Financial mechanism

The financial mechanism can be represented by a set of methods of organizing financial relationships that are used by society to ensure favorable conditions in the economy. This mechanism uses the forms, methods and types of relations in the sphere of finance and the methods of their quantitative definitions.

The financial mechanism has a complex structure, which includes elements that correspond to different financial relationships. Due to the multiplicity of interrelations, the use of a huge number of elements of the mechanism is predetermined, including financial planning and forecasting, as well as regulatory documents that regulate the correctness of financial relations and, of course, control over the implementation of various forms, methods and types of emerging financial relations.

Based on the above definitions, the main elements (links) of this mechanism include:

- planning, forecasting;

- indicators, limits and standards in the financial sphere;

- financial management;

- leverage and incentives;

- control.

Depending on the specifics of the various components of the economic economy, and also on the basis of the separation of individual links of the relationship, the financial mechanism can be classified as follows: the financial mechanism of the organization; A mechanism working in the insurance industry; The mechanism of public finances. Each of these species, in turn, includes isolated structural links.

All the components of this mechanism in the complex should be a single whole, as they are all closely interrelated and are in constant dependence. At the same time, these links can function independently, and this can cause constant coordination of the components of the entire mechanism. It is from the internal coordination of all structural elements of the financial mechanism that its effectiveness depends.

In other words, the financial mechanism is a set of methods, forms, levers and tools of formation, the use of sources of financial resources to meet government needs. This also includes the needs of business entities and the needs of ordinary citizens.

The financial mechanism of the organization is a system for managing the financial resources of the entity. Its main goal is to make a profit. The financial mechanism of enterprise management provides the business entity with the necessary means that can ensure its solvency (the possibility of timely settlement with banks on borrowed funds, suppliers, etc.).

The financial mechanism of the organization works in the system of economic laws and is aimed at:

- providing finance in the form of loans, financing and self-financing;

- financial regulation, represented by taxes, subsidies and loans;

- a system of financial instruments.

In the structure of the financial mechanism of the organization are:

- methods that involve taxation, planning, forecasting, investing;

- leverage in the sphere of finance - use of certain indicators of economic activity to obtain the largest amount of profit (interest rate, depreciation, exchange rates, etc.);

- Information, regulatory and legal support.

To manage funds in the structure of any organization is the relevant unit or simply a specialist (in a small company). The main task of these units (specialist) is to implement the functions of finance to achieve high profitability, improve the quality of finished products or reduce costs. Only with the effective application of the financial mechanism can you achieve high profits in the enterprise.