New E-Invoicing Requirements in the Kingdom of Saudi Arabia

E-Invoicing requirements in Saudi Arabia

With Saudi Arabia mandating e-invoicing to increase transparency and compliance with tax regulations, ZATCA (Zakat, Tax and Customers Authority), formerly known as GAZT, has issued new regulations for controls, requirements, and technical specifications.

The Generation stage commences from 4th December 2021 and businesses are required to generate, issue and store electronic invoices and notes and should notify the Authority if any technical error arises. The second phase, Integration commences 1st June 2022, by which time taxpayers must mandatorily integrate their systems with ZATCA’s (the Authority) systems by using an Application Programming Interface (API).

In accordance with ZATCA’s regulations, all the transactions which earlier required tax invoices to be issued must comply and follow e-invoicing requirements:

  • Supplies of goods and services that are either subject to the standard VAT rate or zero rate;
  • Export of goods and services from the Kingdom;
  • Intra-GCC supplies in accordance with the Agreement, VAT law and its Implementing Regulation;
  • Nominal supplies by the taxpayer in accordance with the Agreement, VAT, and Implementing Regulation; and
  • Any payments related to supply of goods or services and received by the taxpayer before the actual supply.

The transactions for which notes are issued as per Article 40 and 54 of the VAT Implementing Regulation shall also have to comply with the latest regulation in the following instances:

  • Cancellation or suspension of the supplies after its occurrence either wholly or partially
  • In case of essential change or amendment in the supply, which leads to the change of the VAT due; and
  • Amendment of the supply value which is pre-agreed upon between the supplier and consumer, in case of goods or services refund.

Transactions that are not required to follow the regulations are:

  • Transactions with Exempted Supplies;
  • Any payments related to exempted supplies and received by a taxpayer;
  • Supplies subject to VAT pursuant to Reverse Charge Mechanism; and
  • Import of goods to the Kingdom.

What changes should businesses observe from 4th December 2021?

During the transition phase, businesses will be required to adjust their accounting systems and internal processes to meet the e-invoicing requirements through an ‘e-invoice generation solution’. The ‘e-invoice generation solution’ will be considered as compliant after prior verification of its conformity to all specifications and requirements by the Authority, third party or self-certified by the person subject to e-invoicing regulations.

Business entities and banks must ensure that their accounting system has enhanced capabilities both for VAT compliance and e-invoicing solution:

  • The compliant solution should be able to connect to an internet connection and integrate with external systems by using an Application Programming Interface (API). Taxpayers will be required to work with their IT team to ensure that technical requirements are met.
  • The e-invoices and associated notes must contain mandated fields as specified by ZATCA which will help with integration.
  • Business entities should be able to generate e-invoices in XML format or PDF/A-3 format (with embedded XML) and share the same with customers.
  • The Authority shall create a Cryptographic stamp (an electronic stamp created via cryptographic algorithms to ensure authenticity of origin and integrity of content) after receiving the e-invoices and electronic notes pursuant to the integration procedures starting from the date determined by the authority.
  • Businesses need to prepare themselves to share tax invoices or its associated notes that have been generated electronically in XML format or PDF/A-3 format (with embedded XML), in the same format of such invoice or note with customers.
  • Businesses should be able to export generated invoices and associated notes into an external archival system.

What should the compliant e-invoice generation solution be able to do?

