thebusnovel Chapter 123 Electronics Factory Finance
Chapter 123 Electronics Factory Finance
The snow stopped at 3 p.m.
After processing several faxes from Los Angeles, Lingyun pressed the internal phone.
"Please ask Section Chief Wu to come over."
Five minutes later, Wu Jianguo, the head of the finance department, knocked on the door and came in. He was in his early forties, wearing black-rimmed glasses, and carrying a black hardcover notebook and folder.
"Mr. Ling, you wanted to see me?"
"Sit down." Ling Yun gestured to the chair opposite him. "Tell me about the factory's financial situation this year."
Wu Jianguo sat down, opened the folder, and pulled out several reports.
"Let me first report some key data."
He pushed the first form in front of Lingyun.
"As of yesterday, the factory's bank account balance was 4,637,200 yuan. This is the cash portion."
"After you injected three million in start-up capital in April this year, the factory officially resumed production in May. From May to December, the total sales revenue was 18.4 million. It mainly came from three parts: first, our own sales team distributed the products in computer malls across the country, accounting for about 45%; second, the order from Mr. Li Wentao in Hong Kong, worth 8.8 million; and third, the advance payment for the OEM order from Dell, worth one million."
Wu Jianguo spoke calmly, and each number was very clear.
"In terms of costs: raw material purchases cost 7.2 million, labor wages 7 million, and utilities, depreciation, and management fees 500,000. Profit is about 3.4 million. Including the sale of some inventory raw materials left over from last year's acquisition, the actual profit for the whole year is around 4 million."
Ling Yun picked up the report and looked at it.
"What about accounts receivable?"
"Almost none," Wu Jianguo said. "Our sales policy is cash on delivery; distributors must make payment upfront. For Hong Kong orders, according to the contract, the other party pays 95% after acceptance, and the remaining 5% warranty deposit will not expire until August this year. Dell's prepayment has already been received."
"external debt?"
"Aside from the 6.6 million long-term bank loan that was taken over during the acquisition, there are no other debts. The loan was to be repaid starting three years later according to the agreement, and currently only the interest is being paid; the interest for this year has already been paid in full."
Ling Yun put down the report and looked out the window.
Inside the factory, several workers were shoveling snow. The production line was still running, and the sound of machines could be faintly heard.
"Were all wages paid on time?"
"Payments are made on time every month on the 15th, without fail. The worker with the highest piece-rate wage earned 920 yuan in December." Wu Jianguo paused, "The workers are in good spirits and highly motivated."
Ling Yun turned his gaze back.
Do you think the factory's finances are currently healthy?
"Very healthy," Wu Jianguo said without hesitation. "We have ample cash flow, a low debt ratio, and strong profitability. Among local private enterprises, we are among the top."
He turned to the next page of the notebook.
"However, Mr. Ling, I have a suggestion."
"explain."
"The factory is developing rapidly, and the demand for funds will continue to grow. Building a new factory and expanding production lines next year will require substantial investment. Currently, we rely entirely on our own capital, which is stable but limits our growth rate."
Wu Jianguo pushed up his glasses.
"My suggestion is to take out a loan. The factory is currently operating well and has no short-term debt, so banks are very willing to lend to companies like ours. If we apply for a working capital loan of three to five million, the interest rate will not be high, and we can also enjoy preferential policies."
"Borrow money to develop?" Ling Yun asked.
"Yes. Using leverage effectively can accelerate development," Wu Jianguo said. "For example, building a new factory might require two phases if all funds are used from our own capital. But with a loan, it can be completed in one phase, allowing for earlier production and profits. As long as the return on investment is higher than the loan interest rate, it's worthwhile."
Ling Yun thought for a moment.
"How much do you think the bank will approve?"
"Given our current financial situation, five million is no problem. If we mortgage some assets, we can get even more," Wu Jianguo said confidently. "I spoke with Director Liu from ICBC, and he proactively asked us if we needed financial support."
The office was quiet for a moment.
Ling Yun stood up and walked to the window.
