Accounting & Financial Management Checklist for UAE Companies

Having an accounting management checklist is integral whether you develop it in-house or outsource it to an accounting firm in dubai. A company needs to be profitable in order to thrive and be successful, and whether it is a small and medium-sized entity or a large listed company, having a team of qualified accountants is integral to determining whether the revenue earned is more than the expenditure incurred by the entity. The accounting function also helps in identifying the business areas/ divisions that are performing well and the ones that are not performing that well and need attention of the top management to make them more effective and profitable.

Experienced and qualified accountants can easily analyze critical data/ information pertaining to investments, revenue streams, expenditure, etc. and report revenue growth in the most effective manner possible. Nowadays most of the large companies have team of qualified professionals to take care of the accounting function but it’s the small businesses that find accounting difficult to cater to and take care of. A significant number of small businesses don’t even have an accounting controller to take care of their day-to-day accounting processes.

Managing the financial side of the business is not as difficult as most people think and presume. By creating a well-thought out plan with the right amount of budget allocated and maintaining accounting records in accordance with the set policies in place, one can ensure the functioning of an effective and efficient accounting department.

It is important for the owners/top management of small and medium sized entities to at least have basic knowledge regarding how accounting actually works as only then they will be able to understand the financial part of the business and contribute towards a more efficient and effective accounting function. We have an accounting checklist that will not only help you in in getting a better understanding about various accounting functions and processes but will also help you in formulating a strategy to deal with financial part of your business while streamlining your tax preparation and compliance issues.

Our checklist consists of some of the very important things that one should keep in mind when formulating an all rounded accounting strategy:

1. Record all your Business Transactions ON TIME

One of the most hectic tasks is to record all your business transactions on a daily basis without any delay. This is one of the simplest and easiest ways to keep track of your business operations and transactions. Ensure that functions/ processes such as vendor payment, customer billing, etc. are processed and recorded on a daily basis and if not possible then these should at least be recorded on a weekly basis. Although, MS excel or even manual registers can be used to record the transactions but it is recommended that the entity should use accounting software to record all its business transactions

2. Carefully Document All your Business Invoices/bills

It should be ensured that all the business invoices and bills should be properly documented and filed for maintaining proper accounting records. Now-a-days, businesses also have the option of attaching invoices with the relevant Journal entry in its accounting system (e.g xero accounting system, Zoho accounting software, quickbooks online etc.) depending on the type of software used by the business.
Also ensure that different files should be maintained depending on the type of invoices, such as a customer file, vendor file, etc.

3. Raise and Issue Customer Invoices on Time

Invoices should be raised and issued to customers on time. The invoice must information such as invoice date, invoice amount, party name, due date, etc. The invoice should also contain the payment terms decided with the customer at the time of the agreement. Templates for customer invoice can be downloaded from the internet or you can easily design your invoice format using MS Word and MS Excel.

4. Pay your Vendors on Time

It is important to keep track of your trade payables and at the same time make sure that adequate funds are available to make timely payments to suppliers. This would help you in maintaining favorable relationship with your suppliers and keeping your reputation intact.

A business should prepare aged payable analysis on a weekly or monthly basis to identify the bills/ invoices against which payments are due but are yet to be made to suppliers.

It is important to maintain a separate file for unpaid vendors. The file should contain details regarding the invoice amount, invoice date, amount due, due date, etc. This would help you in making sure that whenever you have spare funds available, you can pay-off your suppliers so that to have a better relationship with them.

5. Closely Monitor your Business’s Liquidity

In case of small and medium sized entities, one of the most important things to consider and ensure is cash liquidity as it is integral to execution of daily operational tasks. Checking business payments and receipts on a daily basis not only helps you in keeping track of the revenue earned and expenses incurred in a day but is also considered to be one of the most important tools for business startups to control business expenses.

6. Check Your Projected Cash Flow

In order to manage your finances effectively and efficiently over a long-period of time, it is important that you prepare and analyze a projected cash flow on a monthly basis. A projected cash flow will help you in knowing how much cash you will be able to generate over the next coming months and then you could plan accordingly with regards to making payments to various suppliers against pending bills/ invoices. This would also assist you in making better-informed business decisions

7. Prepare Reconciliations of Cash and Bank Book Balances

Reconciliation of bank balance appearing in ledgers with bank statements should be prepared on a weekly or monthly basis depending on the volume of transactions. In addition to reconciling bank balances, it is also recommended that entity’s all cash related business transactions should be checked and reconciled with supporting documents or manual cash book (if any). This would help the you in knowing how much cash is available to use for capital and revenue expenditure on a monthly basis.

8. Prepare Aged Receivables Analysis, Identify Defaulters and Hand them over to Debt Collectors

In some cases, you may not get payment from customers on time. Therefore, the aged receivable analysis should be prepared on a weekly or monthly basis to keep track of how much money you owe from various customers. It is also recommended that a separate file of un-paid customer invoices should be maintained by the entity so that it is easy to identify the invoices against which the entity is yet to receive payment from customers.
Identify the oldest receivables who might become Bad Debts and handover them to Debt Collection Agencies who do the rest for you.

9. Check Inventory

One of the most critical areas of most businesses is inventory handling and management. Stock accounting is considered to be one of the primary checklist points for business startups. It is important to conduct physical count of inventory on a monthly basis to make sure that amount and quantity of inventory appearing in entity’s accounting system actually exists or not. Checking stock on a regular basis will also help you in identifying items that have become obsolete or are damaged and therefore require adjustments to be made to account for the obsolete or damaged items.

10. Review Your Inventory for Write-downs

Another important element of managing your business is to review your inventory on a weekly or monthly basis for identifying obsolete, missing or damaged inventory items. The identified discrepancies with regards to obsolete, missing and damaged items should then be recorded in the entity’s accounting system. This would be done by writing off the identified items cost from the total inventory amount recorded in the entity’s accounting software.

11. Processing of Payroll

The payroll should be reviewed before disbursement so that any error or omission can be corrected immediately. You can also use a separate accounting software for accounting of your payroll. If you have too many employees then in that case you can also outsource this accounting function to a payroll service provider.

12. Make Your Monthly/Quarterly VAT Returns and Payments

Prepare and file your VAT returns on time and don’t risk of being penalized. Review your tax figures to be ensuring accuracy of the information to be filed in the tax returns. The tax payable should be submitted to the authorities on time.

13. Correlate Your Balance sheet and Income statement with Historical Data as well as the Set Budget

You can compare your current profit & loss statement with information appearing in your previous income statements for identifying areas that require attention to make the business more profitable. Comparing it with the budget you have set can also help you in knowing how close you are with regards to achieving your goals. By comparing your current financial position with that of your previous balance sheets will help you in knowing how your assets and liabilities are performing when compared with previous years. This will also help you in getting better insight about the changing trends as well as helping you in making better informed business decisions.

14. File Tax Returns After Thorough Review 

The most important component of managing your business is to approve your entity’s financial accounts and file tax returns (in accordance with the information presented in the financial statements) on a timely basis. Review your tax return before filing it to ensure accuracy unless you want to be audited by the tax authority.

15. Financial Statements Audit

Appoint one of the reputed auditors in Dubai or any other Emirate of the UAE  by the end of October of the ongoing financial year to conduct the year-end audit. Complete the physical verification of the documents and analytical testing by the end of December which will allow the auditors to complete the audit within 1 month of the year-end.