N.K. Alimova,
General Director of the Synergy Charitable Foundation,
Moscow
One of the most pressing problems in education today is “extortion from parents” and “forced charity.” Considering this topic, we will proceed from the fact that:
Firstly, according to Deming's principle, only in 2% of cases errors in the work of a company are made by specific people. The remaining 98% is generated by the system. Thus, “extortions” are in 98 cases out of 100 not a mistake of the school director, but the result of the work of the entire modern education system;
Secondly, the most complex socio-economic problems cannot be solved in simple ways. With such simple methods as “dismissing”, “punishing”, “banning”, it is impossible to solve the issues of lack of budget funds and insufficient economic literacy of heads of educational institutions.
Today, there is no longer any doubt about the need for additional financial injections for state and municipal educational institutions. In not a single interview did educational leaders say that it is impossible to attract funds to the school under any circumstances and that it has enough budget funds. They only talk about attracting them legally.
Let's consider what sources of funding educational institutions have today.
Each additional source of financing has its pros and cons. The advantage of paid additional services is that you can enter into an agreement with parents under which they pay money, and the school sells them (more precisely, not to them, but to their children - one of the main features of the economics of education) a certain educational service.
There are no financial difficulties in this scheme; a parent can make a claim about the quality of the educational service, but not about cash flows. However, this method also has its disadvantages:
It does not resolve the issue of fees for the so-called needs of the class, since the money received should be spent on obtaining additional education;
Only consumers of additional educational services become the source of funds;
Since January 2005, the school has lost the opportunity to open its current accounts in commercial banks, and now all money for additional paid educational services goes to the school’s account in the treasury. This means that an educational institution cannot manage them in the same way as money in its current accounts.
The method of obtaining additional funds through charitable donations also has advantages and disadvantages. The advantages include the ability to attract all parents, and not just those who use additional paid services. In addition to them, school graduates, entrepreneurs, and local authorities can also be involved in charity. The possibilities for spending these funds are expanding; the main thing is that they go for the statutory purposes. To attract charitable donations, an educational institution can create its own legal entity with a current account or enter into an agreement with a charitable foundation and manage its money independently. In addition, philanthropists have a number of tax benefits.
What is the disadvantage of this source of funding? First of all, in the negative attitude of society towards the very idea of charity due to the scandals of the 90s associated with charitable foundations.
Another drawback of charity in an educational institution is the very low level of explanatory work among managers on the issues of creating competent relationships with parents as benefactors.
Law does not prohibit attract additional funds in the form of charitable donations to an educational institution.
In accordance with Art. 4 of the Federal Law of August 11, 1995 No. 135-FZ “On Charitable Activities and Charitable Organizations”:
"1. Citizens and legal entities have the right to freely carry out charitable activities on the basis of voluntariness and freedom of choice of its goals...
3. No one has the right to limit the freedom of choice of the goals of charitable activities and forms of its implementation established by this federal law.”
Participating in the charitable process philanthropists And beneficiaries. The mediator between them is Charitable organization.
Not only parents can be benefactors of an educational institution, although they remain the main contingent for attracting additional funds to the school; graduates can also be involved in charity. In addition, parents-entrepreneurs represent a special contingent; work with them can be done not so much as with parents, but to a greater extent as with entrepreneurs. If you wish, you can contact anyone as a philanthropist. The most important thing to remember is that philanthropists can define goals, for which their donations will be used, and also have the right to receive a report on their use.
Beneficiaries are students, teachers, school administration (if benefactors do not mind making financial incentives for the school administration one of the goals of their charity, no one can prohibit the director from receiving money from charitable donations).
The charitable organization may be an existing charitable foundation, a charitable foundation established at a school, or another organization established in the forms prescribed by law. The charitable foundation is engaged not only in financial intermediation between philanthropists and beneficiaries, but also resolves substantive issues of the charitable process.
At the end of the financial year, the charitable foundation must provide a report on the expenditure of charitable contributions. According to the rules, he must provide it not to beneficiaries (the school), but to benefactors (parents). However, an educational institution has developed a practice in which documents related to the movement of charitable donations are collected by the school administration and are not communicated to parent-philanthropists.
This approach leads to accusations against the school. It is necessary to inform philanthropists about where their donations are spent.
To do this, the director must have estimate of income and expenses for the next year (Appendix 1), approved either by the general parent meeting or the parent committee.