Downstairs, Ma Baoguo was directing workers to load New Year's goods onto a truck. The red cardboard boxes stood out against the snow.
"How is the year-end bonus arranged?" Lingyun asked.
"As you previously instructed, management will receive 15% of their annual salary, while ordinary employees will receive one month's salary. The total budget is approximately 250,000."
"Increase it to 400,000."
Wu Jianguo was stunned for a moment: "Four hundred thousand?"
"Yes." Ling Yun turned around. "Outstanding employees will receive extra rewards. The specific list will be decided by Factory Manager Ma."
"President Ling, isn't this percentage too high? Most companies only give out one month's salary as a year-end bonus, and we've already..."
"Do as I say," Ling Yun interrupted him. "The workers have worked very hard this year. The factory's success is due to their overtime work. We can't be stingy when it's time to reward them."
Wu Jianguo wrote it down in his notebook.
"400,000... After the cash expenditure, there is still more than 4.2 million in the account."
"How much will it cost to build the new factory?" Lingyun asked.
"According to Factory Manager Ma's plan, the total investment for the new factory, two automated production lines, and supporting equipment is about six million. If it is divided into two phases, the first phase will cost three million, and it can be put into production before June next year."
"One phase isn't enough," Ling Yun said. "If we're going to build it, we'll build it all at once. Six million, we'll start after the new year."
"The funding gap is 1.8 million." Wu Jianguo quickly calculated, "If we take out a loan of 3 million, it will not only be enough to build the factory, but we can also keep more than 1 million as working capital."
Ling Yun walked back to the table and sat down.
"You prepare the documents for the loan. Apply for a loan of five million initially, and the actual amount used will depend on the situation."
"clear."
How much did you spend on New Year's goods?
"Three hundred and thirty thousand. That's based on a standard of two hundred yuan per person. In addition, the extra subsidy for employees in difficulty that you mentioned cost another thirty thousand."
"A total of 360,000." Ling Yun nodded. "With these New Year's goods, plus a year-end bonus of 400,000, the workers can have a prosperous New Year this year."
Wu Jianguo smiled.
"To be honest, Mr. Ling, I've worked in finance at a state-owned enterprise for fifteen years, and I've never seen any company give out so many benefits. Back when the electronics factory was doing at its best, the year-end bonus was just some towels and soap."
"Times have changed," Ling Yun said. "Now we are a private enterprise. If a private enterprise wants to retain its employees, it has to ensure that the workers earn real money. The more they earn, the better the factory will be."
He picked up a pen and wrote a few numbers on the paper.
"Our goals for next year are: to double sales revenue to 36 million; to strive for 6 million in profit; and to increase the average wage of workers by another 20%."
Wu Jianguo took notes carefully.
"The pressure is considerable."
"Pressure is a motivator," Lingyun said. "Your finance department also needs to hire more people. Next year, there will be more business and the accounts will be more complicated. You could hire two college graduates and mentor them."
"OK."
"In addition, we need to establish a cost accounting system. The cost of each product and each production line should be calculated separately. We need to make it clear where we can save money and where there is inefficiency."
"I'm working on a plan, and I'll show it to you after the Spring Festival."
Ling Yun glanced at his watch; it was 3:40 PM.
That's all for today. Get your loan application materials ready as soon as possible, and we'll go to the bank to discuss it after the New Year.
Wu Jianguo tidied up the documents and stood up.
He stopped at the door.
"President Ling, there's something I'm not sure if I should say."
"explain."
"My daughter works at the provincial machinery factory. The factory lost money this year, and the year-end bonus was canceled," Wu Jianguo said. "Last night she asked me if our factory was still hiring. I said we weren't hiring for the time being, and she sighed."
He paused.
"Working under your guidance is our good fortune. Thank you."
Ling Yun waved his hand.
"Keep up the good work, next year will be even better."
Wu Jianguo is gone.
The office fell silent again.
Lingyun looked out the window again. The truck loaded with New Year's goods had already driven away, leaving a few tire tracks in the snow. Several workers finishing their early shift walked out of the factory gate together, chatting and laughing.