Proposed Twelve (12) Principles of FM and 20 FM quality standards
Next, not only we suggest to implement a FM form in Appendix for the above 20 elements of RM quality standards, but we also continue to propose 12 principles of a so-called good financial management system which can be used in most of companies, from small to medium to big size, esp. in developing countries including Vietnam as following:
Principle 1 – The company needs to transfer new debt issuances into operation cash flow and fixed asset investment to derive a realistic free cash flow.
Principle 2 – For project financial management, remember financial projection has interaction with technology investment, I.e sometimes it needs to create investment limit and forms for manufacturing and factory .
Principle 3 – The company need to balance net working capital demand projection among operation years, estimation of changes in receivables, inventories and payables, as well as estimation and suggestions from banks.
Principle 4 – FRM standards are vital, so that top management set up private budgets to prevent them happening to avoid financial risks such as liquidity risk
Principle 5 – The company ensures a designated person to take care of FM principles and qualified standards in this book, for finance practice
Principle 6 – FM reports better to be supported with IT software solutions and read by top management
Principle 7 – The corporation understands capital sources needed for environment protection and CSR.
Principle 8 – The internal control system should go together with internal audit to identify financial risks so that it can control them better
Principle 9 – Corporation needs to have proper disclosure of accounting information and suitable transparency to keep trust and client loyalty
Principle 10 – Corporate management pay attention to factors, internal and external , affecting decrease or increase in its stock price to have better stock price management
Principle 11 – Corporate management needs to delegate tasks rationally and properly for CFOs and financial team and compensate them accordingly.
Principle 12 – Better financial management go together with quality products , good and services
(Source: made by main author)