  • The compliant solution must be able to generate invoices and their associated notes in the XML format or PDF/A-3 format (with embedded XML) as per the requirements of electronic invoices formats.
  • The compliant solution must be tamper-resistant and include a mechanism which prevents tampering and should reveal any tampering attempts that might occur by the user or any third party in accordance with the specifications and requirements specified by the Authority. The Authority has the power to verify the e-invoicing generation solution to the specifications and requirements.
  • The compliant solution must be able to protect the generated electronic invoices and electronic notes from any alteration or undetected deletion, and contain some functionalities which enable the person subject to e-invoicing regulation to save electronic invoices and electronic notes and archive them in XML format without an Internet connection.
  • The compliant e-invoice generation solution must be able to generate a Universally Unique Identifier (UUID) in addition to the invoice sequential number which identifies and distinguish each VAT Tax Invoice, Simplified Tax Invoice, and their associated notes in accordance with the specifications, requirements and timelines. This shall be for each electronic invoice or electronic ote as per the requirements and timelines. UUID is a 128-bit number, generated by an algorithm chosen to make it unlikely that the same identifier will be generated by anyone else.
  • The compliant solution which is used for generating Simplified Tax Invoices and their associated notes, must be able to generate a Cryptographic Stamp for each electronic invoice or electronic note. Such cryptographic stamp must have an identifier as per the requirements and timelines
  • The compliant solution must be able to generate a hash (an enciphered text obtained by applying a one-way algorithm upon data which prevents the return to the original data or amending or tampering it) for each generated electronic invoice or electronic note within the sequence of the electronic invoices and electronic notes. The hash of the invoice is then embedded in the next invoice in the sequence. This hash is used to protect the sequence of Invoices from tampering whether by deletion or replacement
  • The compliant solution must be able to generate a QR code which is a type of matrix barcode, with a pattern of black and white squares that is machine readable by a QR code scanner or the camera of smart devices in order to enable basic validation of electronic invoices and electronic notes.
  • The compliant solution must have a tamper-resistant invoice counter that cannot be reset. The counter must increment for each generated invoice or associated note and the compliant solution must record the value of this counter in each invoice or associated note. This counter is used to ensure that invoices cannot be deleted from the end of the invoice sequence without detection.

Will there be any fines or penalties for non-compliance?

Yes, all provisions related to tax invoices in the VAT Law are applicable to electronic invoices including fines and penalties.

Further regulations relating to the generation of e-invoices shall be made available by ZATCA in the coming months.

Affiniax has collaborated with Pagero, a digital solution provider to ensure all our clients are compliant with the forthcoming E-invoice mandate.

Not sure if these requirements apply to you? Read our blog on applicability, as well as other commonly asked questions to learn more.

If you would like to know more about the E-Invoicing Requirements, please feel free to approach our team.

New E-Invoicing Regulations in the Kingdom of Saudi Arabia

Mandatory E-Invoice in Saudi Arabia

New regulations have recently been issued by Saudi Arabia to mandate electronic invoicing (e-invoice) effective from December 4, 2021, for all registered entities and businesses. The Zakat, Tax and Customers Authority (ZATCA), formerly known as the General Authority of Zakat and Tax (GAZT), has published a framework about the implementation which focuses on increasing transparency and compliance with tax obligations, which, in turn, leads to high consumer protection.

Who does it apply to?

The new invoicing regulations are applicable to all taxable persons (excluding non-resident taxable persons) who are a resident in KSA. Any customers or third parties that issue a tax invoice on behalf of a taxable person who is a resident of the Kingdom shall also be required to comply with this regulation. Taxpayers who are not residents of KSA are excluded from these regulations.

What is the KSA e-invoicing regulation all about?

Taxpayers under the KSA e-invoicing regulation are expected to issue invoices and amendments (such as debit and credit notes) electronically for all their purchase and sale transactions (including exports which may be zero rated).

The taxpayer residents and business entities will have to comply with a standard electronic format and be prepared to issue, receive and store e-invoices in a particular electronic format with predefined data fields.

But firstly what is an e-invoice and electronic notes, and what will be the content?

An e-invoice is simply a tax invoice that is issued in an electronic format. Electronic notes comprise of debit and credit notes which shall also be issued in an electronic format. A handwritten or scanned invoice will henceforth not be considered an electronic invoice, even if they are sent digitally. Only e-invoices generated in the specified format are acceptable.

The terms, requirements and conditions applicable to tax invoices as per Article (53) of VAT Implementing Regulation will be determined at a later stage by ZATCA for a smooth transition.

Can I issue scanned copies or PDF documents for invoices?