After the end of the financial year, the head of the educational institution must provide parents with a report on the expenditure of their funds (Appendix 2). This report is being produced by a charitable foundation for an educational institution.
Regulates the relationship between all participants in the charitable process board of trustees educational institution (now terms such as governing council, supervisory council have appeared, but the meaning of their activities is practically the same).
The Board of Trustees takes part in the formation of cost and income estimates and the development of intra-school charitable programs.
The board of trustees can work in two forms: with the formation of a legal entity (non-profit organization, charitable foundation) or without this - as a public organization. (The activities of a legal entity are a separate topic of discussion, which we will not touch upon today.)
Let's consider the work of the board of trustees in the form of a public organization, which is based, first of all, on the Law of the Russian Federation “On Education”. So, in accordance with Art. 35 of this Law:
"1. Management of state and municipal educational institutions is carried out in accordance with the legislation of the Russian Federation and the charter of the relevant educational institution.
2. Management of state and municipal educational institutions-deniya is built on the principles of unity of command and self-government. The forms of self-government of an educational institution are the council of the educational institution, the board of trustees, the general meeting, the pedagogical council and other forms. The procedure for electing self-government bodies of an educational institution and their competence are determined by the charter of the educational institution.”
Thus, the Law of the Russian Federation “On Education” speaks of the board of trustees as one of the forms of school self-government. The election procedure and the competence of the board of trustees are regulated by the charter of the educational institution.
The activities of the board of trustees and regional regulatory documents are regulated. Let's consider Art. 13 “Forms of support for state educational institutions” of the Moscow Law of June 20, 2001 No. 25 “On the development of education in the city of Moscow”:
"1. In order to develop state-public forms of management in the field of education, additionally attract extra-budgetary financial resources to ensure the activities of state educational institutions, establish public control over the use of targeted contributions and voluntary donations from legal entities and individuals for the needs of state educational institutions, educational institutions have the right to create a board of trustees and/or trustee fund.
2. The board of trustees is a form of self-government of a state educational institution.
The board of trustees may include participants in the educational process and other persons interested in improving the activities and development of a state educational institution.
The election procedure and the competence of the board of trustees, to the extent not regulated by this law, are determined by the charter and (or) regulations on the board of trustees of the state educational institution.
Members of the board of trustees perform their functions free of charge.”
Thus, in order to create a board of trustees, it is necessary to make additions to the charter of an educational institution to regulate its activities. The chapter of the charter devoted to the work of the board of trustees must reflect the procedure for the formation and management of the board, its functions, and the term of work.
Approximate regulations on the board of trustees of a general education institution, approved. by Decree of the Government of the Russian Federation dated December 10, 1999 No. 1379, does not sufficiently cover the work of the board of trustees
It is possible to develop a more complete Regulations on the Board of Trustees , on the basis of which the administration of the educational institution will develop its own local act. The regulations are adopted at the general meeting of the educational institution or at the council of the educational institution and are documented in minutes.
Annex 1
Estimate of income and expenses (financial plan) of the board of trustees of educational institution No. _______ for 2006.
|
Items of income and expenses |
Just for a year |
Including by quarter |
|||
|
1st quarter |
2nd quarter |
3rd quarter |
4th quarter |
||
|
Income |
|||||
|
1 000 000 |
300 000 |
300 000 |
100 000 |
300 000 |
|
|
Expenses |
|||||
|
1. One-time charitable assistance to employees of State Educational Institution No. _____ |
700 000 |
210 000 |
210 000 |
70 000 |
210 000 |
|
2. Purchase of office equipment |
100 000 |
30 000 |
30 000 |
40 000 |
|
|
3. Renovation of offices No._____ |
100 000 |
100 000 |
|||
|
50 000 |
|||||
|
5. Unforeseen expenses |
50 000 |
||||
|
Total |
1 000 000 |
240 000 |
240 000 |
170 000 |
250 000 |
Appendix 2
Report on the expenditure of funds received into the subaccount of the educational institution No._____ in the “Synergy” charity foundation under the targeted charity program “Education” for 2006.
