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An Accountant’s Guide To Monitor Financial Growth Of Your Company

Finance can be intimidating for upstart entrepreneurs but failing to give it due care will steer your business into the wrong trajectory. Tracking the financial performance of your business regularly will help you ensure that strategic decisions are taken on time. Accurate financial reporting and financial analysis are the cornerstones of monitoring financial performance and hence, it warrants sufficient attention by the entrepreneurs. For the uninitiated, the assistance of the top accounting firms in Dubai may come in handy.

To help entrepreneurs become savvier about the financial aspects of their business, here’s a list of things to monitor the financial performance of the company:

Preparation of Key Financial Statements

Balance sheet and profit/loss statements are the basic yet vital reports that every company is required to make. These two reports are considered to be crucial indicators of the company’s performance. Apart from that Balance sheet and profit/loss statements are required statutorily in terms of accounting. What you get from these reports is an overview of the financial health of the business, and it also tells the owners everything that they need to know about how their business is performing.

Preparation of Aged Debtors Trial Balance

With the help of your accountant in the UAE, you need to prepare an aged debtors trial balance every month. An aged debtors trial balance helps the business owners keep track of all the customers who owe them money. The companies, especially SMEs, can monitor the irregular accounts and follow up diligently with defaulters to get back the money. Avoiding the menace of bad debts has become more important especially after many SMEs reported cash flow struggles due to the pandemic.

Preparation of Inventory Records

Inventory records are vital for businesses operating in the manufacturing sector. Businesses in the manufacturing sector make heavy investments in machinery, equipment and raw materials, which necessitates maintaining accurate inventory records. With an inventory record, you can understand how much stock was purchased, how much was used for making the final products, how much of it went waste, and whether any machine went missing at any point in time. An accurate inventory record tells you if you need to purchase more raw materials apart from enabling you to calculate input/output ratios and stock turnover ratios.

Preparation of Working Capital Statements and Financial Ratios

You can ask the accounting firm that manages your finances to prepare regular working capital statements and periodic calculations of current ratios and quick ratios. Such reports are key for you to understand how many assets you have, as opposed to your liabilities, and how many assets you can convert quickly to cash. Choosing the best accounting firms in Dubai is vital here to ensure the accuracy of such reports.

Preparation of Fund and Cash Flow Statements

Cash flow statements and fund flow reports allow you to determine how much liquid cash is flowing onto your business. A casual look at the balance sheet will let you see many receivables marked as revenues. However, many of such receivables will be some way off from being converted into hard currency. And you need to understand that a business can be run with proper or actual earnings and not on estimated ones.

Analysis of Overheads

You can go complacent once you prepare proper financial statements. Your business needs to go beyond that and check closer at the numbers to reveal the weak areas. Consult with the top accounting firms in Dubai and they will tell you the importance of checking the overhead expenses, such as rent, salaries, marketing expenses etc. You need to ensure whether such expenses are under control, or are dragging down the overall profitability of the company.

Analysis of Marketing Expenses

With the help of efficient accounts in Dubai, you can have a robust analysis of marketing expenses. You must track the spending on advertising and analyse whether the returns justify the expense, or it has ended up as an unnecessary cost for the company. Further, you need to analyse the amount of money spent on other marketing channels such as social media and check the number of leads that got converted into actual sales. Answering such questions will enable you to analyse the financial performance of the company.

Competitor Analysis

Analysing your competition is essential for driving your business to success in a highly competitive market like Dubai. This type of analysis, however, depends upon the type of business and the market you’re operating in. The following questions form the core of the competitor analysis

  1. Who are your competitors
  2. What do your competitors offer
  3. Their pricing method for products and services
  4. What are their competitive advantages

Performing a SWOT (strengths, weaknesses, opportunities and threats) will also help you glean more information about your competitors. This would include what your competitors advertise or communicate about themselves and what others including the consumers say about them. Performing a competitor analysis means you have a process in place to constantly track and measure the performance of your business. It would help you identify the best practices and develop strategies to enhance business growth.

Seek Help from Best Accounting Firms in Dubai, UAE

Monitoring the financial performance is essential to ensure the growth and progress of any business. Constantly tracking the financial performance with the help of accountants in Dubai safeguards the business from any financial or organizational hurdles. Since monitoring financial performance gives you an idea of where your business is headed, it is advisable to work with the best accounting firms in Dubai such as Jitendra Chartered Accountants (JCA). As one of the top accounting companies in Dubai, we ensure that your business is headed on the right track by monitoring key performance indicators.

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