No, scanned and PDF invoices will not be considered as an e-invoice. Invoices that are handwritten, Microsoft Word invoices and any unstructured invoice on a webpage or email will not be accepted.

Should a taxable person generate the e-invoices for sales outside the Kingdom (exports)?

Yes, it is mandatory for all taxable persons to issue and store the e-invoices starting from December 4, 2021, for all taxable supplies, whether it is subject to standard rate or zero rate for resident and non-resident consumers.

When will this be implemented?

ZATCA will be implementing e-invoicing in two stages. ZATCA issued their first e-invoicing regulations on December 4, 2020, by giving a period of 12 calendar months from the date of publication for businesses to start generating invoices.

Hence, the first phase of Generation shall commence from December 4, 2021, and it will be mandatory for businesses and entities (excluding non-resident taxable persons) to generate, issue and store electronic invoices and electronic notes, related to their processing and record keeping as well as any other third party issuing tax invoices on behalf of a taxable supplier.

From June 1, 2022, all taxable persons must integrate their internal systems with ZATCA’s system through an API (Application Programing Interface). The timelines for integration with the system and phases are yet to be announced.

Affiniax Partners has collaborated with Pagero, a digital solution provider to ensure all our clients are compliant with the forthcoming E-invoice mandate.

In case you would like to learn more about the E-Invoicing requirements mandated under the regulation, read our blog on the subject.

If you would like to know more about the E-Invoicing Regulations, please feel free to get in touch with our team.

How to Achieve continuous growth and improvement

Grow your company using ISO systems and checks

Within today’s Quality Management Systems, ‘Continuous Improvement’ is one of the most important principles, especially within the ISO 9001:2015 Quality Management System.

It plays an important part in keeping the organisation competitive, and must be a permanent objective within the organisation.

In reality, history shows that many organisations go out of business simply because they are not able to improve as quickly as their competitors!

So, what is Continuous Improvement? It is defined as “a recurring activity to increase the ability to fulfil requirements.”

Within ISO 9001:2015, its focus is on increasing the ability to fulfil quality requirements. Improvement activities are similar to problem solving activities. The big difference is that improvement activities are planned and usually organised as part of a larger program, whereas problem solving is usually more reactive and unplanned.


Continual improvement is driven by the objectives set by the Senior Management Team.

As a minimum, quality objectives should address:

  1. The improvement of internal efficiency
  2. Individual customer requirements
  3. The level of performance that your market sector expects

There is no requirement that the organisation should set objectives for improvement of all its processes at any one time. It would be unrealistic to expect an organisation to make progress in all potential improvements simultaneously.

Each improvement will require the commitment of resources, which should be prioritised by top management, especially if investment is required.


Inputs for improvement opportunities are obtained from the following sources:

  • Customer satisfaction
  • Customer complaints and feedback
  • Market research and analysis
  • Inputs from employees, suppliers, and other interested parties
  • Internal and external audits of the quality system
  • Records of product or process non-conformances
  • Data from process and product characteristics and their trends

Opportunities for improvement may also be identified on a special project basis. The following are examples of such projects:

  • Non-value-added use of floor space
  • Excessive inspection/testing
  • Excessive handling and storage
  • Excessive failures and costs to quality
  • Machine set-up changeover times

The majority of organisations with a Quality Management System use some form of the PDCA cycle.


P – Plan

  • Resolve a problem: define, analyse, and identify root cause
  • Improve a process: change to create improvement

D – Do

  • Resolve a problem: devise a solution
  • Improve a process: encourage changes on a small scale to induce improvement

C – Check (Monitor)

  • Resolve a problem: confirm outcome and identify deviations and issues
  • Improve a process: investigate selected processes to verify if changes are working

A – Act

  • Resolve a problem: standardise solution, review and define next issue
  • Improve a process: to secure the greatest benefit from change

The PDCA cycle is a repetitive four-stage model used in business for the control and continual improvement of processes and products. The PDCA model is also known as the Deming circle/ cycle/ wheel. The Deming cycle, or PDCA Cycle consists of a logical sequence of the following four repetitive steps for continuous improvement and learning: Plan – Do – Check (Monitor) – Act.

