determine the position of the enterprise in the market. In addition, for each business line, the average indicators have different values. Currently, BIDV Hoan Kiem is generally evaluating short-term payment ability indicators greater than 1 as a safe ratio, or quick payment ability indicators greater than 0.5 as quickly meeting due debts. This application is not suitable in evaluating all types of enterprises and all business lines.
4.3 Solutions to complete financial analysis of corporate customers in lending activities of BIDV - Hoan Kiem branch
4.3.1 Completing the database used in financial analysis of corporate customers of BIDV - Hoan Kiem branch
Banks need to review and regularly update the internal document system, guide data collection and use of methods to assess the financial situation of enterprises to provide and disseminate to all staff working in credit and credit appraisal. These internal documents are not only guidelines for the implementation of the assessment of customers' financial situation in practice but also training materials for new staff or periodic training of staff, and should develop a Credit Handbook within the bank.
Relatively complete and detailed information sources facilitate the practical application process. The data used in the analysis are taken from financial reports such as balance sheets, business performance reports... these financial reports are requested by the bank to be audited or inspected by the tax authority, and for cases that have not been inspected, customer relations officers have methods to check the data and request customers to make accurate and reasonable corrections...
4.3.2 Solution to improve analysis method
Currently, BIDV Hoan Kiem is using comparison methods and ratio methods to analyze customer finances, these are just methods.
simple method, and the analysis only stops at calculating some basic indicators, not determining the relationship between financial indicators and the level of influence of those factors on the analysis indicators. Therefore, to analyze customer finance to achieve high results, BIDV also needs to focus on applying the following additional financial analysis methods:
The balance method is a method based on the dialectical relationship of objectively existing economic phenomena and things. Analysts can check the conformity between the capital mobilization situation and the capital usage situation of customers according to the following formulas:
Total Assets = Owner's Equity + Liabilities Or Total Assets = Total Capital.
Direct comparison method: used to compare between summary and detailed indicators. Compare the opening balance of this period with the closing balance of the previous period, compare the balance of summary indicators with the balance of detailed indicators, compare original documents with recorded documents...
Logical comparison method to examine the corresponding level of fluctuation in the value of economic indicators related to each other such as if capital changes, will assets change accordingly?
The graphical method helps users have a vivid visual view of the evolution of research objects over a certain period of time as well as the scale of components and structures in the whole, helping to quickly analyze and orient financial indicators, thereby providing solutions to improve the efficiency of production and business activities.
The Dupont financial model method is a scientific analysis method widely used in developed countries. This method is used to analyze the relationship between factors affecting the financial indicators that need to be analyzed. Through that relationship, people can discover the factors that have affected the analyzed indicators in a strict logical sequence and different trends.
4.3.3 Solutions to improve processes and regulations
BIDV has regulations on financial analysis of corporate customers. In the process of performing the customer financial analysis process, analysts sometimes ignore some parts of the analysis process or sometimes subjectively and emotionally ignore some content for traditional customers or trust customers too much so they do not carefully check the information provided by customers, so they do not check with related subjects such as comparing financial reports with tax authorities, comparing large receivables of customers to determine whether those receivables are likely to have risks in the future, valuing the real value of the enterprise's fixed assets, valuing the current value of the enterprise's inventory, evaluating short-term investments, the enterprise's cost control level... In addition, analysts must predict how the political, social, economic, and natural situations may affect the enterprise in the future... The quality of the customer appraisal stage before borrowing, monitoring and analyzing customer finances throughout the loan process greatly affects customer's ability to pay in the future.
To ensure the quality of financial assessment of corporate customers is further improved, banks need to continuously improve the lending process, including more specific instructions on the assessment of customers' financial situation. Through the actual work process, contact with customers, refer to the lending processes of other banks, to adjust the lending process at the bank to shorten the time and procedures while still improving the efficiency of the assessment of customers' financial situation.
When there are new policies and directives from the State Bank, management agencies and banks need to immediately update and disseminate them to all.
Credit officers can be trained or coached if necessary. At the same time, research and adjust procedures and regulations to ensure that they meet new development requirements, paying special attention to assessing customers' financial situation.
4.3.4 Solution to complete analysis content
Banks also need to improve the classification of enterprises and customer ratings by considering the weighting of financial indicators to suit the characteristics of customers at the bank. At the same time, banks need to build a system of industry average indicators based on the actual characteristics of enterprises in each business sector to have a basis for evaluating enterprise indicators more accurately.
Strengthening the inspection and examination of the implementation of regulations in lending regulations in general, and the assessment of customers' financial situation in particular. Because this is an important activity with many potential risks, it is the basis for assessing the efficiency of business operations, the ability of customers to repay debts, ensuring safety and profitability in the bank's credit activities.
The bank also needs to promote training, regularly organize short courses, intensive training classes, and discussions between long-time staff and young staff with little experience in customer financial assessment. At the same time, the bank also creates conditions to encourage staff to participate in professional training courses, domestic and international seminars to improve their qualifications.
Banks need to conduct regular checks and review the calculation of indicators used to assess the financial situation of enterprises, in order to find unreasonable shortcomings and make appropriate additions and changes. This work needs to be done by the staff directly involved in the assessment.
appraisal, long-term experience, understanding the nature of the work and the characteristics of the customer.
