How to increase the financial stability of the enterprise

Financial stability is one of the most important characteristics of an enterprise in a market economy. Financially stable is a creditworthy and solvent enterprise that has a certain reserve of its own funds, provided that their value exceeds the size of borrowed sources.

Instruction manual

1

To increase financial stability, clearly monitor and manage receivables, monitor its quality and ratio. Violation of the contractual obligations of the enterprise and untimely payment of goods sold lead to the loss of the business reputation of the company and, as a result, to its illiquidity and insolvency. For effective receivables management it is necessary:

- control the payment discipline of buyers;

- focus on a larger number of buyers in order to reduce the risk of non-payment by one or more of them;

- monitor the ratio of receivables and payables.

2

To speed up the turnover of receivables and ensure timely settlements, provide discounts to debtors for reducing repayment periods, use promissory notes in settlements with debtors, factoring operations, use a commercial loan in relations with customers.

3

In order to increase financial stability, create a reserve for bad debts. It represents the accounts receivable of the organization, which is not repaid within the terms established by the contract, and is not provided with the necessary guarantees. Creating a reserve will allow you to save on the amount of income tax, it mitigates the negative consequences of bad debts, but does not eliminate them.

4

Another option to increase financial stability is to increase the equity of the enterprise, for example, through the issuance of securities and reinvestment of profits. When deciding on the attraction of borrowed sources, it is necessary to assess the current structure of liabilities. A high share of borrowed funds in them can make raising new funds dangerous for the financial stability of the enterprise.

increasing financial stability