If you want to know how to drive continual improvement in your company, please  contact or call 04 425 6616 and we will work with you to show you how!

The importance of correctly managing your team

How to manage employees effectively using ISO Management standards

Many businesses, no matter what the size, forget their most important asset. Their staff! It’s not easy when you, as a business owner, CEO or General Manager, are constantly trying to balance profit and loss, fight suppliers or chase debtors to remember that there is a team below you waiting for leadership, decisions and support.

Communication, as we all know, is key in any business. However, it is all too often overlooked when it comes to internal communications. Business leaders need information to make good, solid business decisions. So, they need accurate, timely information from their Heads of Departments (HoDs). These HoDs need to collect and collate the information required from their teams. But if the teams don’t know what information, in what format, when and why, that information will be slow, possibly incomplete or inaccurate.

A team is created by working together, towards a common objective, supporting each other, and providing clear and consistent input to the next in line’s process. This requires leadership, knowledge and support. Every member of a team is important. Every member of a team needs to know why they are important, feel important. A team needs developing, which means that each team member needs developing, not just within the business, but within the person.

The 3 main ISO management systems, all now in a new and improved format, help place the individual staff member, no matter what role, within the system. It helps business leaders to put in place those processes and procedures that will enable staff to feel part of the team, support them, develop them and, in doing so, provide consistent, high quality and safe services and products to your customers in order to meet or, better still, exceed your expectations for them.

If you want to know more about how ISO management systems can improve your company, please contact or call 04 425 6616.


Does your company need to maintain a register of UBOs and nominee directors?

The United Arab Emirates (UAE) recently issued Cabinet Resolution No. 58 of 2020 on the Regulation of the Procedures of the Real Beneficiary (the Resolution), which came into effect on 28 August 2020 and replaced Cabinet Resolution No. 34 of 2020 issued earlier this year.

Over the years, certain free zones in Dubai have already implemented requirements about information to be furnished regarding an Ultimate Beneficial Owner (UBO) during the registration process. However, many of the licensing authorities in the UAE previously did not require such information from the companies.

The new Resolution aims to introduce the requirement for a beneficial ownership register in the UAE mainland and unify the minimum disclosure requirements for corporate entities incorporated in the UAE mainland and in the non-financial free zones.

The Resolution addresses the disclosure requirements at the corporate registration stage, as well as the requirement to subsequently maintain a shareholder register, a register of beneficial owners and a register of nominee directors. Companies are now required to file the beneficial ownership information with the relevant Registrar by 27 October 2020.

Key points:

  • All companies in the UAE, both mainland and free zone companies, with the exception of companies incorporated in the financial free zones (Abu Dhabi Global Market (ADGM) and Dubai International Financial Centre (DIFC) and companies owned by the Federal Government and their subsidiaries), must now keep at their office premises:
    • A shareholder register
    • A register of beneficial owners
    • A register of nominee directors.
  • Companies must file such information relating to the shareholders and beneficial owners with the relevant registrar and licensing authorities responsible for supervising the register of trade names for the various types of establishments registered in the UAE (the Registrar) by 27 October 2020.
  • Companies must notify the Registrar of any change or amendment to the information provided within 15 days of such change or amendment. Also, the companies need to designate an Individual who can be contacted by the regulators regarding the matters enacted in the resolution.
  • Companies which are listed on well-regulated stock exchanges or companies which are owned by these listed companies may rely on the disclosures made to the relevant stock exchange rather than making independent inquiries as to the beneficial ownership.

The resolution has been adopted in furtherance of Federal Law no. 20 of 2018, on Anti- Money Laundering, which placed an obligation on corporate entities to disclose any individual ownership (whether beneficial or actual) in an entity which owns twenty five percent (25%) or more of the company, to the relevant regulator.