|
1 |
2 |
3 |
4 |
5 |
|
Items of income and expenses |
Total according to plan for 2006 |
Actually |
Deviation from plan |
|
|
+ in rubles |
+ in% |
|||
|
1 |
2 |
3 |
4 |
5 |
|
Income |
||||
|
1. Targeted revenues for the implementation of the “Education” program |
1 000 000 |
1 200 000 |
200 000 |
20% |
|
Total income |
||||
|
Expenses |
||||
|
1. One-time charitable assistance to employees of State Educational Institution No._____ |
700 000 |
700 000 |
||
|
2. Purchase of office equipment |
100 000 |
120 000 |
20 000 |
20% |
|
3. Renovation of offices No._____ |
100 000 |
150 000 |
50 000 |
50% |
|
4. Renovation of offices No._____ |
50 000 |
50 000 |
||
|
5. Renovation of offices No._____ |
50 000 |
50 000 |
||
|
Total expenses |
1 000 000 |
1 070 000 |
70 000 |
|
|
Balance carried over to next year |
130 000 |
|||
Chairman of the Board of Trustees Signature (Initials, surname)
Director of State Educational Institution No.____ Signature (Initials, surname)
Directory of the head of an educational institution. 2006. No. 2. pp. 26-35
Attracting financing is one of the basic needs of any corporation. This problem is solved in the interaction of a corporation with an investment institution, for example, to place an issue of shares or bonds. Thanks to this interaction, a corporation can correctly build its capital raising policy, select optimal sources of financing, and reduce the cost of borrowed funds. On the other hand, enterprises that have financing needs can operate within the corporation. To satisfy it, they can, firstly, request resources within the corporation, and secondly, enter the capital market external to the corporation, which is one of the greatest achievements of modern civilization, which allows solving the problems described above.
The real sector of the economy has investment opportunities, the implementation of which requires capital resources in order to make a profit. On the other hand, there are sectors that do not have internal investment potential, but have free resources. The capital market emerged and developed as a mechanism that simplifies and reduces the cost of relations between those who own resources and those who need them.
The banking system is one of the conductors of capital into the real sector. However, in the current situation in the country's economy, banks are losing their status as a stronghold of the financial system. Confidence in banks has been shaken, which will cause, among other things, increased selectivity when issuing loans, especially long-term ones. As a result, the enterprise, even with obvious investment opportunities, may be left without financing.
The most attractive for a corporation is the securities market, which, unfortunately, did not have time to develop to the point where not only large, but also medium and small enterprises could attract resources from it, but turned out to be thrown back several years as a result of the crisis. Currently, only the largest and most professional operators remain on the stock market, and the volume of transactions has decreased tenfold. Consequently, it is advisable to adjust plans for corporate issues of shares for sale on the market in the direction of attracting foreign investors.
But life does not stop and corporations do not experience any less need for financing. In corporate associations, financing problems often arise, and the problem of one business is the lack of funds for potential growth, another is the lack of funds in general (with stagnant production), and the third is the impossibility of expanding on existing sites.
For corporations, as a rule, corporate financing services are needed - attracting investors, both on a debt and equity basis, but without changing ownership of a controlling stake. Corporations of the second type are interested in attracting a strategic investor, and the main shareholders are likely to agree with the loss of control. As a rule, a strategic investor wants to acquire more than 50%, and sometimes more than 75% of the shares of such a corporation, that is, absorb it. Owners of the third type of corporation have the funds (or present schemes to obtain funds) for the acquisition (absorption) or combination (merger) with another business, which should bring additional income (synergistic effect).
Services of all listed types are provided by specific financial institutions - investment banks - which are still just emerging in Russia as a link in the financial system. Large universal investment companies and banks operating in the securities market are most often transformed into investment banks.
On the one hand, an investment bank must have a powerful analytical service that, working together with the enterprise, can penetrate into the essence of production and investment processes. On the other hand, an investment bank needs an infrastructure that allows it to work in all segments of the securities market, as well as organize interaction with banking structures.
The investment bank searches for a strategic investor, acts as a consultant on mergers and participates in all necessary stock transactions.
A typical corporate finance product offered by an investment bank will typically include services such as:
1. Assessing the need to attract resources (investment diagnostics);
2. Development of optimal financing instruments and development of recommendations for their use (investment design);
3. Intermediation between the corporation and capital supply structures (emission activities, loan transactions);
4. Support of the financing project (financial consulting).
The analysis of the corporation's activities is carried out with the level of detail necessary to identify the volume of need for additional financing. It is possible that the need for additional funding will not be identified at all. However, financial analysis and economic valuation of a corporation are quite important in the investment banking process. It is on the basis of the analysis results that all further actions to select the type of sources and attract financing are built.
