The essence and principles of financial management crisis
The deepening market reforms in Ukraine provides for large-scale restructuring of enterprises to provide innovative development of basic industries, improve the competitiveness of domestic producers and ultimately - improve the financial situation of business entities. However, achieving this goal will inevitably lead to bankruptcy of a number of enterprises.
Although bankruptcy is also the engine of progress and provides a mechanism of natural selection in the most competitive market environment, we can not underestimate its destructive consequences for the owners of capital, employees, business partners and society in general.
From these positions is growing urgency of effective crisis management as the financial system timely methods and techniques can prevent a financial crisis and avoid bankruptcy.
Content crisis of financial management is to develop a set of measures to prevent the financial crisis and overcome it. The financial crisis - a phase of deregulation of business, which is characterized disabilities impact on its financial relationships.
A manifestation of the crisis in the financial activity is a significant deterioration in the capital structure, solvency and liquidity by external and internal factors.
The possible occurrence of bankruptcy is a stage of the financial crisis, which the company already unable to exercise financial support of business. However unpredictable the loss potential of enterprise development is a threat to its continued existence.
The main purpose of financial crisis management is the development and implementation of measures aimed at the rapid restoration of solvency and providing sufficient financial viability to exit the crisis. The main tasks of the anti-crisis policy at the micro level are:
- Early signs of crisis;
- Prevention of bankruptcy;
- Localization crisis;
- The financial stabilization of the company;
- To prevent a repeat of the crisis.
The figure illustrates the object and the subject of financial crisis management, as well as the system of external (exogenous) and internal (endogenous) factors that may cause the financial crisis at the company.
The specific content management measures depends on the depth of the financial crisis. From this perspective, financial crisis management can be:
• a system of preventive measures to prevent the financial crisis;
• system design and effective measures aimed at removing the company from the financial crisis.
Goals and crisis management tools based on real financial condition of the company is shown in Fig. 12.2. Development of specific crisis management policy based on such principles as:
- The need for preventive crisis management in the financial activity through their early diagnosis and develop a system of preventive measures;
- A differentiated approach to the crisis (occurrence of factors, the type of crisis and stage of development), depending on the level of risk for the financial development of the company;
- Timely and adequate response to specific crises in the financial development of the company;
- Implementation of primary internal capacity of financial stability;
- Financial reorganization to avoid bankruptcy.
According to these principles binding stages of formation and policy implementation of anti-crisis financial management are:
1) constant monitoring of the financial situation of the company in order to timely detect signs of the crisis;
2) identification of the main factors that caused the crisis state enterprise;
3) identify the extent of the financial crisis;
4) the formation of anti-crisis policy objectives;
5) the choice of appropriate instruments of crisis management and development of anti crisis measures;
6) control timeliness and effectiveness of implemented measures;
7) corrective anti-crisis policy, taking into account the results achieved and changes in factors external and internal environment.