To understand more about how the above changes can affect your business, please reach out to us on

Affiniax Partners’ HR Rising Star

Best HR practices during Covid-19 Pandemic


I chose the Human Resources discipline for my MBA as I wanted to have a positive impact on people’s lives through the introduction of employee-friendly policies, influence future aspects of the company based on my recruitment decisions, and help organizations identify key talent.

My Ongoing HR Journey…

Oct 2017 – I began my HR career as an HR Faculty at National Academy, Dubai, where I delivered academic lectures on HR topics to working professionals. The lectures delivered were based on knowledge gained during my MBA, and I realized that I must gain practical HR working experience to enhance my knowledge regarding regional HR practices and UAE employment laws.

Dec 2017 – To further my career, I joined Affiniax Partners as an HR Executive. At Affiniax, management intended to transform the traditional operating model via fully integrated change management strategies and strategically managed HR transformation. It didn’t take me long to understand that the reasons why I chose HR as my career path were good to get started but not great to accomplish what I envisioned.

My vision was to align HR closely with Affiniax’s strategy in coordination with my colleagues and focused on enhancing the internal processes.

My first step was meetings with key employees and department heads regarding the company’s policies and processes. I presented those suggestions to the management, which resulted in decisions regarding proper SOP’s. I designed the Employee Manual with clear policies and processes in consultation with line managers and employees.

Soon after, I got selected for the Youth Leadership Program (YLP) at Affiniax in May 2018, which focused on the development of personal and professional skills. The selection was done based on interviews with the CEO and the training team.

I implemented the automation of manual tasks through migration to cloud-based services by ensuring process simplification and introduced a free HR software, Beneple (with limited features) with a pilot approach to familiarize the employees with cloud HR.

After successfully implementing Beneple, I implemented Zoho People in 2019 which consisted of more features. Again, I executed it successfully by overcoming challenges related to time taken to train the employees, altering the culture to adopt digital processes and to achieve 100% technology acceptance among the employees.

I revamped the performance management of my organization in 2018 through Robert Mosley’s “KPI & MSC model”. In 2019, I moved the same model onto the cloud for better record management, better security and multiple options of customizations in approval levels.

I chose a free software, Surveymonkey to evaluate ongoing learning programs at our workplace. I designed online forms, considering time spent by employees to evaluate the programs, ease of filling up the forms, better security and record-management.

I introduced employee surveys to measure the workplace climate and get a holistic perspective of employees.

I introduced comprehensive reports for Exit Interviews, Candidate selections, 360 Degree Reviews and Learning Evaluations.

Business Outcomes

  • Online L&D Evaluation and Performance Management – Data analysis and collection time reduced by 30%.
  • HR software – Reduction of time by 30% because of real-time attendance reports, customized online reports, better file management and digital record keeping.
  • Employee Surveys – 75% of the interns found the induction training session to be extremely useful and were very satisfied with our recruiting process.

Overcoming Challenges

The challenge was just around change as the employees were used to the rhythms of the old system. I strategically managed the change with the line managers by implementing phased rollouts of initiatives and training sessions.

Present Day
2020 is different now than it was a few months ago. With our workforce moving towards remote working, maintaining productivity, culture and employee engagement are extremely important. I conduct creative virtual team activities (definitely more than before), to build stronger relationships.

Moving Ahead
My CEO, after observing my passion, gave me the opportunity to showcase my skills for client assignments, which included Employee Manual and Agreements, Interview Assessment Reports, Succession Planning, Incentive structure, Organization Culture, to name a few. It was refreshing to experience this gradual shift towards consulting, where I got to enhance my knowledge with each assignment and share new perspectives that add value to my clients’ businesses.

I invest my time in reading leadership and HR books and networking at HR events to uncover the best practices of other organizations.

What Safety Measures Restaurants should take during the COVID-19 Pandemic

Steps restaurants can take to get more customers during pandemic

After months of being stuck at home during lockdown, even the most experienced home chef would be longing for a meal that he or she did not labour to make in their kitchen. For some, a reason to change out of their sleepwear and get out of the house—with or without the kids—is becoming more of a necessity to keep their sanity than a celebratory activity. In short, people are eager to be able to eat out again.

