How can Accounting Firms help to turn around the Finances of a Struggling business?

Businesses struggling to manage their finances amid serious issues may need the help of accounting companies in Dubai to get back on track. Companies generally struggle due to various reasons including a difficult business environment, a business succession that didn’t go as per the plan, serious management problems, adverse market etc. The key to turning around your finances in such situations is to get help from accounting experts and execute a plan in a structured and effective way.

Entrepreneurs can outsource the services of accounting firms in Dubai to come up with a well-thought-out recovery plan. Companies with an in-house accounting professional may not always have access to such recovery solutions. In this situation, it is better to seek the help of experienced professionals from outside as they can help them get out of the situation and you can retain control over the fate of your business. Accounting companies often have experience in helping out companies to recover from economic downturns and they can do it for you as well.

Meanwhile, you can try the following tips to help turn your troubled business around:

1. Ensure the Immediate Survival of the Business

It would be tough for entrepreneurs to make tough decisions amidst a precarious financial state, especially if they are experiencing the struggle for the first time. What you immediately must do is to make sure that you have adequate funds to continue your operations in a short time. To do that you can prepare financial forecasts with the help of accounting companies in Dubai to determine the short and long-term cash flow requirements.

Such forecasts will allow you to negotiate payment holidays, new financing options or equity injections with your lenders and other financial partners. In the short term, you will also need to address the balance sheet, reduce costs to maximize cash flow and ensure that changes can be made within the company. Many companies have done this when they were first hit by the Covid-19-induced lockdowns in 2020.

2. Review your Cost Structure

Next, accounting firms in Dubai will help you to review your company’s cost structure based on sales projections. At this time, it is advisable to examine your company’s fixed and indirect costs including marketing and administrative expenses. You can also review certain research and development activities that tend to increase year over year.

These costs may have been justifiable when everything in the company was going well. However, the time has come to ask whether they are necessary. Cutting those expenses may strategically position your business for future recovery. You must also review the production costs to ensure they are competitive. These costs such as purchasing raw materials will depend on the company’s level of sales, while other costs such as labour, will be somewhat variable.

3. Make a Financial and Operational Diagnosis

It is critical for struggling businesses to examine their financial and operational health to determine whether a turnaround is possible. Accounting companies in Dubai can do an in-depth review of your company’s results to understand the trends that emerge. You can have some serious introspections based on questions such as

  • Are margins reducing over time? If yes, why?
  • Were your pricing policies too aggressive?
  • Did you mismanage your procurements?
  • Did you experience any issues at a plant or in a store?

You need to properly identify the problems that led you to difficulties to get them solved. At this stage, it’s ideal to sit down with a team of professionals from the best accounting companies in Dubai as they have a set of analytical tools that can help target solutions.

4. Meet the Compliance Deadlines

At a time of financial instability, you can’t afford to run into further trouble by failing to meet the deadlines such as VAT return filing and deadlines related to Economic Substance Regulations (ESR). Since the UAE corporate tax will take effect from June 1st 2023, you need to take care of the deadlines related to that as well. Failing to meet such deadlines may lead to hefty penalties, reputation damage and even cancellation of trade licenses. Accounting companies in Dubai offering tax and ESR services can be your saviours in those situations.

5. Keep Up-to-date Accounting Records

Keeping your accounts up to date will save you from costly mistakes such as failing to keep up with late customer payments or not realising when you have to pay your suppliers. Maintaining your books of accounts properly will help you to track expenses, debts and creditors. It will also help you to apply for extra funds through banks or corporate finance providers in Dubai. It is also essential to ensure compliance with the UAE VAT Law and relevant free zone regulations.

Hire the Best Accounting Companies in Dubai, UAE

Many entrepreneurs will lose their sense and fail to make the right business decisions while experiencing a downturn. However, accounting companies in Dubai can work with you to come up with a robust financial recovery plan that will put your business back on track.  Accounting firms in Dubai such as Jitendra Chartered Accountants (JCA) can make a diagnosis of your company’s financial health and suggest remedial measures.

JCA is one of the leading Chartered Accountant firms in Dubai with 20 plus years of experience. We can provide the best solutions for all of your accounting and audit requirements along with other services such as ICV certification, corporate finance services, ESR advice, corporate tax assessment etc.