Accounting Advise For UAE Startups To Reduce Costs and Boost Profits
‘Doing more with less’ has become the mantra of startups and SMEs across the world in the post-pandemic era. Even the businesses that have not come under the reel of the pandemic are treading cautiously to avoid future risks. Controlling the expenses while maintaining, or even increasing, your quality of service and/or product may appear to be a challenge. However, advice from the best accounting firms in Dubai will equip you to achieve this objective.
Does this sound great? Let’s get into the details of how you can accomplish this:
Know your strategic costs
The right way to implement a cost-cutting strategy is by making a list of things that make and save the most money in your company. These could include costs directly connected with product quality, excellent customer service, profitable new sales or your defined competitive edge. These are the strategic costs that you must leave untouched. Focus on other things that are not strategic costs and aggressively cut such expenses. The mantra is simple: after listing out strategic costs, consider everything else as overhead expenses. Your accountant is the key to make such a list or consult with the best accounting firms in Dubai.
The COVID-19 pandemic drastically changed the way businesses operate in the UAE. Digital transformation has become inevitable to navigate the economic challenges posed by the pandemic. Businesses that embrace technology have greater chances of staying afloat as it can significantly reduce operational costs. What you need to do is conduct an assessment of your current administrative processes and identify areas that could be automated using technology, instead of manpower.
Set a Monthly Budget
From an accounting perspective, this adage applies to every small business: You can’t manage the things that you can’t measure. Although most startup owners believe they are responsible for controlling the costs, many of them operate without a monthly budget. Business owners who aim to save a lot of money in very little time must set a budget. With a solid budget, you can save a significant amount of money every month. Seek the help of the best accounting firms in Dubai to prepare robust monthly budgets.
You may be storing a lot of inventory that won’t be needed for a while. The extra inventory will cost you a lot of money because of the expense of buying the products. And, it will force you to spend cash on the warehouse space that is needed to hold the products. If possible, you should look for lean business options to minimize your inventory while ensuring that you always have products available when your customers are ready to buy.
Save for a Rainy Day
Since the outbreak of the pandemic, every business owner seems to have realised the importance of setting aside cash for the future. The emergency funds will come in handy for you if any unexpected event strikes. Sometimes, it may help you pay the tax amount when it’s urgent. Saving for the future will help you avoid running up business credit cards.
Keep the Taxman at Bay
The UAE is a low-tax jurisdiction with the only tax being the Value Added Tax (VAT) at a meagre rate of 5%. If you come within the purview of VAT registration, you should ensure compliance with all the mandatory requirements. Failing to file VAT Returns or failing inaccurate returns may lead to hefty penalties that will increase your financial burden. With the help of the top accounting firms in Dubai, you can reduce your tax liabilities.
Pay Off Business Debt
Debt is a common cause that forces many small business owners to opt for liquidation. Debt will make life harder for you as it is a grave risk to the cash flow. While in debt, you have to pay for the costs that are due apart from dealing with a lot of expenses for the interest. Mostly, business owners spend a lot every year on credit card interest. If credit card interest expenses pile up, it will potentially cost your company a significant amount in avoidable costs.
Encourage Early Billing & Payment
Take necessary steps to ensure your payments are on time and implement a system of team incentives for a successfully paid-up month. Keep a track of all your due dates for bills and supplies on the calendar. In the case of invoices, note what’s needed to submit the payment such as credit card number, proper address, and the required documentation to accompany the payment. Make a weekly schedule on what should get sent out to whom, and let your accounting professional get used to this.
Consult with the Best Accounting Firms in Dubai for Advice
Startups and small businesses are forced to implement robust cost control measures in the wake of uncertainties induced by the COVID-19 pandemic. Cost controlling helps the companies stay afloat and boost profits in the long run. With the assistance of experienced accounting & bookkeeping firms in Dubai such as Jitendra Chartered Accountants (JCA), startups can implement strong cost control policies within their organization. JCA has a team of highly qualified Chartered Accountants in the UAE who can assist the business owners to fulfill their accounting requirements such as maintaining financial records, VAT registration, VAT return filing, etc. By availing of JCA’s robust accounting services in Dubai, entrepreneurs can achieve their business goals in peace of mind.