It is safe to say that most, if not all, in the food-service industry are also eager to welcome back the diners that they are used to serving. Business owners are eager to be able to reopen and recover lost earnings while the service staff is eager to earn again after months of being without work. There are also many who simply miss the satisfaction of serving people meals that nourish them and giving them an enjoyable dining experience; who missed the creative expression that came with their food industry jobs. Whether it is grabbing an inexpensive meal at a quick-service restaurant or an exquisite dining experience at a fancy restaurant, food safety and the assurance that a consumer will not go home with a COVID-19 infection is of paramount concern to everyone.

For the employers or business owners and their management team, the responsibility for prevention and management of outbreaks rests on their shoulders.

  • Take steps to ensure that staff adhere to existing and additional government regulations to keep the workplace safe while the COVID-19 threat still exists.
  • Conduct a COVID-19 risk assessment of the entire workplace; having a tried and tested business continuity plan in place would also be a big help.
  • Increase visible monitoring and enforcement of control measures including HACCP-based SOPs.
  • Conduct regular reviews, including seeking feedback from staff and customers to identify areas for improvement.

All employees, on the other hand, must be more vigilant, strictly following all processes put in place to ensure food safety. Although it is very unlikely COVID-19 could be transmitted through properly prepared food or food packaging that is properly handled, staff must observe good hygiene practices at all times.

  • Wash hands frequently with soap and water for at least 20 seconds (or sanitise), especially before and after handling food, cleaning cutlery, dishes, glasses, or other items to be used by the customer.
  • Staff that handle dirty or used items, collect used dishes from customer tables, and handle payments should be designated for these activities only, whenever possible.
  • All employees must ensure their thorough understanding of all HACCP principles and:
    • identify any food handling hazard;
    • identify the critical control points (CCPs) to prevent, remove or reduce a hazard;
    • set limits for CCPs;
    • monitor the CCPs;
    • immediately correct any problem with a CCP;
    • put checks in place to make sure the HACCP plan is working; and
    • keep accurate and up-to-date records.

There are other resources available for business owners that could help to further reassure their customers that their establishment is a safe environment for them to be in. The World Travel and Tourism Council (WTTC) has come up with a global safety stamp to recognise establishments around the world who have adopted policies and protocols that ensure the safety of consumers (for more info, click here). Certification agency Bureau Veritas has also launched a Safeguard label for shops, restaurants, and other confined spaces were people gather (for more info, click here or here).

With business owners and their employees clearly understanding how their cooperation will ensure their customers will be safe while in their premises, this will allow for a more comfortable, enjoyable, and most importantly, COVID-19 safe customer experience. If you are in need of help with regards to implementing HACCP or another food safety management system such as ISO 22000 in your establishment, contact Affiniax Partners for a free consultation.


Is it Safe to Travel Once Again?

List of guidelines for businesses during Covid-19

Is it safe to travel once again? What is being done at the moment to make it safe to travel once more? Despite the health risks and economic slowdown, travelling between cities or countries cannot be completely avoided.

The travel and tourism industry is no doubt one of the hardest hit, if not the hardest hit, by the ongoing COVID-19 pandemic. From the time the first outbreak on a cruise ship was reported, up to the recent string of airline bankruptcies and aircraft manufacturer layoffs. Add to this all the related local service industries and businesses that are dependent on tourists and business travelers that have either closed temporarily or been forced to close for good. So, what is currently being done to help make travelling safe once again?

