Finance and Statistics - Ковалева А.М.

7.4 Sources of Working Capital Formation

The current assets of enterprises are designed to ensure their continuous movement at all stages of the circuit in order to meet the needs of production in monetary and material resources, ensure the timeliness and completeness of settlements, increase the efficiency of using working capital.

All sources of financing of current assets are divided into own, borrowed and attracted. Own funds play a major role in the organization of circulation of funds, since enterprises operating on the basis of commercial calculation should have a certain property and operational independence in order to conduct business cost-effectively and be responsible For the decisions made.

Formation of working capital occurs at the time of the organization of the enterprise, when its authorized capital is created. The source of formation in this case is the investment funds of the founders of the enterprise. In the process of work, the source of replenishment of working capital is the profit received, as well as the equivalent of own funds. These are means that do not belong to the enterprise, but are constantly in its turnover. Such funds serve as a source of formation of working capital in the amount of their minimum balance. These include: minimum monthly wage arrears for workers of the enterprise, reserves to cover future expenses, minimum overdue debt to the budget and extra-budgetary funds, funds of creditors received as prepayment for products (goods, services), buyers' funds for Pledges for returnable packaging, carry-over balances of the consumption fund, etc.

To reduce the general needs of the economy in working capital, as well as to stimulate their effective use, it is advisable to attract borrowed funds. Borrowings are mainly short-term bank loans, through which temporary additional requirements for working capital are met.

The main areas for attracting loans for the formation of working capital are: lending to seasonal stocks of raw materials, materials and costs associated with the seasonal production process; Temporary replenishment of the lack of own working capital; Settlement and mediation of payment turnover.

The resolution of the Presidium of the Supreme Council of the Russian Federation and the Government of the Russian Federation "On Urgent Measures to Improve Settlements in the National Economy and Increase the Responsibility of Enterprises for Their Financial Condition" dated May 25, 1992, No. 2837-1, was devoted to the objectives of finding additional borrowed sources of financing working capital. As well as the Resolution of the Government of the Russian Federation and the Central Bank of the Russian Federation "On the Procedure for the Settlement of Nonpayments of State-owned Enterprises" of July 1, 1992, No. 458. Provision is made for a targeted state loan to replenish the working capital of enterprises and organizations. The source of this loan is the target extra-budgetary fund created in the financial institutions of the regions, regions, autonomous entities, cities of Moscow and St. Petersburg. In accordance with these resolutions, the loan was allocated on the basis of an agreement between a financial institution and an enterprise or organization. The state enterprises and organizations, joint-stock companies with a state stake in the authorized capital of more than 50%, privatized enterprises and organizations regardless of their organizational and legal forms could receive this credit.

This loan was provided at the expense of a credit line opened to the Ministry of Finance of the Russian Federation by the CBRF at a floating interest rate.

Under the conditions of the administrative-command system of economic management, borrowed funds among sources of financing of working capital comprised a rather large share. So, in 1965, the share of loans in the structure of sources of education of working capital accounted for 42.6%, in 1975 - 47.3, in 1977 - 47.1, in 1988 - 47.6%. Since 1988, the share of credit in the structure of sources of working capital began to decline. So, in 1989 it was 40.5%, in 1990 - 24.2%. " In subsequent years, the share of loans gradually increased and amounted to about 40%.

The nature of the dynamics of this indicator is due to objective economic processes. Decrease in the share of the loan. Late 80-ies can be explained by the reduction of centralized lending to enterprises with a still undeveloped system of commercial credit. Along with the establishment of the system of commercial banks, the growth in the volume of commercial credit has also increased the share of credit resources in the structure of sources of formation of the circulating assets of enterprises.

"According to the collections of the CSU" National Economy of the USSR "for 1977, 1985, 1990.

Thus, with the transition to a market economy management system, the role of credit as a source of working capital has at least not diminished. Along with the habitual need to cover the excess demand for working capital of enterprises, new factors have emerged that determine the strengthening of the importance of bank credit. These factors are primarily related to the transitional stage of development experienced by the domestic economy. One of them was inflation. The impact of inflation on the company's working capital is very multifaceted: it has a direct and indirect influence. Direct influence is characterized by depreciation of working capital during their turnover, i.е. After completion of the turnover, the enterprise does not actually receive the advanced amount of current assets as part of the proceeds from the sale of products.

Indirect influence is expressed in the slowing of the turnover of funds due to the crisis of non-payments, largely due to inflation. Other reasons for the emergence of non-payments include the decline in labor productivity; Extreme inefficiency of production; Inability of individual managers to adapt to new conditions: to seek new solutions, to change the product range, to reduce the material and energy intensity of production, realizing unnecessary and unnecessary assets; Finally, the imperfection of legislation that allows us to pay unpaid debts.

In order to combat nonpayments and provide financial support, considerable funds are allocated to replenish the working capital of enterprises. However, not always allocated funds are used for their intended purpose, which also has a strong inflationary effect.

These reasons cause the increased interest of enterprises in borrowed funds as a source of replenishment of current assets frozen in long-term receivables. In this situation, the question arises of the limits of the use of credit as a source of working capital. This is due to the dual influence that the application of the loan has on the financial position of the enterprise as a whole and on the state of working capital in particular.

On the one hand, without attracting credit resources in the context of a deficit of own funds, the enterprise must reduce or completely suspend production, which threatens with serious financial difficulties until bankruptcy. On the other hand, the solution of the problems that have arisen only with the help of credits causes an increase in the company's dependence on credit resources due to an increase in loan debts. This leads to an increase in the instability of the financial condition, lost its own working capital, passing into the ownership of the bank, because enterprises do not provide a rate of return on invested capital, given in the form of bank interest.

Accounts payable refers to unscheduled borrowed sources of working capital formation. Its presence means the participation in the turnover of the enterprise of the funds of other enterprises and organizations. Part of the payables is natural, as it follows from the current procedure for settlements. Along with this, accounts payable can arise as a result of violation of payment discipline.

Enterprises may incur accounts payable to suppliers for goods received, contractors for work performed, tax inspectorate for taxes and payments, and deductions for extra-budgetary funds.

So, in 1999 the formation of circulating assets of enterprises was provided by 42.5% due to debts for shipped products (work performed, services rendered) 1.

It should also highlight other sources of working capital formation, which include funds of the enterprise temporarily not used for the intended purpose (funds, reserves, etc.).

The right balance between own, borrowed and attracted sources of education of working capital plays an important role in strengthening the financial condition of the enterprise.