DOI: 10.12731/wsd-2014-9.1-12 UDC 330
MODERN ASPECTS OF INTERNATIONAL FINANCIAL MANAGEMENT
Likhman V.A.
Objective: to extend theoretical representations about international financial management and to reveal global trends and regularities of international financial management.
Methods of the research: research is carried out in the problem, applying multiple Russian andforeign analytical techniques, instrumental and methodological technologies, namely: monographic research, graphic interpretation of empirical and factual information - the fact which allowed to secure reliability of the general method of research as well as authenticity of overall results, conclusions and recommendations.
Keywords: international financial management, analysis, financial control, legislative acts, financial crisis management.
Introduction
Explaining the essence of international financial management need to be based on knowledge of the theory of financial management, highlighting aspects that are primarily or exclusively to international financial management. International Management - is the theory and practice of international business management, i.e. activities associated with the movement of resources (raw materials, capital, technology, people) , goods and services across national borders.
The main types of international business are international trade and foreign investment, especially foreign direct investment. One of the main subjects of international business is an international firm that acts as part of the global business, which includes suppliers, customers, and competitors. International firm differs from the national fact that its activities directly affect the distance tariff barriers, exchange rates, the differences in the levels of interest rates and inflation rates in different countries, language, political issues, etc.
Results of the research
The financial manager permanently resolves the contradiction that arises between the goals of the enterprise and financial capacity to implement them. Actual tasks of financial management, and the specific challenges of international financial management enter in the range of its many tasks. The objectives of financial management are:
• financial analysis and decision-making system;
• planning the use of short-term financial resources;
• planning of long-term financial resources;
• analysis of potential risk;
• monitoring and reporting on the implementation of solutions.
The specific objectives of international financial management include:
• assessment of the external position of the country on the basis of its analysis of the balance of payments;
• planning of financial transactions multinational corporations
(MNCs) in terms of use in international transactions of different currencies;
• financing export activities;
• international capital budgeting, motivation for direct investment
and portfolio investment;
• transactions in eurocurrency and Eurobond markets.
Corporate strategy of MNCs is constructed on the basis of its global objectives (mission) and has five areas:
1) strategy in the field of research and development;
2) operating strategy;
3) financial strategy;
4) marketing strategy;
5) strategy of human relations.
Accordingly, there are three basic functions of management: production management, which covers the first, second and fifth direction, marketing management and financial management.
In the management of MNCs these functions form a system in which all the functions - the main, are equal and interdependent subsystems (units) unified management system that act (must act in the interests of the organization as a whole) and the overall objective is to achieve this goal as efficiently and productively, than competitors.
Financial management of MNCs performs as common to all firms function (although they have their own characteristics within MNCs) and functions inherent only international management that caused the operation in a heterogeneous environment, in terms of currency risk, restrictions on international trade and investment, political risk, special conditions of taxation and accounting.
If a company regarded as a combination of capital, coming from different sources (from investors to invest in the company's capital, loans, income derived from the activities of the firm) and aimed at different targets (acquisition of fixed assets, the creation of inventory, purchase of securities, cash, etc.), the management of such a movement is a function of capital and financial management.
The main task of the international financial manager is to assess the short-and long-term assets and liabilities of MNCs in the temporal and spatial use of international markets.
Financing companies, depending on the purpose, is divided into short and long term.
The purpose of short-term financing of the company is working capital, the performance of current liabilities. The tasks of the manager in the field of short-term capital are cash management, inventory management and technical reserves, trade finance, and etc.
Sources of short-term financing of international firms are divided into two main groups:
• Internal sources of financing.
• External sources of funding.
Varieties of domestic financing are self-financing and in-house loans. In general, the internal sources of financing firms are retained profits and depreciation, redistributed within the company with in-house international loans. External funding sources of the firm or its subsidiaries are bank financing (national, foreign and eurocurrency) and receiving funds through the stock market.
The purpose of the medium - and long-term financing of the company is to provide funds to finance long-term investment and other
activities of the company, the formation of long-term income security portfolio, leading to an increase in the assessed value of the company in the future and growth of the share capital.
Long-term funding of international company has two main forms:
• from investors (through the purchase of their shares and bonds);
• from creditors (in the form of bank credit or placement of long-
term securities - bonds).
In turn, the international financing is divided into foreign and eurocurrency, depending on the type of relationship resident - non-resident and the currency that is provided.
On sources of long-term financing of the company is divided into internal and external.
Domestic sources of long-term financing of the company are accumulated net cash flow, arising in the implementation of international operations. The basis of the net cash flows is retained earnings and accumulated amortization.
The purpose of the financial management of any company is to increase the value of shareholders' equity. Therefore, the net cash flow of the company should continue to increase.
External sources of financing long-term bank financing firms act in the form of bank credit and raising funds through the issue of shares and bonds on the open market.
International financial management is the system of economic decisions that arise about the implementation of financial management in the internationalization of business activities of the firm. In this case, the firm should proceed from the postulate that its commercial activities in foreign markets will directly or indirectly higher returns than the national market.
All decisions are taken in different parts of the company, must be calculated from the financial positions. Otherwise, the success of the operation of this unit is uncertain. Examining the feasibility of a life of certain decisions in the firm is engaged in the financial manager or chief accountant.
The financial manager of the company or bank involved in foreign trade, multinational corporations or international bank, practically solves the same issues as the financial manager of the firm and the bank operating in the domestic market. The essence of its activity is reduced to finding the answers to three basic questions: where to find sources of funding for the company (bank) where to direct financial flows in order to maximize profits and how to neutralize the risks arising from the conduct of operations. However, the range of problems that arise when dealing with these issues is much wider than the job of manager in the domestic market. At the same time, and an arsenal of tools available to the international financial manager, is very diverse.
International financial manager has to take into account in their work significantly more risks than the manager of the company, working in the domestic market. In particular, in its work related to the implementation of the tasks of financial management, it must constantly analyze monetary and foreign exchange, country, political risks arising from the implementation of the firm (bank) foreign trade.
In the crisis of the global financial market framework for international financial management should be a centralized management of financial flows and the formation of a system of financial control. The centralization of financial management makes it possible to ensure the operational management of liquidity , making decisions in accordance with the financial strategy , increasing the degree of manageability and
control, reduction of credit risk and currency risk up to the size of the industry, the introduction of netting ( mutual settlement), and transfer pricing. Organization of centralized financial management involves choosing one of the following approaches.
The first is self-securing all procedures on the basis of automation (joint service centers, in-house banks, payment centers) that allow to implement this approach.
The second approach is to hire a third-party service provider to cash flow management (outsourcing - external control).
Formation of the system of financial control is an effective mechanism for improving the efficiency of the financial management of the organization and to ensure financial secur
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