  1. The World Travel and Tourism Council (WTTC), along with governments and health experts, developed action plans to aid in the recovery efforts for the industry. They have come up with a global safety stamp to recognise governments and companies around the world who have adopted policies and protocols that ensure the safety of consumers and travelers. They will also be publishing protocols for the Hospitality industry, Attractions, Outdoor Retail industry, Aviation industry, Airports, Short Term Rentals industry, Cruises, Tour Operators, Convention Centres and MICE, Car Rental industry and Insurance industries. For more information, visit
  2. Bureau Veritas is an international organisation that tests, inspects and certifies other organisations according to accepted international standards. They have launched a Safeguard label “to provide reassurance to partners, customers and employees that the entities carrying the label have undergone checks and audits of the preventive measures in place”, according to their site. Commonly used in the hospitality industry, it can also be given to shops, restaurants, and corporate buildings, or other confined spaces where people gather. It covers audits of facilities, processes, staff, and hygiene/cleaning. This certification is valid for six (6) months, and a reassessment needs to be conducted in order to be able to continue to keep the label.  For more information, visit or
  3. Spain’s Association for Standardisation (UNE) collaborated with its Institute for Spanish Tourism Quality (ICTE) to publish a series of specifications which in turn put in place guidelines and recommendations for reducing the risk of the spread of COVID-19 in its tourism sector. They have made these documents available for anyone to use on
  4. The emirate of Dubai in the United Arab Emirates went a step further and came up with an assurance stamp for all establishments that adhere to the government’s safety standards. After a thorough verification and validation process, the stamp can be displayed to let all consumers know that they are entering a place that follows rigorous safety and hygiene measures. The stamp is valid for only two (2) weeks, further reassuring the public that as long as the stamp is displayed, the place they are entering continuously meets safety requirements.

In most countries, the challenge that businesses face in dealing with the COVID-19 pandemic is the lack of a consistent and reliable approach. ISO’s technical committee on tourism and its related services is developing ways to support organisations and to prevent the further spread of COVID-19, but in the meantime, ISO 22483:2020 Tourism and Related Services can be a valuable resource.

Contact us if you want to find out how any of the news above can help you and your team get started on your road to recovery in a post-pandemic business environment.

How to improve Cash Flow Management during COVID-19

Accounting solutions to help business survive covid

A couple of months ago, we wrote a blog describing “WHY BUDGETING IS CONSIDERED KEY TO BUSINESS FINANCIAL SUCCESS?” and one of the mentioned benefits of budgeting was planning and predicting cash flows. We assume that, due to the unpredictable events caused by COVID-19, there would be a major change in the budgeted figures and improving cash flow is important to help owners make decisions that will influence the future of their company.

As a major portion of cash revolves around accounts receivable and payable, let us examine some methods to achieve budgeted cash flow through its proper management.

  • Improve Receivables Credit Policy: Review your receivable credit policy i.e. your credit terms. It should be less than the credit period given to you by your suppliers. In order to improve your receivables credit period, you can encourage customers to pay faster with an early payment discount scheme.
    On the other hand, you can check with your supplier if payment terms can be increased on the basis of your long-term relationship. If not all, some of them may agree and extend your credit period from (hypothetically) 30 days to 45 days.
  • Advance Payment: If you are providing a service or goods that involve substantial cash or effort before delivery of said service or goods, ask your customer to pay a portion of that as an advance. An advance can range between 30%-50%, depending on the agreement with your customer and the type of services or goods to be provided.
  • Transaction cycle between receivable and payable should not be too long, or else you will end up investing in additional human resources or will end up paying interest on delay in payments to your suppliers.
  • Invoice financing: This option is also known as invoice factoring, invoice discounting or, in simple terms, selling your sales invoice to finance companies or banks. For example, if you have credit terms of 30 days with a customer, you can get the amount from a finance company on the day the invoice was issued, instead of waiting for 30 days.
  • Set up a policy for long outstanding receivables: Set up a policy indicating the maximum period it should take to clear a customer’s account. If any outstanding receivables exceed the maximum period, act immediately and suspend any further business with that client until their account is settled.
  • On-time Accounting: Record all transactions immediately and keep track of aging summary on a regular basis.
  • Use Automated feature of accounting software: Tracking receivables and payables manually would be time consuming and more cumbersome if even a single document is missed. Automating the process will help you with quick compilation of information and send regular reminder mail to customers for payment without interrupting your routine work.

