An Analysis Of The Financial Sharing Model Of K Group's Centralized Fund Management

Funds are one of the most important resources of an enterprise and sufficient funds serve as a powerful guarantee for the corporate development.Used in an effective way,the funds can further reduce the operating costs of an enterprise to increase its competitiveness.With the continuous development of the economy,enterprises have accumulated more and more wealth.Unfortunately,in the continuous expansion,the wealth has become increasingly dispersed and circulated in different regions and countries.How to effectively manage the funds scattered in various places and enterprises has gradually become a research topic for scholars and entrepreneurs.With the discussion about the effectiveness of the internal capital market and continuous management practices,there is a corporate centralized fund management under the sharing model formed,including settlement center,cash pooling,and finance company.The centralized management of the group's funds makes full use of internal surplus,axes the external financing of the enterprise,and reduces the financing costs.In addition,the centralized fund management strengthens the monitoring of fund settlement and tightens the risk management and control so as to ensure the safety of funds.K Group,a domestic enterprise specializing in third-party medical testing,was established in Guangzhou in 1994.Since 2007,it has set up subsidiaries across the country by means of acquisitions or founding.In 2018,K Group's subsidiaries have spread across all provincial capitals and certain prefecture-level cities except Tibet,with a total of more than 50 subsidiaries.On the slip side,the cross-regional and cross-organizational structure has given rise to increasingly serious fund management problems.The group fails to keep track of the overall fund flow,direction,and stock due to the information asymmetry of funds in a timely and accurate manner.Meanwhile,the lack of fund collection and allocation mechanism disables it to utilize the capital market formed within the group to solve the fund surplus or deficit issues among the subsidiaries,thereby increasing the corporate financing costs.Facing the above-mentioned problems,K Group's management has gradually proposed to conduct a centralized management of the group's funds in an attempt to improve the efficiency of fund use and provide financial support for the group's further development.The present study,with K Group as the research subject,makes an analysis of its fund management activities by employing the case study and financial ratio analysis methods based on the domestic and foreign literature review.The results show that: 1)K Group can establish the organizational and institutional systems of centralized fund management by setting up a fund management center and build its fund management information platform with the help of modern information management technology;2)K Group,using the cash pooling model,is capable of centrally managing the group's funds to provide financial sharing services of funds for the companies within K Group.In this way,the efficiency of fund use can be effectively improved and the cost of use can be reduced to secure the group's funds.Thus,it can achieve the purpose of better providing financial guarantee for the group's development.On this basis,the relevant policy recommendations are put forward to provide decision-making references to relevant functional departments.