One of the general aspects of the economic development of the Russian Federation at the present stage of society is the existence of an innovative economy. The solution to the problem of increasing activity in the field of innovation is twofold, if we consider the issue at the level of individual structures. On the one hand, innovative projects of the Russian economy are formed from projects of various firms. This raises the level of its competitiveness. On the other hand, innovation is an important tool in the competition for individual enterprises and organizations both on the international and domestic markets. Our article will discuss the investment needs of projects and the sources of their financing. Let us analyze the classification, structure of sources, and also analyze them in detail.
Subjects of financing investment projects. Methodology
Under the sources of financing of investment projects it is necessary to understand the funds applicable as investment resources. It is worth noting that a lot currently depends on their competent choice. This is the viability of investment work; distribution of income derived from it; peculiar guarantees of financial stability to investors. A single system is formed from sources of financing investment projects, as well as certain investment methods. It must be added that behind each method is a real market entity.
Among the ways of investing, it is important to note the following:
- Credit.
- State.
- Combined.
- Self-financing.
Market Entities:
- Stock exchanges.
- Commercial banking structures.
- Budgets of different levels.
- Enterprises.
Classification of sources of financing
It should be borne in mind that all of these entities can be investors. And the sources of financing investment projects are:
- Own financial resources of the investor (depreciation charges; profit; savings, accumulations of individuals and legal entities; cash that is paid by insurance structures as compensation for losses from any kind of accident). It must be remembered that any commercial organization today must analyze the structure of sources of financing for investment projects, as well as identify certain trends, their causes, with negative outside interference in the process.
- Borrowed funds of investors or resources transferred by them. A vivid example here are budget or bank loans.
- Attracted funds of investors. We are talking about money received from the sale of shares, as well as thanks to contributions - for example, shares - of citizens, members of labor collectives and legal entities.
- Extrabudgetary fund funds.
- Funds from the federal budget, which can be presented both on a returnable and irrevocable basis, as well as the budget capital of the constituent entities of the Russian Federation.
- Money of foreign investors.
Types of sources of financing investment projects
Investment financing for facilities and construction projects can be implemented through one or a number of sources. Currently, they are usually classified into:
- Budget (centralized) - means of the budget of the federal or local level, as well as the budgets of the constituent entities of the Russian Federation.
- Extra-budgetary (decentralized) - all the rest (borrowed money from extra-budgetary funds, own funds of structures, individual developers, investments from foreign capital). It is worth noting that today the use of attracted sources of financing of investment projects in the Russian Federation is not predominant.
Structure of funding sources
The economic system does not develop and does not exist at all without the formation and subsequent use of investment resources. It is the solution of the issue associated with their search that makes it possible to increase the efficiency of the economy. In the economic literature, sources of financing of investment projects are usually classified in accordance with three areas: own, loan, attracted. It is worth noting that they can be expanded by adding budget investments, as well as charitable and free contributions.
Any source of financing an investment project can have certain components, volumes, role and significance. In each new case, they will differ significantly in terms of returnability, availability, chargeability and effectiveness.
Own sources of investment
It is advisable to separately consider their own sources of financing of investment projects and the mechanisms for their application. Economic growth depends on the structure and volume of investments in the national economy. In addition, the state should take an active part in the investment process, regulate, stimulate and direct it. Next, we take this into account and analyze the fundamental possibilities and urgent problems of the main sources of financing investment projects and mechanisms for their use. Today, the material basis for the process of expanded reproduction anywhere in the world is self-financing of structures. In other words, financing of the investment of an economic entity is realized, as a rule, from its own sources: depreciation of fixed assets, profit and reserve funds. In this case, the neoplasms' own funds are considered internal, and loans and borrowed funds are external sources of financing investment projects.
What are the difficulties?
It should be borne in mind that the possibility of using the profit of the structure as one of the main sources of accumulation is complicated due to the increase in the number of unprofitable companies, the huge volume of non-payments, as well as the desire of businessmen to reduce profits as much as possible or not to disclose it at all so as not to pay taxes. An analysis of the situation proves that the main sources of financing investment projects are our own. Profit is considered a key internal tool for creating financial investments. It provides the existing directions of strategic development of the company.
It is at the expense of profit that the company is able to pay taxes, form consumer and reserve funds, and also accumulate investment resources in order to fully develop economically. It is worth noting that the last part of the company's profit is the main source of financing investment projects by definition. The amount of resources for investment, which is created from the profits of the company, is revealed in the process of its distribution in accordance with different goals.
