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vated.) and the fourth multiple choice answer to the question number two (I want the scale of pensions and welfare payments to be constantly increased.) proves the respondents were less prepared the tax rates increase than the scale of pensions and welfare payments increase. Only 65% of Russian residents were ready for the increase of labor tax rates and 85% among them wanted the increase in the scale of pensions and welfare payments. Among the respondents who were residents of Ukraine this percentage was 27% and 60% respectively Labor tax rates increase was acceptable for only 53% of the respondents who were older than 50 y.o. and for 34% of the younger respondents. 76% of the respondents older than 50 y.o. wanted the scale of pensions and welfare payments to be increased and 63% of the respondents younger than 50 y.o. Only 50% of DSc holders were ready for labor tax increase and 72% of the same respondents wanted the scale of pensions and welfare payments to be increased. The difference in the attitude to the same problem is even marked among PhD holders - 33% and 63%. Only 39% of males agreed to the increase of labor tax rates. 56% of this group of respondents agreed to the increase in the scale of pensions and welfare payments. The females expressed a more significant difference - 41% and 74%.
It is worth mentioning the fact that the mean difference in readiness for the increase in tax rates in comparison to the desired increase in the scales of pensions and welfare payments is about 25%.
Significant number of the respondents (23%) agreed to overcome hardships in order the scale of pensions and welfare payments remained the same. It was quite typical for the respondents from Germany and Poland. The residents from Ukraine (27%) were not so optimistic. The respondents from Russia were even less optimistic about that - only 10%. This viewpoint was more characteristic to PhD holders (30%) as compared to DSc holders (14%) and it was more characteristic to males (27%) than to females (21%). No gender differences were noted.
The comparison of the respondents who chose the third multiple choice answer to the question number one (I agree to the rates to be left at the present level.) and the third multiple choice answer to the question number two (I am ready for only inconsiderable decrease in existing in your country scales of pensions and welfare payments.) proves the respondents agreed to the tax rates existing in their countries than to the scale of pensions and welfare payments existing in their countries.
37% of the respondents expressed their agreement to the labor tax rates existing at present while only 23% of the respondents accepted the existing scale of pensions and
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welfare payments (the difference is 14%). The difference in opinion on this problem among Ukrainians was 23% (50% and 27% respectively), and among Russians it was 10% (20% and 10% respectively); among the respondents who were under 50 y.o. it was 20% (43% and 23% respectively). It is noteworthy that the opinion of the respondents who were over 50 y.o. was the same (23% and 23% respectively). The difference in the opinion on the given problem in males was 12% (39% and 27%); in females it was 14% (35% and 21%); in DSc holders it was 23% (37% and 14%). The opinion of PhD holders differed by only 7% (37% and 30%).
Only 6% of the respondents were ready for a slight decrease in the scale of pensions and welfare payments. That was due to the optimistic attitude of the respondents younger than 50 y.o. to that. Only two young males from Ukraine were sure to say they were ready for a considerable decrease in the scale of pensions and welfare payments.
The results of the questionnaire obtained make it possible to conclude the following.
The society is ready for an increase in labor tax rates but only in case
• economic motivation is provided;
• significant increase in the scale of pensions and welfare payments is provided at the same time.
The results of the opinion poll showed that while planning the tax reforms it is possible to rely mostly on males and on people of older age.
Methodologically correctly developed and carried out opinion poll alongside with thorough research and generalization of theoretical aspects of the studied topic, examination of world experience and general tendencies of taxation systems development worldwide in the context of existing at the moment changes in the economy in general and taxation system in particular in a definite country will enable to work out really substantiated and motivated statements concerning reforms in the taxation system of a factor of production or a sphere of business activity. Critical understanding of the process of establishment and development of a definite existing tax as well as legislation practice concerning the given tax will also contribute to work out comprehensive questions for an opinion poll.
The authors strongly believe that firstly, the range of respondents can be enlarged to make competent and substantiated decisions concerning reforms of labor tax system; secondly, techniques and methods used in this opinion poll can be applied to other opinion polls concerning reforms of other spheres of taxation, improvement of taxation administration, enhancement of tax competitiveness both State and corporate.
