Top Tips To Improve Your Accounting Strategy During Economic Downturn
Small businesses are always at the receiving end of economic uncertainties and are hand-to-mouth because they have no futuristic approach to save and build the reserves for uncertainties such as Corona-19. When Covid-19 hit across the world, many small businesses closed down due to cash flow troubles. Economic downturns like Covid-19 forced companies to critically examine their books to understand how they can cut costs and boost profitability. They need to look beyond the breakeven point ( no loss no profit) to stay afloat. Seeking advice from accounting firms in Dubai can help them devise better strategies to navigate the hardships of the pandemic.
Here are some accounting tips that will help you overcome economic uncertainties and help your company to become more profitable and to thrive in the future. Read on.
Adjust your strategy and long-term goals
When an economic uncertainty strikes your business unexpectedly, most entrepreneurs stick to short term goals to put out the fires. However, along with that, you must keep an eye on long-term business continuity and profitability as well. Accounting firms in Dubai can help you prioritise your options.
Analyse each product and service your company offers to verify their profitability. Ask yourself some valid questions such as ‘Is everything profitable?’ ‘Are some products or clients more profitable than others?’ etc. Let your accounting team conduct an in-depth financial analysis and build a new business strategy based on the results.
Scrutinise Every Contract
An economic crisis is a critical moment in your business that demands a reassessment of contracts. Round up your attorneys and consult with the top accounting firms in Dubai to review the contracts. Don’t forget to give special attention to force majeure clauses. The scrutiny of contracts should cover key aspects such as termination rights, termination risks, renegotiation rights, personal guarantees and other contract provisions. Finally, determine whether you must renegotiate any of these terms.
Invest in Existing Customers
An economic downturn such as a pandemic or recession is not the right time to invest in new customers. When faced with an economic crisis, your customers will probably be clamping down on spending. This makes it tougher to persuade new customers to try your offerings.
On the other hand, economic downturns are ideal for building real relationships with your existing customers. Show them that you care for them when they are at their lowest point. The relationship you build with your customers during a crisis will lead to long-term customer loyalty. Furthermore, a downturn is the best time to reconnect with your old customers. Old customers were once active customers and it’s important to reach out to them during a downturn.
Focus on Core Competencies
When the sea is calm you can steer your business to diversified paths and sectors. During such periods, the biggest risks may yield the biggest rewards. However, a recession or pandemic is not the right time to diversify into unknown paths. Instead, you should turn back to the products and services you are sure will perform the best.
During economic uncertainties, it is not advisable to spend money to support weaker products or services. Invest only in your best products or services to past and current customers, and prospects. Also, find multiple revenue streams to promote such products or services. Multiple streams of revenue will give you more financial flexibility when the going gets tough.
Use your biggest expense wisely
People can be the biggest business in most companies. For better people management, you should review the utilisation daily, rather than every month, and implement measures to enhance your employees’ accountability. At the same time, you can try outsourcing alternatives in accounting, IT, HR and other areas where you can skip hiring a full-time employee. Outsourcing the best accounting firms in Dubai will enhance your financial strategies apart from cutting costs.
Seek the Help of the Best Accounting Firms in Dubai, UAE
A pandemic is a critical time when businesses are forced to reassess their accounting strategies to stay afloat. Unforeseen events warrant new strategies for which accountants can help small businesses. If you can’t perform critical accounting checks internally or lack qualified accountants in your team, consider outsourcing accounting services. The best accounting firms in Dubai such as Jitendra Chartered Accountants (JCA) can help startups and small businesses to survive through tough times.
JCA can provide you with specialists who work with you to find more technical and nuanced solutions. JCA has a team of highly qualified Chartered Accountants in the UAE who can assist the business owners to fulfil 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.