Other than the methods mentioned above, you can also improve cash flow by converting fixed costs into variable costs, cutting or delaying expenses, looking to sell or lease idle assets, checking for deferment of loan instalments, lowering instalment amounts etc.

It is very important that you consider your business model before selecting from the above methods to improve cash flow. Contact us for more information

Key Steps accountants should take to guide SMEs out of the Covid-19 Crisis

Business survival tips, strategies for businesses during covid-19 crisis, accounting consultancy in Dubai

In the present situation where the whole world has come to a stop, it is now more important than ever to have savings in hand. There will be a massive impact felt due to the coronavirus, and businesses need to be ready for any situation which comes their way. It is because of this reason that outsourcing the accounting functions of a company will be more beneficial for the management.

Accountants – for many – are SME’s trusted advisors.

The Covid-19 crisis is a critical time where SMEs need all the guidance they can get to navigate through the storm. We call on accountants and small accountancy practices to help struggling SMEs through these difficult times.

The following actions are required to be taken by accountants to support their struggling SME clients:

1. Informing clients about all aid options

Accountants should be aware of all financial (and other) forms of aid provided by national governments. It would be helpful for the national accountancy body to be aware of aid that other countries provide, so they can flag the best practices to their own national policymakers.

2. Applying the available aid to client’s situations

Identify clients in high risk sectors and those that would benefit most from public support measures. Help them by:

  • Advising them on, and guiding them through, all the claims available to them
  • Identifying options to help them diversify their business
  • Providing a path to accessing emergency financing being provided by governments
  • If possible, consider renegotiating your fees and payment schedules with them

3. Helping with immediate business survival

One of the ways in which accountants can help is by informing their SME clients of immediate measures that might make the difference between survival and collapse. They should also help them implement these measures where required. Examples of this include:

  • Accessing the reliefs on offer as soon as possible to increase the impact.
  • Reviewing and adjusting their cash flow forecast to determine what impact cuts in sales will have on their ability to pay their suppliers and debt. Businesses should continue to pay their suppliers when they can to help avoid a wide-spread collapse of the financial system.
  • Considering the business model to ascertain whether the SME can deliver goods or services in an alternative manner – such as by home delivery or online, and whether it can downsize or stop certain activities, such as travel, sales and marketing.
  • Understanding their supply chains and planning for disruptions in the supply of products and services. This may involve scaling back production for some parts and stock and re-considering suppliers and clients from countries heavily impacted by the virus.
  • Checking their insurance to understand whether they are eligible for a claim for any financial losses.
  • Communicating with their staff to discuss the possibility of short term pay cuts.
  • Ensuring that their financials are up to date so they can monitor profitability, stock, and debtor-creditor balances. Many governments are offering deferment of tax returns and financial information filing. However, such deferments’ long-term impacts are not clear. They could result in a later bottleneck in filing such returns and the possible loss of financial and tax data.
  • Negotiating with their debtors- for example, to offer discounts in exchange for early payment.
  • Negotiating with their debtors– for example, to offer discounts in exchange for early payment.
  • Continually monitoring the situation and informing clients of new initiatives so that when lifting the restrictions becomes imminent, they are ready to recommence trading.
  • If all else fails, considering the options within insolvency as it may be possible to rescue viable businesses by debt reorganization rather than being forced into full liquidation.

4. Guiding SME’s plan for the medium term

Many SMEs are likely to be in a crisis mode. Our accountants help them avoid emergency measures that could endanger the business’ medium-term viability. They can, for example, help them to:

  • Reconsider whether laying off employees is unavoidable. On top of having negative social and societal impacts, cutting down on workforce also constitutes a loss of key skills for the business. This should be a last resort option only, so make your clients aware of that and help them access all alternative options, aid and financing available first. It is possible that staff would prefer taking a temporary pay cut over redundancy. This could increase staff loyalty and allow the business to resume operations once the restrictions are lifted.
  • Start building financial reserves as soon as possible, to prepare for a new peak in coronavirus cases even after the current restrictions are lifted.