V.A. Durnov
THE INSTRUMENTS OF FINANCIAL PLANNING
The paper analyzes financial planning efficiency for enterprise management improvement. The author describes the system of financial tools and considers in detail financial planning methods, their strengths and weaknesses. Key words: financial planning, budgeting, efficiency, methods, enterprise.
В.А. Дурное
ИНСТРУМЕНТЫ ФИНАНСОВОГО ПЛАНИРОВАНИЯ
В статье анализируется эффективность финансового планирования для повышения качества управления предприятием. Описывается инструментарий, подробно рассматриваются методы финансового планирования, отмечаются их преимущества и недостатки.
Ключееые слоеа: финансовое планирование, бюджетирование, эффективность, методы, предприятие.
Financial planning and aspects associated with it have been under discussion of the economists of Russia since the moment of transition of the country to market economy. Results of different researches show that in modern conditions financial planning at enterprises consists of two main components - forecasting necessary for decision making and decision making itself. However, it should be noted that forecasting is performed with special algorithms (by optional choice of methods, techniques, regulations and procedures) while decision making is performed on individual basis (by act of volition).
Financial planning is a process of planning activities aimed at formation and usage of financial resources which enable interrelation of revenue and expenses on the basis of associativity of indicators of an enterprise development and sources of financing as well as contribution to enhancement of finance efficiency [1].
At present a well known viewpoint is that planning, financial including; in economic crisis has no sense. In this case an appropriate question arises of how to prove different options of economic management correspond to forecasts of an enterprise development. It is rather troublesome without enterprise finance planning.
Financial planning has been used for several decades in leading companies of the world and it has proved to be an efficient means of improvement of an enterprise management. In its turn efficiency is a relative indicator characterizing the process which enabled to obtain the result [2].
Management team of an enterprise should have the information at hand on the tasks in the sphere of economic activity possible to be planned for the future period of time. While planning the economic activity of an enterprise it is necessary to know what financial resources will be required for implementation of the tasks set. For example, it can regard planning for getting hold of capital, obtaining credits, expanding of capital stock, defining investment volume, etc. Moreover, there are people interested in business activities of an enterprise that make specific demands on the results of its activity.
The tasks that are solved by financial planning in modern Russian market can be formulated in the following way:
- developing a basis for stages of financial planning implementation;
- analyzing weak and strong points of an enterprise activity;
- carrying out planning, implementation of plans, control and analysis;
- working out motivated managerial decisions;
- providing coordination, cooperation and communication of departments of an enterprise in the interests of the enterprise on the whole;
- raising responsibility for accomplishment certain plan targets;
- motivating the expenses of an enterprise;
- improving and enhancing efficacy of distribution and usage of an enterprise resources;
- creating efficient motivation system aimed at raising responsibility, increasing in performance and quality of labor, etc.[3].
Implementation of the mentioned tasks is possible by using specific instruments of financial planning. First of all, methods of financial planning necessary to be used for that are
- normative method;
- calculating and analytical method;
- method of balance settlement;
- economic and mathematical model building.
Budgeting is also an instrument of financial planning.
Principle of normative method (it also has the name of
economic analysis) is to estimate the demand of an enterprise for financial resources and for their sources on the basis of approved norms and technical-economic standards. These standards can be tax rates, tax dues and embarkation fees, depreciation charges, regulations of demands in floating funds, etc. The system of norms and standards used in financial planning is based on the levels of entities in economic system. This system includes federal, republican (regional and autonomous entities), local standards as well as standards of a business entity.
The advantage of normative method of financial planning is its simplicity. In case standard and volume indicators are known, it is easy to calculate plan financial indicator. Besides, the application of this method enables the management team of an enterprise to be conversant in the business environment by means of comparing their own financial indicators with the ones of other enterprises both in the same branch of industry and in the others. It also allows coordinating the business activities with the standards of plan financial indicators.
The disadvantages of normative method are the averaging of standards. Each enterprise has its own scheme of development and standards, though. Thus, standards are not always applicable to a specific enterprise. For instance, in modern conditions in the framework of bailout program enterprises expand the scope of their business activities by including sales of goods, provision of services and agency operations. The application of standards and norms in these conditions is really difficult. Due to this normative method can be successfully applied in the branches of industry and enterprises which have a very specific profile of activity. Besides, this method is not autarkic. Hence, the management team of enterprises should apply normative method in combination with other methods of financial planning.
