Financial resources are the cash receipts and incomes of entrepreneurs, which are designed to expand and provide production, provide material incentives, satisfy needs, and so on. They are the material embodiment of economic relations.
Sources of financial resources
The most important of these is the value of GDP in the country, which consists of profit, wages and capital.
Their sources at the macro level are:
- income from foreign trade activities (foreign economic activity) ;
- GDP
- attracted resources (loan);
- national wealth.
Sources at the micro level are the following:
- attracted funds (loan, proceeds from the sale of bonds, stocks, etc.);
- finances received by the company in the order of distribution (insurance replenishment, etc.);
- own funds and those that are equated with them (vacation pay and employee wages).
Financial resources represent working capital and fixed assets. Them
the formation takes place at the initial level, at the time of the formation of the enterprise, when equity appears. We are talking about the property of the organization, which was created with the help of constituent contributions. Consequently, financial resources are those resources that are available to management after the current costs of covering expenses and paying salaries were made.
Financial resources are organized, planned and stimulated using a special mechanism, which consists of a set of interconnected elements. Let's consider them in more detail:
- Economic methods are ways of influencing the production process. Thanks to their action, financial resources are formed and applied.
- Legal support "works" on the basis of legislative acts, decrees, orders and other legal documents.
- Financial leverage - these are the techniques that “trigger” financial resources.
- Regulatory support is the rules, orders, instructions, norms, methodological explanations, directions, tariff rates and so on.
- Information support is a variety of commercial, economic, financial support. It also includes information on the financial solvency and stability of competitors and partners, the cost of goods, rates, interest, dividends in the markets (stock, commodity, foreign exchange), the situation on the stock exchange, commercial activities of entities and so on.
Financial resources are usually used in the following areas:
- They ensure the production process (expenses for capital investments, repairs, acquisition of intangible assets, payment of bonuses to stimulate employees, financing of the reserve fund).
- Application for the needs of defense, security, state authorities and law enforcement agencies.
- The cost of fulfilling monetary obligations to investors, founders, shareholders and so on.
Financial resources are formed and used taking into account a special management system. We are talking about management, whose activities are aimed at achieving the tactical and strategic goals of this organization.
For optimal management, management must:
- organize and manage the company's relations in the economic sphere with other enterprises, insurance companies, banks, budgets of any level, as well as financial relations within the organization itself;
- to form financial resources, predict their flow and optimize;
- allocate capital and accompany the process of its functioning;
- analyze and direct cash flows.