The annual interest rate is quite high. P VC should more drastically regulate the capital sources of member units through debt collection to reduce long-term debt and reduce the cost of periodic interest, which accounts for a significant proportion of financial costs.
Promote corporate restructuring and divestment: The Corporation needs to clarify the financial situation of the units in which P VC invests and contributes capital, promote the implementation of the Corporation's restructuring project (especially restructuring of capital contributions) to recover investment capital and focus capital on key production and business activities. This is a fairly abundant capital mobilization channel, but currently due to the unpredictable macroeconomic situation, investors are still hesitant to invest in this field. However, with the strengths of P VC Corporation, if it is determined to promote restructuring and make the financial situation transparent, many investors will certainly be interested in investing.
Mobilize commercial credit loans and other sources of capital through negotiations with credit institutions to resolve difficulties and obstacles regarding P VC's loan guarantees for units on the principle of maximizing the Group's position and the borrowing units must be responsible for debt extension, debt forgiveness, and asset sale to repay bank debts. For the remaining part, P VC must be responsible to the end to repay bank debts to regain the brand and image of P VC and P VN. Proactively and actively work with banks/credit institutions to restructure debts, negotiate loan interest rates and arrange sufficient capital to serve production and business activities and release guarantees in the coming time;
Strengthen cash flow management at projects/works. Coordinate and urge the Executive Boards, closely follow the Investors in the acceptance and payment work to recover capital, especially the over-advancement and over-advancement for contractors at the projects.
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In addition, P VC needs to promote the restructuring of the Corporation's guaranteed loans by actively working with Banks and Credit Institutions to negotiate the release of PVC's guarantee obligations;
3.2.2. Group of solutions to improve capital allocation and usage management
- Consider choosing the capital structure to ensure the most effective use, suitable for each period; establish a reasonable profit sharing policy to ensure both the rights of the owner and the rights of employees and workers; in addition, the management and use of assets to avoid waste and wrong purposes also need attention.
- Strengthen the monitoring and management of fixed assets, construction materials, imported and exported materials and inventories at construction sites;
- Annually allocate an appropriate amount of investment for research and development. Form a fund for science and technology development. Research topics for applying science and technology are built from practical needs;
- In addition, because P VC is a unit operating under the Parent - Subsidiary company model, therefore, control through only the profit margin on capital, revenue realized per capital unit, etc. at the subsidiaries allows the parent company to have a reasonable investment policy in units in areas with potential for development.
3.3.3. Group of solutions to complete revenue and cost management
Revenue management: the first thing is to build a management method and determine real revenue. When implementing this method, the unit needs to implement mixed management, which means both centralized and decentralized. Based on real revenue, it is possible to provide accurate financial analysis indicators and determine the operating efficiency of each unit, indicators such as profit, real revenue per unit of business capital, revenue per unit of labor, etc., thereby grasping the effectiveness of the unit's operations, thereby building a support mechanism in production and business activities, creating conditions for controlling the use of capital. Actively carry out marketing and bidding to find and supplement sources of work, create jobs for employees, and increase revenue for the company.
Cost management: cost factor is always an important factor contributing to reducing product cost and increasing profit. Therefore, innovation in cost management methods needs to be implemented through the following measures:
Implementing a mixed management method, that is, implementing both a cost allocation method and a cost standard management method;
The construction of cost management methods must be based on the basic principles of cost management, on the basis of regulations and instructions of state management agencies and in accordance with the actual situation of the unit. The payment of salaries, bonuses and other allowances of a salary and bonus nature must be based on production and business efficiency.
PVC continues to reform and perfect the organizational structure of the unit. Build a system of departments and teams suitable to the production and business characteristics of the unit. Streamline the management apparatus, prioritize the recruitment of highly qualified and skilled staff and workers. Apply corporate governance measures consistent with the Group's system. Build a corporate culture to create a scientific, united and friendly working environment;
Be determined in construction management of all works and projects that PVC and units within PVC carry out;
Profit management: the unit's profit after offsetting previous year's losses according to the law and paying corporate income tax is distributed: (1) to offset previous year's losses that have expired and are deducted from pre-tax profits, (2) to set up a financial reserve fund, etc. In which, priority is given to the development investment fund from after-tax profits to expand production and business activities.
It is necessary to innovate management methods in the direction of creating motivation and initiative for member units to develop and improve the efficiency of production and business activities.
3.3.4. Group of solutions to complete financial planning work
Pay attention to and focus on financial planning (including short-term financial planning and long-term financial planning). This is the basis for all company activities and also the basis for evaluating the effectiveness of financial activities.
To do this, P VC managers need to accurately and clearly define their development orientation/goals, build clear and specific financial goals and ensure feasibility based on the results of analysis, correct and accurate perception of their reality based on financial indicators as well as capacity and operating situation. From those goals, P VC proposes a plan to implement the goals, assigns specific tasks and responsibilities to each manager , each department, and regularly reviews during the implementation process.
Financial goals and implementation plans are not independent and separate but must be closely linked with other management goals, consistent with the company's overall goals, ensuring good support functions and promoting the implementation of other goals.
Financial planning does not stop at setting up financial targets for implementation, but must forecast revenue and expenditure flows to guide business activities, and at the same time anticipate and minimize unusual fluctuations. Financial planning may not have the exact steps as short-term financial planning, but it must ensure strategic thinking and most importantly, it must aim at achieving the goals and mission of the business.