It should be added that the basis for meeting the corporation's financing needs is a transaction (a series of transactions) for the purchase and sale of its securities or for the provision of a bank loan. The most important parameters of the transaction are its size and price, which, among other things, depend on the financial instrument chosen to meet the investment needs of the borrower.
It is advantageous to use debt financing for a corporation not on a temporary basis, but by leaving a constant share in the advanced capital, that is, consistently replacing debt with its own financial resources in equal amounts. On the one hand, this frees you from one-time repayment of a fairly large principal part of the debt from profit or other own sources. On the other hand, by maintaining a significant proportion of debt in a corporation's advanced capital, it is possible to continually enjoy the tax benefits of financial leverage, thereby increasing the market value of the corporation. Of course, such behavior will require a clear calculation based on stable profitable operation.
The financing instrument is selected depending on the amount, term and restrictions on the cost of capital imposed by the profitability of the corporation's projects. Initially, almost any possibility is considered - from ordinary shares to bank loans and bonds. The issue of shares, as already mentioned, is unlikely to be successfully placed on the Russian market at present. There is, however, the option of a private placement, which means selling the entire issue to one or more strategic investors. Investment banking services may include searching for such investors.
Bank credit is currently unnecessarily expensive. However, an investment bank can work to create a banking syndicate that lends to the corporation at a reduced rate. A syndicated loan is usually cheaper than a loan from a single bank, since the entire set of credit risks associated with this loan is divided between the syndicate participants.
Today's problems in the banking system are the basis for the possibility of issuing corporate bonds, which are a debt financing instrument of a credit nature. It is possible to issue bonds of various types: coupon bonds (with a fixed and floating coupon yield), discount bonds and convertible bonds (the yield is linked to the parameters of placing an additional issue of shares and their market value).
Small bond issues ($3-10 million) can be placed privately. Large loans (more than $10 million) should be serviced jointly by several financial institutions and placed both privately, among large investors, and publicly, among small and medium-sized investors.
There are also many “non-traditional” instruments for the Russian capital market that can be used to attract financing. Some instruments used in financial practice to attract financial resources are discussed below, however, it is worth keeping in mind that, as a rule, it is often possible to design an instrument that exactly meets the specifics of a particular corporation and is most suitable for it.
Financing options
The corporation can use the following options for attracting financing:
1. Issue of ordinary shares.
2. Issue of preferred shares.
3. Issue of corporate bonds.
4. Obtaining a bank loan.
Attracting investment and investing financial resources is the basis for the successful start and development of any business and the implementation of any project.
Entrepreneurs’ own funds are not always enough to implement and develop new promising areas. But there are always people, financial organizations, large entrepreneurs who are ready to invest their money in new promising developments, innovations, products, production, etc. on various conditions (from borrowing funds at interest to acquiring a share and participating in a business). However, just a good business idea or a brilliant technical development is not a sufficient condition for receiving money for its implementation.
To attract investment you need:
- competently formulate the idea and present it in a form understandable to financiers - a business plan, a financial model;
- find and attract organizations willing to finance investment projects in this area of business on acceptable terms;
- conduct negotiations, present the project in a high-quality manner;
- draw up the necessary documentation, conclude contracts, etc., that is, ensure the transaction of obtaining financing from a legal point of view.
What sources can be attracted to finance an investment project?
Today there are many financial organizations that are ready to finance a promising project, subject to competent business planning and justification. Below is a far from complete list of organizations with which CEAFIT LLC specialists deal when searching for investors.
- private equity funds;
- venture companies;
- state banks;
- commercial banks;
- private investors;
- leasing companies;
- entrepreneurship development funds;
- employment funds, etc.
Our company has partnerships with a number of similar organizations.
What work does CEAFIT LLC perform to attract investment in the project?
- search for potential investors;
- development of a business plan (feasibility study, financial model) or other materials in accordance with the requirements of investors;
- preparation of information materials for searching for an investor;
- posting on special information resources and sending potential investors information about the investment project, including a business plan, resume, teaser, financial model and other information;
- carrying out negotiations on behalf of the initiator of a business project with potential investors;
- updating and changing the business plan, resume, financial model if necessary;
- consulting assistance in determining possible options for the investor’s entry and exit from a business project;
- determination of the project financing scheme;
- analysis of investor proposals and draft constituent (and/or similar) agreements;
- preparation of necessary documentation for concluding a transaction.
