How Strong Cash Flow Helps Businesses in the UAE Make Strategic Decisions?
Businesses in the UAE, especially small businesses, should believe in the old yet meaningful adage ‘Cash is King.’ Strong cash flow is what keeps the companies going ahead and not the mindless race for profit. It’s a fool’s thinking to ignore the cash flow while aiming for profits. Strong cash flow indicates a company’s ability to generate and use cash and its cash flow statements are therefore solid proof of the company’s financial position. Many small businesses in the UAE ignore the importance of cash flow and succumb to untimely demise due to cash burn. Such companies often fail to avail better access to business credits.
With the help of the best accounting firm in the UAE, companies can achieve better cash flow management. With strong cash flow, businesses can empower themselves with the power to make strategic business decisions. They get more access to business credits and can think of new avenues for business generation and further expansion.
The following are some of the ways in which cash flow helps companies in implementing strategic decisions:
1) Focus on Creating New Revenue Areas
An efficient cash flow management is the key to identifying new roots of revenue for businesses. The companies get to know the core ways that generate the revenue by accounting for the cash inflows and outflows. Once this core area is identified, the companies can take their business to the next level. In short cash flow statements give a clear picture of what moves the company ahead.
2) Better Analysis of Business Finance
Cash flow statements allow entrepreneurs to manage their business finance in a better way. Proper cash flow statements enable companies to look at their finances in a better way. It will help bolster the trust of company stakeholders and help prepare a better financial budget for the business. Having a robust budget plan means the companies can eliminate unnecessary expenses and maximise profit.
3) Business Expansion
Cash flow can efficiently streamline the expansion process of the companies in the right direction. String finance is the ultimate requirement for the expansion process to take off. The companies need to give importance to cash flow right from the go. Analysing the cash flow statements will give the owners a clear idea about the growth and the right time to expand the business. In this way, the cash flow statements enhance business planning.
4) Creates a Solid Base for Credit
Cash flow statements also help the companies avail better access to business credit. Cash flow statements are solid proof of proper utilisation of finances and it elevates the businesses to a strong position to avail credits. Availing credits assist the entrepreneurs in giving a proper direction to their business expansion.
5) Eases the Accounting and Audit Process
The UAE Commercial Company Law 2015 mandates that the companies should maintain proper books of account for at least 5 years. Many free zones in the UAE have made it mandatory to their companies to maintain their company accounts and get the audit done from approved & listed accounting & audit firms in Dubai & UAE. Properly managing the cash flow statements will help the businesses in maintaining the books of accounts as well.
6) The Company’s Inventory Planning
Cash flow is important for the businesses that maintain stocks such as trading companies. Proper understanding of the cash flow helps the companies maintain a better stock of inventory. Efficient inventory management helps business owners streamline their internal processes.
Seek Help From Accounting Firms in UAE
The companies that aim for profits need to first understand the importance of cash flow statements. Aiming for profits without proper cash flow management can be a meaningless affair. In this backdrop, the businesses can outsource the accounting processes to the best accounting & bookkeeping firms in the UAE to streamline their cash flow management. Jitendra Chartered Accountants (JCA) is one of the leading accounting firms in Dubai, UAE. JCA will help the business owners to run their companies effectively with healthy growth prospects. Recording all the financial transactions of a company is one of the most important tasks of bookkeeping firms in Dubai & UAE. JCA’s chartered accountants will ensure that the companies are keeping accurate & up to date records of financial statements that help the businesses make strategic decisions.