3.3.5. Support solution group
- Regularly research, learn and grasp new technologies to gradually master technology and enhance competitive advantages in construction work;
- Maintain, ensure quality, and sustain current markets: power plant projects; petrochemical refinery projects; industrial park infrastructure projects, etc.;
- Maintain ISO standard management system and HSEQ process at all PVC projects/works.
- Closely linking learning with practical application in construction and installation work: Building tools to manage progress, quality, improve construction methods as well as other comprehensive solutions to improve labor productivity, maximize cost savings, and ensure construction quality;
- Continue to implement the overall restructuring of P VC in accordance with the direction approved by the Group, in the direction that the parent company directly participates in production and business activities in the construction and installation sector, plays the role of guiding the activities of affiliated companies, divests all investment capital in units not in the main business chain of P VC; enhances the role of management, supervision and operation of production and business activities to ensure improved operational efficiency of units and efficiency of using investment capital of PVC;
- Be determined in reviewing, comparing and collecting debts, develop detailed plans for debt collection and handling for each month and quarter, in order to recover capital to ensure production and business activities, and minimize financial costs due to capital appropriation;
- Actively work with the Group/Group member units and state management agencies to speed up the approval of costs arising in projects that PVC is participating in;
- PVC continues to reform and perfect the unit's organizational structure. Build a system of departments and teams suitable to the unit's production and business characteristics. Streamline the management apparatus, prioritize the recruitment of highly qualified and skilled staff and workers;
- Apply corporate governance measures consistent with the Corporation's system. Build corporate culture to create a scientific, united, and friendly working environment.
3.3. Some recommendations
In addition to its efforts and determination in overcoming previous shortcomings and limitations, improving and perfecting management work in accordance with the development orientation and actual situation of P VC, the necessary and sufficient conditions for P VC to effectively realize the above solutions are:
3.3.1. Recommendations to the Government
The State continues to perfect the legal system in a suitable direction, close to the actual socio-economic situation of the country, this will greatly impact the operations of enterprises; The issuance of Decrees/Circulars
The guidance of the Law by Ministries/Departments also needs to be timely with the promulgation of the Law, helping businesses in the application process, avoiding the promulgation of guiding Decrees/Circulars with large delays as at present.
Vietnam's legal document system needs to be completed in a synchronous direction, avoiding overlap, avoiding the situation where a field that the Law intervenes has too many documents regulating, supplementing, and guiding the implementation, causing complications for the implementation of the Law, causing trouble for businesses, and making it difficult for the examination and management process of State agencies.
Strengthening the State's macro-management of business operations. This is demonstrated by the State's impact through macro-management tools, impacts that are directional in nature and in accordance with market rules.
It is necessary to perfect mechanisms and policies to exploit and mobilize domestic and foreign financial resources for investment and development, especially in the fields of Oil and Gas and Transport Infrastructure. The perfection must be in a synchronous direction, improving the quality of issuance, being consistent with reality and creating breakthroughs in resource mobilization.
3.3.2. Recommendations to Vietnam Oil and Gas Group (PVN)
The Group has regulations and mechanisms to regulate work between service units in the Group on the principle that units will be assigned to implement tasks/projects according to the capacity and operational experience of each unit to avoid internal competition. In particular, the Group/units in the Group need to have a mechanism to support work assignment for P VC in the coming time (due to the difficult financial situation of P VC, accumulated losses are PVC's weakness in the bidding process).
The Group needs to have a mechanism to ensure financial capacity for P VC during the bidding process and construction implementation within the next 2-3 years.
CONCLUDE
For businesses, business management includes many contents such as technical and technological management, sales management, production management, etc., but only financial management is the most comprehensive. To grasp the core of business management, it is necessary to grasp the financial management of that business. Therefore, it can be seen that financial management is one of the most difficult stages in the process of business management. In particular, in the current conditions of international economic integration, it opens up not only many opportunities but also many challenges and difficulties for Vietnamese businesses. Most Vietnamese businesses are in a state of capital shortage and production on a small and medium scale. Not only that, the intellectual content in the products is still low, so the competitiveness of the products has not been improved. Not only that, businesses also face difficulties in the context of the Covid-19 pandemic affecting the economic market of the whole world. Therefore, in order to survive and stand firm in the production and business market during the current difficult period, businesses must try to arrange and find ways to mobilize and use capital effectively, and must improve and enhance the effectiveness of financial management of the business.
Vietnam Oil and Gas Construction Joint Stock Corporation (P VC) is an enterprise operating under the model of a parent-subsidiary company, a joint stock company, operating under the Law on Enterprises of Vietnam; is a member unit of Vietnam Oil and Gas Group, the Group owns 54.47% of the charter capital. In the period of 2018-2020, through evaluation and analysis, the topic "Financial management of Vietnam Oil and Gas Construction Joint Stock Corporation" has achieved the set goals, which are:
Firstly, the thesis has outlined the general theoretical basis of financial management for enterprises. Based on this theoretical basis, it has created conditions to conduct a scientific and correct study of the financial management status of the Vietnam Oil and Gas Construction Joint Stock Corporation.
Second, the thesis evaluates the current financial management status of Vietnam Oil and Gas Construction Joint Stock Corporation, thereby presenting the achieved results and shortcomings.
Currently, limitations in financial management at Vietnam Oil and Gas Construction Joint Stock Corporation.
Third, based on the assessment of the current financial management status of the Vietnam Oil and Gas Construction Joint Stock Corporation, to improve the effectiveness of the enterprise's financial management, it is necessary to have reasonable solutions along with close coordination and strong direction from relevant sectors and levels.