How much does it cost to attract an investor?
A desirable (but not mandatory) condition for attracting investments is the competent implementation of the necessary research - business plans, feasibility studies, building a financial model, etc., mainly by employees of CEAFIT LLC.
Our specialists must be well versed in the project and be confident in its quality assessment and presentation. After successfully raising funds, these expenses are deducted from the commission amount of CEAFIT LLC for attracting investments.
If you carry out these studies yourself or through another organization, we will carry out a free examination of the materials and, if necessary, make recommendations for correcting them, after which you can begin active work with investors. However, our company reserves the right to refuse cooperation if the materials are not brought to the required level of quality.
The average cost of our services for attracting investments is 2% of attracted investments (for projects with the required investment amount of up to 50 million rubles). For more capital-intensive projects, the cost of our services is negotiated separately.
Payment upon receipt of the first tranche of financing.
If you are interested in attracting investments to finance a promising projectin Tyumen and Tyumen region, Khanty-Mansi Autonomous Okrug (KhMAO, Ugra)contact us by phone +7(3452)57-82-93 or by email or use any other convenient for you. At a minimum, you will receive professional and absolutely free consultation to solve your problem.
The following types of strategies for attracting financial resources are distinguished, which can have an internal and external orientation (but, as a rule, they must organically combine both). 1. Using your own funds to expand your market niche. Used by medium and large highly specialized firms operating in established stable markets. Generally unprofitable. 2. Pooling the financial resources of medium and large firms to implement expensive projects to capture new markets. 3. Use of all available sources of financing (loans, issue of shares, creation of consortia, etc.) for the formation and implementation of promising innovative programs of small and medium-sized enterprises in knowledge-intensive industries. Risky, but highly profitable. 4. Attracting donor funds from large firms - consumers of products as part of vertical integration with them. 5. Cross financing (divisions that generate financial resources share them with those who lack them). External orientation involves relying on borrowed funds (bond issues and bank loans), internal orientation - on own funds (authorized capital and profit). The financing strategy determines: 1) the optimal ratio of internal and external sources of raising funds; 2) the price that the company can pay for them; 3) methods of distribution (redistribution) of financial resources between departments. The first problem is particularly complex and does not have a clear solution. The reason is that deviation from the optimum in either direction is both extremely profitable and risky. Focusing on using profits is the safest way to finance. But, firstly, its value is generally limited, which imposes strict limits on the potential development opportunities of the company. Secondly, an increase in the share of profits allocated to expanding and improving production infringes on the current interests of the owners. These restrictions, it would seem, can be overcome by issuing shares, which brings in additional huge funds. However, companies usually take this step with great reluctance, and there are reasons for this. The fact is that shares are sold to third parties, and, therefore, leave the control of the issuer and are subsequently freely sold and bought on the securities market. Thus, sooner or later they can be concentrated in the hands of any person (including a competitor), which will allow him to establish control over the corporation without the knowledge of the founders. In this sense, the use of external (borrowed) sources of financing is more preferable. But at the same time, the company becomes dependent on creditors, who, on occasion (which is especially typical for Russia) can purposefully bankrupt it. However, the use of borrowed funds can bring significant benefits to the company (and not just prevent a hidden change of ownership). The fact is that an increase in their share determines the growth of the main indicator characterizing the efficiency of its work - return on equity. The higher it is, the greater the demand for the company's shares, the higher their rate and, thus, the price of the corporation itself. The reason is that the attracted capital earns a profit on a par with its own, and in this case is excluded from the calculation of profitability. At the same time, an increase in the share of borrowed capital, as already mentioned, correspondingly increases the risk of bankruptcy, because the company at the right time may not have the funds to repay the loans. Many of the negative aspects of the strategies described above for attracting financial resources can be overcome with the help of leasing - long-term rental of equipment. The lessor company purchases (including on behalf of the lessee company) and leases out the necessary elements of fixed capital. Sometimes leaseback takes place - the entity sells property to a leasing company and leases it with the possibility of repurchase. In terms of content, leasing is a form of commodity credit for fixed capital, and in form it is similar to investment financing. There are the following main leasing options. 1. Depending on the number of participants: direct leasing (supplier and lessor - one person); indirect leasing (the property is leased not by the supplier, but by a financial intermediary). 2. By the type of property that becomes the object of the transaction (movable and immovable). 