THE VALUE OF BUSINESS CONSULTING IN THE UAE?

Determining the value you can derive from business consulting is one of those things that often comes with hindsight and, on occasion is overlooked or missed entirely. Having expert specialist advise or guidance often leads to the right decisions being made on a day to day basis and that can be mistaken for ‘business as usual’ rather than seeing it’s true benefit.

One way to highlight the real value of business consulting is to think of it terms of dentistry (let’s think way outside the box here).

Some people are methodical and make regular appointments to visit their dentist for a checkup. During that checkup, they will look at the health and vitality of the teeth and gums and look for any hidden problems or potential future issues that can be resolved and removed before they happen. When bigger problems are present, remedial action can be taken and they leave in the knowledge and comfort that they are likely to be incident free in the period until their next visit (and even if that is not the case, they know exactly where to go if something does happen)

At the other end of the scale are those who will only visit the dentist once the pain of a problem has reached the point that they can’t continue to operate without remedial action right now. This is often painful, disruptive and, more often than not, extremely costly as the actions required to get back on track are far more extensive and potentially difficult to administer.

This principle fits well with business consultancy. Having highly skilled business professionals giving your business a check up on a regular basis helps anticipate and tackle problems of all shapes and sizes on the go. If you consider the cost of remedial action at the dentist being high, compare that to having to perform a root canal to your corporate finances or poor due diligence and you start to appreciate the real value of consultancy as a regular input rather than an emergency procedure.

Business consultancy from Affinax covers a broad spectrum of key aspects that absolutely must be delivered with the utmost accuracy and professionalism. Whether you are valuing your business or a potential investment through to drafting commercial agreements or even winding up an organisation, make sure you are best placed to make effective and correct decisions. Few of us are lucky enough to have experience in every aspect of business and commerce and even larger corporations don’t always have the core competencies on their staff full time.

Why not speak to the professionals at Affinax and explore their scope of services and what benefits they can deliver to help you maintain a vibrant healthy smile in your business.

HOW MUCH DOES AN ACCOUNTANT COST IN DUBAI?

The recent changes in the business world in the UAE, particularly the introduction in VAT, has seen significantly increased demand for accountancy services. Until recently, many small and medium businesses may not have had their financial statements professionally compiled or audited whereas newer regulations have made this a necessity rather than something that was done for a secondary purpose (applying for financing for example).

This has, in turn lead to many more business owners and senior managers needing to ask how much these services will cost, and, as is often the case, there isn’t a simple answer.

Rather than try and pick an arbitrary number out of thin air, this article aims to highlight the factors that will impact the cost of accounting and bookkeeping services to help you when making the decision that fits your organisation.

The Scope of Work:
Perhaps the most obvious consideration relates to what type of accountancy you need to be taken care of. This might be registering your company with the FTA for VAT or filing a VAT return. It could be a far broader requirement such as accounting consultancy or even full time bookkeeping. This might be an in house dedicated service or, as is often more appropriate and financially viable, outsource bookkeeping. To make sure you get the quality of service you require, have a look at testimonials and client comments and consider who your competitors and clients are using for their accounting needs. Most importantly, check that the potential accounting service you are considering is experienced and qualified to handle the type of service you will be paying for.

The Scale of Work:
It goes without saying that handling the books of a multinational corporation is going to have a different cost associated than looking after the accounts of a sole proprietor. Also consider the complexity of the industry you are involved in. Large scale construction with multiple sub-contractors and projects spanning multiple financial years are going to have complicated requirements. They may have phased payments agreements and trigger milestones that will require extensive if not specific specialist skills and experience compared to a retail outlet for example. One may require a full time team of accountants whereas the other may need part time assistance for which the costs are going to be relative.

Sheer Numbers:
Should the gross turnover alone be a factor in determining the cost of accountancy services? This is an interesting question on the surface. It may appear that the amount of chargeable work is the same for an organisation turning over $100 million with 100 transactions compared to another turning over $1 million from 100 transactions. In reality, this is not usually the case and higher gross numbers, more often than not, will demand a higher fee. There will be different levels of responsibility and risk involved and making sure your chosen accounting professionals have the relevant experience and confidence with high value transactions is going to be vital for your own peace of mind.

