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Kuala Lumpur

Why Professional Corporate Finance Professional Is Needed In A Company And What Is Corporate Finance?

Home > Study Notes > Why Professional Corporate Finance Professional Is Needed In A Company And What Is Corporate Finance?
Published in: Finance: Banking
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This study is to show why it is so important for a modern company working in a highly complex inter-linked banking and financial system globally to have top-notch finance pro to manage the complexity of modern fast-paced cash flow of the company and huge Capex and Opex to ensure company operation gives its best to its Shareholders.

Loke H / Kuala Lumpur

10 years of teaching experience

Qualification: Chartered Institute of Management Accountants

Teaches: Accountancy: Management, Finance: Banking, Finance: Corporate, Finance: Planning, Accounts, Corporate Finance, Financial Management, Accounting

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  1. Taboo to bankers - NPL So let start from this fear factor with pro-active plan to send a strong message to bank that you are serious about repayment. Bankers work on the premise of worse scenario : come to hardtimes : borrowers tend to have the mentality to borrow and borrow without commitment of repayment.. Bank fully factor in the possibility of borrower's NPL/ default: in their computerized credit risk rating. So focus on : what collateral and form of collateral to your bankers against the loan they lend you. If you can provide a Banker Guarantee up to 100% of bank loan :surely it makes loan evaluation easier because the collateral covers " in principle and on paper" 100% loan that bank lend out Where to get this Banker Guarantee : it is something you got to do your own homework to get one. CGC Malaysia is one of them.Offshore Bank is another avenue; Which bring us to the major bankable selling point : Is the CEO committed to his /her bankers ? Commitment is clearly shine out when you have experienced and skillful corporate finance talent in the management team.And better still : the finance person should be right hand man to the CEO. A veteran corporate finance accountant with proven skill-set and experience in handling banking facilities and compliance and having strong relationship with the banking and lending communities is a must in becoming a bankable organization. With the corporate finance guy the bridge to banking community is activated and ensure a steady flow of financial signals back and forth between banks and the company; much like a binary signal ; till the bank loan is secured from banks Corporate finance technicalities as listed below will be the domain of the corporate finance guy with full supportive backing from the CEO and Board of Directors Financial accounts and past audited accounts and if not good because of tax under-reporting too bad just got to say so and redo the actual accounts
  2. with truth so resurface the actual operating performance of profit and what the balance sheet should looks in truth. If owners not confident of above step : got buy another company and use that to apply for loan subject to the company's accounts at the least looks reasonable.And the new company business must complement and contribute to improved profit and cash flow The quality of customers base is key and the way collection comes in and the collection cycle or turnaround time from sales order to final business cycle of collecting of the sales debts will determine the appeal to bankers and also type and volume (in ringgit sense ) The proven track record of the company to be proficient in their chosen market and market size as much as possible be displayed by way of bank loan " business plan & cash flow Cash flow in the future outlook must be prepared to link the past across the present into the next 3 -5 years forecast so bankers confident the business owners have enough to pay off the instalments and interest and to meet any contingent or sudden huge amount of cash needs Have good set of numbers balance in the accounts plus decent gearing ratio plus other key ratio to showcase the balance between shareholder fund,assets quality and net realizable sale in event of forced sale,and debtors/creditors .aging listing and boring stuff like stock movement aging,staff numbers and their resume and any key managers whose profile and experience enhance the bankability of the company.Yes must have a good profile and experienced accountant / finance manager in the company for who is going to entrust money to a company that owners himself operate such complex financing of modern fast pace economic changes ; currency war going on,race to the bottom currency by each countries to protect their export industry. Bank use computerized system of rating and that is a very unknown factor for its their trade secret to sort out the credit rating of each and every borrowers that comes into their bank to ask for money. This
  3. will be tough to handle if the organization don't have corporate finance guy to manage this banking relationship Corporate finance community by their trade nature developed strong relationship with bankers much like a trader of potato develop strong relationship with potato suppliers. So instead of potato now it is bank money or loan . Trending of financial outlook: collection from debtors and demands from suppliers will tighten the financial grip on business ability to continue smoothly as before so build up strong umbrella cover of bank loan especially trade lines from banks Lots of feasibility study in face of increasing difficult operating condition with skillful business data and financial numbers crunching to come out with good set of banking proposal to bank. Hope it help a bit with this sharing !

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