3. Depending on the place of its imprisonment (internal and external). In domestic leasing, all participants represent one country. With external (international) - different states. 4. Depending on the form of return of funds, leasing is distinguished: with cash payment; with compensation payment (products, services); with mixed payment. 5. By scope of service: pure leasing (all maintenance of the property is carried out by the lessee); with additional service. 6. According to the period of use of the property and the conditions of depreciation associated with it: with full payback and full depreciation; with incomplete 7. By the nature of payment (operational and financial leasing). Operating leasing involves renting out property for a period shorter than its standard service life. Therefore, leasing payments under one contract do not cover the entire cost of the property, and it is rented out several times. In this case, the responsibility for repairing and insuring the property usually falls on the lessor. This form of leasing is used for vehicles, construction equipment, agricultural and computer equipment. Payment amounts for operational leasing are higher than for other forms, due to the additional risks of inability to re-lease property. At the end of the contract, the property is returned. Financial leasing is an operation for the special acquisition of property into ownership with subsequent putting it into use for a period approximately coinciding with the period of operation and depreciation. Typically, property is purchased for a specific user, who chooses it himself. The risk passes to the lessee. Sometimes a split lease is used, which is partly financed by the lessor and partly through loans. The main risk in this case is borne by creditors. Enterprises with a weak financial base, but highly profitable, as well as young and small enterprises can use subleasing. The lessor reduces the risk of non-repayment of loans and receives certain tax (property) and depreciation benefits. The lessee acquires: 100% financing; no need for immediate refund; the ability to create a payment scheme that is convenient for everyone; reducing the risk of moral and physical wear and tear for the lessee; reduction in taxable profit, since leasing payments are expensed; accelerating product turnover, stimulating the introduction of new products and the development of scientific and technical progress achievements. The strategy for raising capital is not least determined by the price that must be paid for it. It is influenced by: payments from profits, such as dividends on preferred shares; interest on bank loans and bonds; tax rate. In practice, the weighted average, or current, cost of capital (WAC) is calculated, which is often used as a discount rate and a benchmark for comparing the profitability of the conditions for attracting additional capital and determining the appropriate action strategy. Any new option for a capital raising strategy is compared with its current price or internal rate of return, and if it turns out to be higher, this option is adopted. As for the redistribution of financial flows between departments, its strategy is developed using portfolio matrices, for example McKinsey.
Each organization strives to develop, acquiring new opportunities, expanding sales markets, increasing the scale of production, etc. To do this, the company’s management, based on a long and in-depth analysis of the market state and the characteristics of its own enterprise, decides on the need to implement certain projects. These development paths must be profitable. After their implementation in production and financial programs, the company must at least recoup its costs for carrying out such events.
In order to be able to increase net profit and develop harmoniously in market conditions, an organization must look for ways to finance its activities. Such resources should not exceed the total income from their use. That's why attracting financing is one of the most important tasks that the management of any company solves.
General concept
Can be produced in different ways. However, what they all have in common is the ultimate goal. All sources that finance are attracted for specific projects. In this case, an accurate complex calculation is carried out. Risks and the likelihood of profit for both the investor and the enterprise are taken into account.
Project financing can be considered in a broad and narrow sense. In the first case, this concept means the entire set of methods and forms of providing the necessary finances for the developed project. In a narrow sense, project financing is understood as methods and forms of ensuring a certain direction of the company’s activities that will bring profit.
In this article, project financing will be considered in a narrow sense. It will allow you to understand how risks and income are optimally distributed between all parties. Every project generates a certain level of profit or loss.
Financing options
There are certain ways to attract financing. Each enterprise can introduce new projects into its production activities using its own and borrowed funds. Moreover, in the first case, the resources for implementing the project are cheaper, but they are not enough for harmonious development.
Borrowed capital has a fairly high cost. Each investor expects remuneration for the enterprise's use of its temporarily available funds. Therefore, at the end of the specified period, the organization returns the borrowed capital to the owner with interest. This is more expensive capital.
However, without attracting borrowed funds, an enterprise cannot develop harmoniously, conquer new niches in the market, or expand its sales markets. It is for this reason that almost every organization resorts to the help of investors. They provide an opportunity for development and increasing the company's profits. But you will have to pay interest for this. The optimal ratio of debt and equity capital guarantees the maximum amount of profit.
