him.
The most important thing is to establish an awareness of paying taxes according to law and avoiding tax risks.
In the course of market development, companies that fail due to illegal shortcuts are everywhere, and in serious cases, company finance personnel and even responsible persons may face imprisonment.
Regarding this, Tan Jincheng, as a reborn person, is more vigilant than anyone else.
So many celebrities in later generations stumbled precisely because of this.
In the era of big data, if you don't cultivate a good tax awareness, you're truly digging your own grave.
"After the National Day holiday, the loan for the new factory will be disbursed. That loan will be used specifically and exclusively for the investment and construction of the new factory. Before the end of the year, the two short-term debts to Jinpeng Trade and Mingcan Plastic Molding will be repaid. The rest can be repaid slowly."
"How much did the new factory borrow?"
Liu Meilin asked curiously.
"30 million yuan, it's enough,"
Tan Jincheng smiled.
Liu Meilin nodded, not speaking, but inwardly pondering how to more reasonably utilize these loans and the loans collected in October.
Compared to previous companies, Shanchi's monthly cash flow was already very large.
"If this continues, I won't be able to do my part-time job!"
This boss is truly audacious.
Currently, this factory's debt already exceeds 14 million yuan, with short-term debts as high as 8 million yuan.
Now, another 30 million yuan has been borrowed, instantly raising the company's debt to over 40 million yuan.
This is truly a headache.
Company finance is not merely about receiving and paying money or issuing invoices.
Aspects like annual budgeting, expenditures, assisting the boss in effective work, and maintaining the company's income-expenditure balance all need attention.
In short, it means you must rationally use the money the boss receives, and the same applies to borrowed money and interest.
No errors can occur.
This is probably why most finance positions are held by women, as women tend to be more meticulous in this area than men.
As for Tan Jincheng personally, he prefers local female finance personnel between 30 and 40 years old who have families.
While being in their prime, life also requires them to work diligently.
Furthermore, having a home locally also means they have relatively more concerns.
This is probably their legendary soft spot.
"Okay, I will handle it properly. Please rest assured, Manager Tan."
"Hmm, next year's workload will be heavy. At that time, I'll find two subordinates for Liu Jie and Gu Jie to help lighten your load. Additionally, at that time, your and Gu Jie's salaries will also be increased. Liu Jie, if you have any other requests, you can also bring them up."
"Then I'll thank Manager Tan first. Just out of curiosity, the new factory will be much larger than the old one, so will we have to move to the bonded zone to work?"
Tan Jincheng nodded:
"Yes, at that time, all office personnel will move to the bonded zone to work. This location will be considered a branch factory, and a branch factory manager can be left to manage it."
"Liu Jie and Gu Jie, you two should also be prepared for this. I will also inform the other office personnel later."
"I understand. I have a car, so it's fine for me, but colleagues without cars might have some trouble. The bonded zone is relatively remote."
Tan Jincheng stroked his chin, musing,
"That is indeed a problem. I remember there's also a living area in the bonded zone. At that time, I'll see if I can rent a dormitory building there to accommodate the employees who will be working there. As for transportation, we can cooperate with a bus company for factory shuttles, and additionally recruit two drivers."
"It's good that Manager Tan has considered this. I was just giving a reminder, after all, the South Zone is all factory buildings, with no living areas at all, which is quite inconvenient."
"Okay, make a preliminary plan. For factory shuttles, let's plan for six buses, and make a budget for driver salaries as well. As for housing, I'll find someone to inquire about the rent for a dormitory building, and then I'll give you a number so you can make the budget."
Currently, we really can't afford to buy factory buses ourselves.
Those 50-seater buses are incredibly expensive, each costing about one to two million yuan.
Based on 300 employees, we'd need six buses to ensure they don't miss work, which would cost over 10 million yuan.
Therefore, cooperating with a bus company and utilizing their surplus capacity is the best approach.
If that doesn't work, buying their retired second-hand vehicles is also an option.
As the factory expands, the troubles also increase.
After the new factory is established, the two factory areas combined will have nearly 600 employees.
Collective dormitories and factory shuttles like these are essential; otherwise, unified management would be impossible.
Starting next year, Shanchi's monthly production capacity will reach 28,000 units, its annual output value will exceed 500 million yuan, and its number of employees will exceed 500.
This is already far beyond the scope Tan Jincheng could control in his previous life, and many things will require learning on the job.
Additionally, with more personnel, security work also needs to be taken seriously.
After all, they are producing electric scooters.
If hundreds of them are stolen due to negligence, losing money would be a minor issue, but affecting the agreed delivery dates would be troublesome.
Many things cannot be considered by Tan Jincheng all at once.
In the later stages of a company, having an excellent team to help the helmsman fill in the details becomes especially important.
Forget it, forget it, I won't think about it for now.
The more I think, the more my head hurts.
"I'll be going if there's nothing else. Liu Jie, you all take your time. I wish you all a happy National Day in advance,"
Tan Jincheng said as he stood up.
Finance personnel are usually busy at the end of the month, and Tan Jincheng didn't want to waste their time.
He decided to discuss anything else after the National Day holiday.
"Okay, Manager Tan, take care. I also wish you a happy National Day,"
Liu Meilin smiled.
(End of Chapter)