Employee or Outsource:
This is one area where you are likely to see significant variation in costs. Having an in-house accountant will incur a salary relative to the experience and skills of the employee. Add to that visa costs, medical insurance and holiday cover and you will have a fixed and determined cost. Outsourcing, provided you have selected the right partner, is likely to represent a lower overall cost almost by default. Consider also that you may well have a team working on your accounts with broader skillsets and combined experience. You could well be getting considerably more bang for your buck if paying for the time they are dedicated to your books rather than for a full working day, week, month or year.

So How Much?
When push comes to shove, you are going to get broadly what you pay for and cheap is rarely the best and the best is rarely cheap. The important thing to ensure is that you are getting great value and the best service for the cost.

Why not speak to the team at Affinax and let them guide you on what services they can provide and how much value they can deliver for you.

WHAT IS THE COST OF OUTSOURCING THE ACCOUNTING AND FINANCE FUNCTION / DEPARTMENT?

Understanding the cost of outsourcing can be confusing. In a field where there are so many options, it is difficult to determine the cost of the accounts and what actually defines this outgoing. Here are six factors that can help you determine the cost of an accountant and why.

1) TRANSACTIONS

On a pure labor cost basis, the number of transactions your business conducts will dictate a portion of the price with an accountancy firm. Quite simply, if your business conducts a few transactions throughout the year, it will cost less than a business that has thousands of transactions.

An important role of an accountant is to account for the business incomings and outgoings on an accrual basis. This shows you, and others, what financial transactions have occurred, how and where?

2) TOTAL REVENUES

Much like the number of transactions, the value of transactions and therefore revenue will have an impact on the cost. Large transactions can often be more complex but more importantly, they carry risk.

It is vital to ensure that if your business is conducting high value transactions, the outsourced accountancy firm has the capability and experience to align with your business. This can come with a price.

3) COMPLEXITY OF BUSINESS

An accountant’s cost is also affected by the complexity of your business. A single office in a single location will have a very different price to the one that is read across several jurisdictions for instance. The makeup of a business complexity can follow a few guidelines:-

  • Entities:
    • How many entities does your company have?
    • Is it a single company dealing only with customers or is it a holding company with many entities serving different functions below?
  • Jurisdictions:
    • Where are the business (es) based?
    • What activities are they carrying out?
    • Is your business based locally, regionally, globally or offshore?
  • Bank Accounts:
    • How many bank accounts are to be served?
    • The number and type of transactions will be monitored.
  • d) Business Model : Various businesses have inherent complications. A single owned proprietorship conducting consultancy services will be much simpler compared to a contracting business having continuous contracting services.
4) INTERNATIONAL ACCOUNTING STANDARDS

An accountant’s cost can also change based on their ability to conform with the International Best Practices. It is important here to align your business to your accountant. An accountancy firm is only as good as its employees and often they would have gained their certifications from abroad first. What is the make-up of the company and to what best practices do they adhere? A big four company will cost you more but has the strength to back and certify your accounts to global standards. Do you need the auditing power of a big four company or will a base level to international mid-tier group perform the task effectively?

5) ANALYTICAL AND MANAGEMENT SUPPORT

If you cannot measure something, how can you improve? It is very important to ensure that your accounting firm can give you the reports you need. These vary from business to business and from C-level to C-level. Everyone wants something different based on what is important to them.

The difference of cost can also change with this factor. Many low to mid-tier firms will not have the ability to customize report for your business. They will use accounting software and will pull out reports in that standard. The more effective firms will tailor it to exactly what you need.

However, the cost of getting the exact figured you need can be outweighed by its significance to your business. Getting improper or ineffective reports can affect your decision-making ability and the future of your business.

6) EXPERIENCE

When choosing an accounting firm in the UAE, you must understand the experience of that company. Aligning your company, its jurisdiction and activity to the skill set of the accountant is vital.

When evaluating the company, you can ask for references or details of the company that have similar stature and activities to yours. Most accountants will give you a list of the big companies that they have worked for or work with, but it is important with alignment to your business – the answer is no. Choose a company with experience in your field, your location(s) and with a proven track record of success.

The cost of experience can be high. For an accountant, landing a multinational can affect its own pricing model. Make sure you align your business with the correct skill set to attain the best results.

5 THINGS YOU MUST CONSIDER WHEN SETTING UP A BUSINESS IN DUBAI

Forming the business model

It is imperative to understand the model of your business before taking the plunge into entrepreneurship. Often companies have been formed where the owner has a great idea but forget that an elegant solution doesn’t automatically translate into a successful business. Companies require an appropriate and effective business model, with the right pricing, communications and delivery channel to the right segment of customers to keep the business thriving.