Principle of calculating and analytical method of planning financial indicators is the following. Plan financial indicator is determined on the basis of analysis of the achieved financial indicator which is considered to be basic as well as on the basis of its indices of change. Expert estimation is the basis for this method (Fig. 1).
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Collection of returns of preplanned period
Carrying out the assessment of dynamics of returns
Expert estimation conduct to assess
perspectives of development
Calculation of plan indicator
Fig. 1. The scheme of the process of calculating and analytical method of planning
Calculating and analytical method is widely applied in cases when there are no technical-economical standards and interrelation of indicators can be established only indirectly on the basis of analysis of their dynamics and relations. This method is often applied at enterprises in determination of value of returns and revenue, amounts of deductions from profit to accumulation, consumption, and emergency funds as well as to funds of certain intake of financial resources, etc.
The disadvantage of this method is its "sensitivity" to returns. It means the application of this method requires sufficiently high accuracy in collection of data on financial indicators. Besides, the dynamics of financial indicators in the preplanned period can be different from their dynamics in the following period. It leads to disorientation of the management team of an enterprise when setting of goals and future financial resources are being balanced.
Thus, the calculation of the planned financial intake can be related to a rather high risk for an enterprise. This can result in the situation that took place at many enterprises in 2008 - 2009. Those enterprises were making plans for 2009 on the basis of their financial indicators dynamics in the period of economic growth that occurred in 2002 -2008. However, due to the world financial crisis there was a considerable decrease in the performance indicators of enterprises. The result of this was that enterprises did not obtain financial means that were planned by application of calculating and analytical method in 2008. That was the reason a considerable number of enterprises were on the brink of bankruptcy.
Record maintenance of the dynamics of financial indicators which is of use in calculation of their planned values can be attributed to an advantage of calculating and analytical method. This record maintenance provides a means for making forecasts with significant likelihood ratio. It also enables to cope with sudden changes in economy (e.g., crisis, etc.) by taking preplanned financial indicators of a more prolonged time period into account. Furthermore, while carrying out analytical analysis it is possible to use statistical data of competitors or partners. This is also an advantage of this method.
Another method of financial planning at enterprises is balance method or method of balance settlement. The principle of this method is to match existing financial resources and practical demand in these resources by means of making balance. In practice balance method is used for planning distribution of profits and other
Collection cf returns of pre-planned period
financial resources of an enterprise as well as for planning demand in receipt of funds such as accumulation fund, consumption fund, etc.
The advantage of this method is the possibility for a relatively high degree of record maintenance of financial resources incoming and outflow which reduces the risk of shortfall of financial resources while meeting the planned target. This method provides record maintenance of different funds.
This method does not consider the reliability of the sources of incoming financial resources which may result in budget deficit and imperil the meeting of the planned target on the whole and a part of it in particular. This is considered to be the disadvantage of this method. To avoid it, it is possible to use emergency fund which resources can replenish budget deficit in case it occurs.
Principle of economic and mathematical model building is that it enables to determine quantification of relationship between financial resources and their defining factors. This relationship is expressed in an economic and mathematical model using which it is possible to carry out factorial analysis of indicators and to reveal their interrelation and interaction. It should be noted that economic and mathematical model is a precise mathematical description of an economic process, i.e., description of factors characterizing the structure and regularities of financial indicators dynamics with the use of mathematical symbols and devices such as equations, inequations, tables, graphs, etc.
Only determining factors are included in the model. Algorithm of the planned indicator development with the use of economic and mathematical technique can be presented in the form of a scheme (Fig. 2).
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Building of economic and mathematical modsls of planned indicator
Prognosis for the indicator using economic and mathematical modd and working out various options of the planned indicator
A
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The choice of one planned indicat cr
Expert estimation conduct to assess
perspectives of development
Fig. 2. The process of the planned indicator development with the use of economic and mathematical model
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Planning of financial indicators at an enterprise on the basis of economic and mathematical model building is used in automated control systems of finance management. Almost all software packages for automated execution of financing and operating activities management at an enterprise are based on this method.