Banks should pay more attention to financial evaluation indicators from the cash flow statement. In reality, financial evaluation indicators from the cash flow statement are often superficially evaluated, disregarded, or not evaluated by bank staff. While these indicators evaluate the business's ability to continue operating, as well as its ability to pay, the funding sources for payment from the business's capital or from outside, the amount of money earned from each activity in the business is enough to cover the spending purposes of that activity. In reality, the cash flows earned are also one of the sources of repayment of the business's loans to the bank. Bank staff need to determine the reasons for the business's large and unusual receipts and payments during the period; their impact on the business's cash flow.
Recalculate business loan needs:
Unit: million VND.
STT
Target | Amount | Note | |
1 | Expected revenue | 232,744 | According to the business plan, approved by the Bank rated positive. |
2 | Expected net profit | 3,956 | According to the business plan |
3 | Estimated basic depreciation ants | 1,500 | According to the business plan career |
4 | Production cost business essential | 227,288 | 4 = 1-2-3 |
5 | Working capital turnover expected year | 2.40 | Average working capital turnover 3 2015 - 2017 reached 2.71, expected |
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2018 | expected in the coming round rotation tends to decrease. | ||
6 | Necessary production and business costs for a spin | 94,703 | 6=4/5 |
7 | Equity capital involved in VLD | 13,817 | The company plans to use less than its equity capital. into VLD |
10 | Working capital requirements 2018 movement | 80,886 | 10=6-7-8-9 |
10.1 | Borrowing from banks and other mobilization | 40,886 | The company is currently licensed. Limit at 02 credit institutions with total limit of about 40 billion. |
10.2 | Loan demand at BIDV Hoan Kiem | 40,000 |
Source: BIDV Hoan Kiem credit management department
Based on the working capital needs in 2018, on the basis of transferring part of the use of products and services from other credit institutions to BIDV, the enterprise requests BIDV Hoan Kiem to grant a short-term credit limit (including outstanding debt, opening LC and payment guarantee,...) in 2018 of 40,000 million VND.
BIDV Hoan Kiem assesses that this is a good customer with great potential for developing products and services. Based on the assessment of the customer's business situation and plan, BIDV Hoan Kiem agrees with the business's proposed limit.
Regarding revenue: By the end of the second quarter of 2018, the company recorded revenue according to tax declaration for the first 6 months of the year reaching 110 billion VND, achieving 47% of the assigned business plan. Therefore, with 112 billion VND in revenue
The remaining ability to complete the business plan of the enterprise is assessed positively. BIDV Hoan Kiem agrees with the enterprise's expected revenue plan of 232,744 million VND.
Regarding Cost of Goods Sold: with the ratio of Cost of Goods Sold to total revenue maintained at an average of 85 - 88%/year, the Company expects the Cost of Goods Sold in 2018 to reach VND 202,488 million, accounting for 87% of total revenue. BIDV Hoan Kiem assesses that the Company's cost of goods plan is appropriate.
Regarding financial costs: with the policy of maintaining average outstanding debt at credit institutions in the range of 40 - 50 billion VND, in particular, in the last month of the year, the outstanding debt can increase by more than 60 billion VND to serve the sales demand during the holidays. At the same time, in order to minimize interest expenses, the company will take advantage of preferential credit packages at credit institutions. Therefore, BIDV Hoan Kiem assesses that the company's expected interest expense in 2018 of 3.5 billion VND is appropriate.
Regarding business management costs: in 2018, with the orientation of expanding operations at the Ho Chi Minh City branch, the Company will recruit more sales staff. At the same time, to make the branch more financially autonomous, the Company will recruit experienced financial accountants to build a branch capable of independent business planning and financial accounting. Therefore, the Company expects management costs to increase compared to 2017, specifically business management costs in the 2018 plan will reach 22,800 million VND, accounting for 10% of total revenue.
4.3.5 Other solutions
Add cash flow statement analysis: Analyze the cash flow statement to know what stage of the business cycle the business is in.
Add more analysis methods
Add more financial statement analysis indicators and recalculate operating indicators according to appropriate formulas.
Using credit scoring and customer rating models
Building industry average targets for business groups Improving staff qualifications
4.4. Some recommendations
4.4.1 Recommendations to the State Bank
- The State Bank also needs to systematize standards, requirements on content and guidelines for assessing the financial situation of enterprises for commercial banks. At the same time, regularly organize conferences and seminars to summarize and share experiences in the whole industry to evaluate the results achieved, the remaining limitations, thereby proposing solutions to overcome the shortcomings in assessing the financial situation of enterprises at commercial banks.
- Enhance the role of the Credit Information Center CIC In the current situation when the requirement to publicize data has not been implemented, the source of information supporting banks is mainly provided through CIC. The State Bank of Vietnam needs to actively strengthen the credit information system, ensuring that CIC performs and promotes its functions and tasks properly. Bank
4.4.2 Recommendations to other relevant ministries and branches
- Transparency and disclosure of financial information sources The Government needs to have regulations requiring independent audits for all businesses, not excluding small and medium-sized enterprises, and at the same time require disclosure of these financial reports.
- It is necessary to strengthen State management measures for business activities, monitor compliance with policies and regimes. There should be regulations to increase transparency in financial accounting activities of the business system, to improve the reliability of information.