The development of economic entities in various fields of activity cannot be considered in isolation from those infrastructure institutions that ensure effective interaction between commercial companies, non-profit public organizations, and government agencies. An important infrastructural institution in the field of economics is consulting.
The development of consulting in the global market is due to the general trend of globalization of business, the possibility of using the help of consultants as a competitive advantage, and the need to increase productivity.
Definition and General Characteristics of Consulting
Consulting is a type of professional intellectual service related to solving certain problems of organizations in the field of management and organizational development. It includes analysis of existing business processes of the client, substantiation of prospects of development, and use of scientific and technical, organizational, and economic innovations taking into account the subject area and features of the client’s business.
Assistance can take the form of information, recommendations, or even the direct performance of a specific work. Consulting can address both local economic issues (financial analysis, accounting, auditing, taxation) and global management issues (strategic development, reorganization, innovation process).
Consulting emerged in the early twentieth century. Today, for the developed countries of the world, this is the norm of doing business. Accounting consulting, legal support and engineering consulting, auditing, and management consulting confidently occupied their niche in the services market.
Structure of Consulting Services
Consulting services include the following:
- General management, which consists in providing assistance in solving problems related to the existence of the object of consulting and prospects for its development;
- Administration, the main task of which is to optimize the management of the organization;
- Financial management, aimed at finding sources of financial resources;
- Evaluation and increase of current financial efficiency of the customer’s organization;
- Strengthening the financial position in the future.
Features of the Functioning of Financial Consulting
Consulting can be carried out in various areas of the enterprise. Therefore, there are many varieties, which are usually combined into two groups – business process consulting and production. Financial consulting is becoming more and more popular. The global financial consulting market is also growing dynamically. Many modern companies have fully experienced the benefits of using financial consulting services, which include services in the field of management, taxation, and accounting.
The use of consulting provides a positive effect, as it is done by professionals who notice what employees of the customer’s company do not notice, and have the appropriate skills and experience. Having an objective alternative opinion when solving complex problems is a valuable resource for the organization. Consulting becomes necessary in a situation where the objective assessment of the situation requires the involvement of outsiders, for example, during the audit or for special one-time measures, such as market opportunities, strategy development, business reconstruction, examination of business projects.
It is impractical and financially unprofitable, especially for small and medium-sized companies, to train and retain a highly paid specialist for special events that are not permanent. Therefore, financial consulting services are quite useful today.
Financial consulting services usually include:
- Advice on transactions in the securities market (buying and selling securities and other financial instruments, placing and raising funds through repo transactions);
- Recommendations on other financial transactions (placement of funds in time deposits in commercial banks, currency conversion, etc.);
- Consultations on issues in the field of finance and investment (tax planning and tax administration, drawing up a financial, innovation, and investment plan, liquidity management, building a system of accounting and management accounting, analyzing the financial activities of an enterprise, managing the capital structure).
Basic Principles of Financial Consulting at the Present Stage
The main principles governing financial consulting services in the market are:
- The dominance of the client’s interests (the client’s interests are a priority and are valued above the consultant’s own interests);
- Professionalism (deep knowledge of specific issues on which advice is provided);
- Confidentiality (non-disclosure of information received from the client under any circumstances);
- The individuality of developments (execution of each order and provision of recommendations for each specific client).
Summing up, it should be noted that the consulting services sector is developing faster than other sectors of the economy. The main advantage of its application is that the company can choose between a ready-made solution developed by consultants and advice that is individually designed, taking into account the specifics of the company. As a result, the client company can save money and time to find solutions to problems.