Practical application of economic and mathematical models shows that complex models with a great number of parameters are often inapplicable. There is one more disadvantage of this method of financial planning: economic processes almost always have nonlinear relations and mathematical methods deal with linear relations. This makes calculations lengthy and tedious which complicates the application of this method in economy.
A considerable advantage of this method is the possibility to automate the planning process. This increases processing data rates and simplifies the work of analysts in planning and forecasting.
Budgeting occupies an increasingly prominent place in the number of instruments of financial planning at an enterprise. Budgeting means feasible scheduling of returns, expenses, sales, cash flows of a business entity, tax payments, etc. Budgets are instruments of both financial planning and control [4].
Budgeting often includes all the above mentioned methods. Budgeting is the basis of planning and managerial decision making. Along with that budgeting serves as a means for assessment of all aspects of financial soundness of an enterprise, provides control and management of material and financial resources of an enterprise, and promotes strengthening of financial discipline. It is important that budgeting contributes to subordination of interests of separate structural divisions to interests of the whole enterprise and owners of its capital.
Each enterprise has its own specific features of budgeting. Specific features are defined in accordance with the object of financial planning and the system of financial and non-financial targets. Besides, budgeting pursues its own definite objectives and uses its own instruments and means.
Budget of an enterprise is made for a certain time period. The choice of the time period is essential as efficiency of budget implementation depends on it.
In should be noted that the budget of an enterprise is approved for a calendar year. This ensures smoothing of a curve of financial indicators seasonal fluctuations. Another specific feature of budgeting is also the possibility to define certain budget indicators for a long-term period, e.g., 3 - 5 years.
Budgeting is closely related to business activities of an enterprise. It enables not only to plan but to control the process of budget implementation. Thus, budgeting process is a closed cycle of planning (Fig. 3).
Fig. 3 shows that the process of budgeting is a cycle where analysis of budget implementation is both the starting and the end stages of budget cycle.
Budgeting provides innovation in distribution of material resources and money supplies, improvement in general and operative management, increase in enterprise transparency, application of modern methods of analysis and control over enterprise business activity, forecasting and monitoring of financial status of an enterprise.
Budgeting has positive and negative sides. Advantages of budgeting are
- improvement of resources distribution process;
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Development
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proj ect for the
coming year
STAGE 3.
Approval XT
n of budget
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Fig. 3. The scheme of implementation of budget process at an enterprise
- stimulation of staff motivation;
- coordination of the enterprise activities;
- development of communication interaction pattern of an enterprise;
- possibility of gaining experience from previous budget making;
- emphasizing the role of each staff member;
- possibility of making amendments to adjust the budget in due time;
- possibility of making comparison of actual and planned results.
Applying budgeting, it is possible to considerably improve manageability of an enterprise and to increase effects of business and financial performance. And effect is an absolute indicator characterizing the result [2].
However, budgeting has several disadvantages. Some of them are the following:
- existence of high level of complexity and cost-consuming of budgeting system;
- necessity for a detailed explanation of budget for better employee motivation;
- absence of flexibility in changing conditions;
- possibility of conflicts arising and decrease in performance efficiency of the staff due to budget requirements to achieve high labor productivity which counters with their intention to minimize the work.
Despite its disadvantages, budgeting is the most efficient instrument of financial planning as it enables to establish tight running and operating control over both incoming and outflow of resources and to provide appropriate conditions for working out an efficient financial strategy. In case budgeting is proper and efficient from the moment it was made to the moment of supervising the implementation it provides a considerable benefit for both enterprises and their employees.
1. See: Sklyarenko V.K., Prudnkov V.M. Economy of an Enterprise: textbook. M.: INFRA-M, 2006.
2. See: Ermakova E.A. Budgetary Management and Its Efficiency in Modern Russia / Bulletin of Saratov State SocioEconomic University. № 1 (20).
3. KislovD., BashilovB. Working out Financial Plans: Methods and Mistakes. M.: Vershina, 2006.
4. See: Balabanov I.T. Financial Analysis and Planning of an Economic Entity. M.: Finance and Statistics, 2002.
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Analysis of budget execution of the previous year
STAGE 4.
Budget execution control