The choice of source of financing for an investment project largely depends on the capabilities of the structure and external circumstances. The second means of self-financing is the amortization of those assets of the enterprise that are long-term. Consequently, the most important instrument for regulating activity in terms of investments is depreciation state policy.
Depreciation policy
The effectiveness of the depreciation policy, first of all, is determined by the degree of taking into account the economic processes occurring after the fact, when substantiating the current depreciation rates. An important role is played by deliberation, the timeliness of their change. Deductions from intangible assets and fixed assets used by the company are a more permanent source of creating investment resources, especially when it comes to structures with a significant amount of assets. Through the use of various depreciation methods, the company can regulate the formation of depreciation flows. The company has the right to independently choose the method of accelerated or linear depreciation of funds of industrial fixed assets.
What sources of financing are more important?
As it turned out, attracted sources of financing for investment projects play a secondary role, and their own come to the fore. That is why there is a need to create the appropriate premises, the key of which are the following:
- Improvement of the circulation of funds.
- Noticeable improvement in financial discipline and financial condition of companies.
- Working capital replenishment.
- Improving the policy in the field of taxes and fees, its primary focus on anticipating fiscal factors for the work of economic agents, as well as ensuring stability. Differentiation of taxation principles existing today to stimulate the processes of accumulation and savings.
- Streamlining financial flows and the tide of capital investment in the real sector of the economy.
- Formation of conditions under which structures will operate as market entities.
Analysis of sources of financing investment projects
Attracting any source of financing investments involves certain costs for the structure. For example, issuing new shares involves paying dividends directly to shareholders, obtaining a loan - paying interest on it, applying leasing - paying remuneration to the lessor, and so on. Therefore, when analyzing, you need to identify the price of various sources of financing and determine the most profitable of them.
It is worth noting that currently the only potential means of financing FIG investments is bank loans. The policy developed by the state over the past few years has not had a direct, but extremely strong impact on incentives and opportunities for financing by banks financial projects of financial-industrial groups. In the regulation of the economy, one of the most important areas of influence on the political priorities of banking institutions in recent years is to raise funds from financial institutions in order to finance the state deficit. the budget. It should be noted that high rates of alternative profitability impede the development of lending and investment by banking institutions of industry, where it is advisable to include investment projects of the financial and industrial group.
The second most important factor that impedes the development of this activity is the ever-increasing insecurity of contractual obligations in the domestic economy. Having looked at the situation only once, it is possible to draw the wrong conclusion that the opportunistic behavior inherent in bank borrowers is in no way related to regulatory state activities. Nevertheless, a more detailed analysis indicates that the dishonesty of economic agents in the execution of contracts is largely triggered by certain actions by the state itself. In any case, the practice that has developed over many years and is associated with the insecurity of the interests of investors and creditors is a significant obstacle to increasing the role of bank investments and loans in financing investment projects of a financial and industrial group.
Final part
So, we fully examined the varieties, the structure of the sources of financing investments, and also analyzed some of them. In conclusion, it is advisable to note that the approach to the issue discussed in the previous chapter allows us to separate the analysis of financing decisions from the analysis of investment decisions. By the way, only after calculating the net present value of the project can each source of financing be analyzed separately.
It must be borne in mind that in order to justify any investment project, a business plan is formed that reflects the essence of the urgent issue, the role of the project in overcoming it, the expected effect of putting the idea into action, sources of financing, and so on. In the case of the adoption of the project option, the analysis of its implementation is carried out by comparing the indicators in fact with the values provided by the business plan.
In the final part, it is advisable to parse and automatic analysis. According to him, a predetermined algorithm implements a detailed study of all the financial and economic aspects of the project requiring investment, starting with the financing conditions and ending with the assessment of the solvency of the project as a whole, indicating the negative features of its implementation. It is worth noting that the analysis can be carried out both throughout the project, and in some of its sections. The procedure is carried out in graphical form. The analysis is accompanied by text comments. It is necessary to supplement that all the information indicated in it can be used for the initial design of the project. In addition, it is on the basis of the analysis that it is possible to identify weaknesses in the production plan of the project, and therefore the risk level of the relevant investments.
Only as a result of the analysis, the developers can form a number of alternative ideas (for example, with different sources of financing, different structure of production or investment costs, etc.). In addition, in the mode of such analysis, the program independently offers a brief conclusion related to the assessment of key performance indicators. In case of discrepancy with accepted methods, she will tell you the most effective ways to eliminate them.
And finally, the financial plan ends with a description of the sources of financing for all calendar periods of the project, as well as an analysis of the financial condition of the company and the effectiveness of investments in the future.