UAE small businesses must redo their accounting ways
Far too many of them still use time consuming manual ways to do their books
Dubai: Small businesses are considered the economic backbone for most economies. They are drivers of growth as they help generate jobs for millions, contribute to the GDP gains, and have a powerful impact on the local economy.
These are just some of the many contributions to socioeconomic development in both developed and developing nations. However, like any other business, small enterprises also face a number of daily challenges as part of the grind of running their operations.
Each day, they make decisions with either minor or major impacts on their overall operations and performance. Of all the concerns that the management team needs to tackle, financial issues are probably the most complex and the most crucial to their expansion and continuing growth.
Given the importance of this aspect, a number of small businesses still handle their finances without the necessary strategic planning, control, and management. There is a need to put in place a practical and cost-efficient financial forecasting, reporting, and monitoring mechanism, as it is essential to accurately anticipate and better manage their financial issues down the road.
A recent study that surveyed around 200 small businesses, cite monitoring performance and financial management as the top two challenges facing them. The respondents from manufacturing, trade, and the services industries either used traditional forms or utilised manual services to record their financial activities, including accounting management, value-added tax (VAT) compliance, invoicing, billing, and inventory.
The research also indicated that businesses with less than Dh2 million annual turnover were using a manual mode of accounting, leading to financial challenges.
To address the monitoring performance and financial management issues, it is important that businesses adopt automated solutions to better organise, streamline, and automate their financial operations. Automated accounting, for example, will ease out the process of account maintenance.
Additionally, implementing such a system will release them from time-consuming processes brought about by the current set-up; eliminate tedious paperwork and inaccurate information; reduce human errors; prevent cases of misplaced invoice and other documents; and result in lower costs and higher savings.
Moreover, under the relatively new VAT regime in the UAE, migrating to a VAT-compliant business management software is vital to ensure their correct compliance. These automated systems can help in invoice generation and tracking historical data, for example.
In a world where everything is going digital and automated, it is important for businesses regardless of their size to keep up with the changes. Under this perspective, investing in new technologies is a significant endeavour necessary for organisations to remain competitive and maintain their market presence and lead.
Many cost-efficient business management software solutions are available in the UAE market today and it is just a matter of choosing the right system that works best for small enterprises in order to maximise the full benefits that it offers.
Vikas Panchal is Business Head at Tally Solutions in the Middle East.