It starts with validating a business opportunity, defining a large customer segment willing to pay money to solve a real problem, in much the same way as a proof of concept or prototype validates a technical solution.

Here are 5 points to understand when building your business model:

  • Ensure your product pricing matches your target segment
  • Ensure that your product offers a feasible solution to consumers’ problems.
  • Pitch your solution to group of customers including all pricing details
  • Talk to industry experts
  • Plan a local rollout or pilot
Let your business model dictate your jurisdiction

An important part of your business model is the activity of the business. In the UAE, different jurisdictions allow or restrict certain types of activities. For instance, an MEP company cannot operate in a Free-Zone. These typically import products and store them in warehouses and factories, most of which are only allowed in LLC mainland areas.

When you have decided on the business activity, the next step is to determine the location, i.e, the place of operations. With all of the regulations around this area it is important to seek advice from trusted company formation or business advisory companies.

Start-up Capital

When starting up it is a difficult decision whether to fund the business yourself or to use an investor to help with the start-up capital. Whilst having 100% of the business is compelling, it is important to understand the costs when initiating a new business. It is equally important to understand the costs when initiating a new business. It is equally important, that with the investor model, that all bases are covered in your financial model.

Common costs to a business are:

Often business overlook costs which may seem small at first, but can mount up. For instance:

  • Marketing budget – How much are you going to invest in brand awareness and lead generations? Who or what is going to deliver the results you want?
  • Staff secondary costs – Visas, medical expenses, Cars, parking, etc all add up. Ensure you understand the full costs of each staff member. Also ensure you speak to the right company to ensure your visa allowances and commitments are clear.
  • Information Technology (IT) – Whilst quantifying the IT hardware cost is relatively simple, the software required can seem a hidden factor. The small charges can add up to a much larger fee and can leave you overwhelmed if you are not prepared. Think about the different required software, who needs them and for whom are they a ‘nice to have’ rather than a necessity.
  • Office rental secondary charges – Firstly think of the rental solution you require, would a rented office space suffice or is your team going to be starting in a way that requires your own office? Remember that any space that is taken and designed requires approvals from Government bodies before action can be taken.
  • Communication / Utilities – From the mobile phones of your staffs to the office phones on the desk, the associated bills needs to be accounted for. With respect to utilities, enquire about average electricity and water charges from neighbors to allow you to get an idea about the cost, with rented office space these are often accounted for and again provide a viable option.
  • Consumables – Water, coffee, tea, sugar, printing cartridges…these all add up. Make sure to keep them as part of your costs.
Corporate Governance

When starting your own business it is vital that you have the correct agreements and processes in place. From the start, you must ensure that as a bare minimum you have the SOPs (standard operating procedures) documented. These are the rules which allow you to define the rules and policies and functions required to operate your business.

If you enter the business world as a partner/co-founder you must ensure that shareholder agreements are created correctly. Not only must the business display its shareholder shares, but the functions that are delegated to them to earn that share, from investors to shareholders performing a set of key functions that dictate their worth.

Also the contracts that stand between you and your customers, are they required and to what depth must they be created.

Whilst, at the start, all parties are excited about the business, things can change that can change the relationships between parties. Ensure that all bases are covered and that clear policies and guidelines are drafted to handle even the worst case scenarios.

Corporate Governance should be of paramount importance when forming a company. It is advisable, again, to seek the advice of a trusted business advisor when forming the company. You may not know of the potential hurdles you may face down the road.

Accounting

Accounting is one of the tasks that need to be satisfied early. For many start-ups this can seem an overwhelming and confusing task.

Who will do it? What is important to record and what tool shall be used?

The importance of accounting can have huge ramifications to a business throughout its lifetime. It is important to ensure the right steps are followed from the beginning so that you know financially where your business is, throughout.

Effective accounting will define your budget throughout the year. However, a budget is often malleable, as businesses change based on many factors. An accounting role must be implemented regularly to track your performance against budget and the ramifications of different actions.

Accounting will also play a part in your cash flows. With cash flow being the vital killer of many businesses , it is important that it is implement correctly.

Conclusion

With the many things to consider when setting up a business in Dubai, your choices of who will fulfill, what roles which can lead to success or failure are very crucial. You are in the market to play out your business idea. Wherever you can, use trusted resources to complete tasks that may not be in your skill set or time allowance.