Methods
For financing can be produced by various methods. The Company makes a careful assessment of which of the following options is more appropriate under the circumstances.
An organization can finance its projects using one of the following methods:
- Equity financing. One of the most common methods in this category is raising equity capital.
- Self-financing. The company owner's own funds are used.
- Lending. Bonds are issued or loans are taken from banking institutions.
- Leasing.
- Receipts from budget funds.
Large enterprises can use several methods listed above to implement their projects. Funds to ensure the operation of each area of the company's activities are presented in the form of cash and non-cash funds.
Internal financing
The cheapest way to raise financing called self-financing. This is ensuring the implementation of enterprise projects at the expense of its internal sources. In this case, authorized capital formed from shareholders’ funds may be used. This fund is formed when the company is created.
Own sources of financing also include flows of funds that are generated as a result of the company’s activities. This amount includes retained earnings as well as depreciation funds.
If an enterprise chooses this financing route, it creates a special fund. It is intended strictly for the implementation of a specific project. This method of financing has a limited scope. It is suitable for small projects. For large-scale transformations and the introduction of new production lines, our own funds are not enough. In this case, third-party funding is required.
External sources
Attracting external financing in some cases it becomes extremely necessary. At the same time, the list of entities willing to provide their temporarily free funds for the use of the organization is quite extensive. These can be both individuals and legal entities. Funds for the implementation of the project can be provided by both state and foreign investors. Additional contributions from the organization's founders may also be used.
Each source that a company can attract has its own advantages and disadvantages. Therefore, it is extremely important when choosing it to develop the right financing strategy. All available methods must be compared with each other. The company chooses the most profitable type of financing. In this case, the profitability of investments and the risk of their use must be taken into account.
When using borrowed sources, a scheme for attracting them is developed. This allows you to calculate the optimal amount of paid funds, which would be sufficient to carry out each step of the implementation of the created plan.
Corporatization
Can be done through corporatization. This concept includes funds received as a result of an additional issue of shares, as well as shares or other similar contributions to the authorized capital of the organization.
Investors allocate a certain amount of their funds to implement the project. Each of them contributes a certain share. Such financing can come in several forms.
Incorporation can be carried out using one of three main methods. The first of these is the additional issue of shares. The second method may be to attract new shares, deposits or other investment contributions from the founders of the organization. In some cases, a third approach is used. It involves the creation of a new enterprise that will work to implement the project.
The presented methods are suitable only if it is necessary to implement a large-scale, large-scale project.
Bank loans
Can be implemented through This is by far one of the most effective forms of project financing. It is suitable for those organizations that, for certain reasons, cannot issue new shares. If this type of financing is not practical for a particular project, a bank loan is one of the best ways to introduce innovation.
The presented resources have many advantages. A bank loan allows you to develop a flexible financing scheme. At the same time, there are no costs for the placement and sale of new securities.
It is when using credit funds from financial institutions that the effect of financial leverage can be obtained. In this case, the profitability of operating own funds increases when using borrowed capital. At the same time, income tax is reduced. In this case, interest costs are included in the cost price.
Bonds
Can be done at the expense of In this case, the company issues corporate bonds for an existing project. This allows you to attract resources on more favorable terms.
In this case, you do not need to provide collateral, as when applying for a bank loan. Debt repayment occurs after the entire service life of the borrowed funds. There is also no need to provide lenders with a detailed business plan.
If difficulties arise during the implementation of the project, the company that issued the bonds can buy them back. Moreover, the price may be lower than for the initial placement.
Leasing
Can be done through leasing. This is a complex of relations between the owner and the recipient of temporary use of movable and immovable property for long-term lease.
Under the agreement, the lessor undertakes to purchase an item of property from a specific seller and then provide it to the lessee for temporary use. The latter has the opportunity to independently choose the property that he will take for temporary use.
In this case, the term of the leasing agreement is less than the established duration of operation of the facility. When the contract term expires, the lessee will be able to buy the object at its residual value or rent it on favorable terms.
Choosing the type of financing
It is made by comparing several options for attracting resources to implement the project. Only if the benefit from raising borrowed funds is sufficiently high, the company enters into appropriate agreements. In each case, a certain type of support for a certain area of the company’s activities is suitable.
Having considered how it happens attracting financing, you can understand the principles by which this or that type of resource is selected.
