PART 2

In our previous article, we discussed the importance of cutting costs in the market and how cost-cutting is to be implemented to achieve at least a 10 percent cost reduction in surplus costs.
However, in some businesses, it is apparent that 10 percent of cost reduction is not going to cut it. Maybe the market is going through a severe downturn, or the company’s primary business is now obsolete. Maybe even, as the recent situation in 2020 was, there is a catastrophe on a global scale.

Getting to 20% – Redesign Ideas

Redesigning

Whatever the situation is, a cost reduction of 20 to 30 percent is certainly possible. However, it should be noted that it is mostly impossible to remove 20 percent of the total costs incurred without undertaking a significant redesign in the workflows of a business or an organizational department. Keep in mind that its rarely a good idea to do the same work with 20 percent fewer people.
When eliminating costs to this extent, it should come as no surprise that any work should be eliminated for which cost exceeds the value. But it should be kept in mind that there is still value that is being cut. The first step can be to combine opportunities to reduce the workload and redistribute the workload to remaining positions available.
To eliminate work effectively, rethink your department in three ways.

Communication with Counterparties

In the case of a business department providing in house service to the Companies’ other departments, it’s a good idea to evaluate your workload about those departments. Is the role in providing necessary information to those other groups? Do their deadlines exacerbate your workloads?
If so, then the cost has a considerable chance of exceeding value, because the department requiring the work is not directly bearing the cost of the work. To ensure that the cost you are incurring is justified, the efforts made by your department should be disaggregated and then verified if each effort is justified. This approach, though time-consuming, can reveal many opportunities.

Eliminating Liaisons and Coordinators

Liaisons and Coordinators were created to assume that two or more groups performing different tasks would not be able to understand each other’s work well enough to carry out adequate communication. However, in today’s work environment, this is mostly not the case. The position of Coordinators and Liaisons is mostly important to organizations whose operations are spread out around the globe. For companies and interworking departments which exist close by, their need does not exist.

Reducing Excessive Service Levels

Excessive Service Levels create a significant problem in the process of cutting costs in a business. There has been an instance in our experience where a full-time staff was hired to sift through daily reports and manually highlight any variances encountered even after the fact that many of the variances had been rendered useless due to a systems overhaul.

Change the process

process changing

The administrative process can become frozen over time and thus may cease to become effective or efficient. Evaluation of the following four business areas will help one to understand whether this has occurred and implemented any changes that may be necessary.
It reduced Business Requirements. There is a need to evaluate whether the business requirements have been changed or not. Perhaps the requirement for certain data does not exist anymore. Evaluate if there is a need to redesign the process or not.
Manual Process. Is there any process that needs to be processed repetitively, rather than electronically with little or no human intervention?
Exceptions to the Norm. Do the routine 90 percent items cost much less to handle than the exceptional 10 percent. Redesigning what constitutes as an exception can reduce the burden of the department.
Timing. Evaluate if shifting the timing of a certain task will benefit the cost-saving process or not.

Moving Away from Belt and Suspenders Mindset.

Normally managers are evaluated against no surprises standard. The managers who were considered better than normal were assessed against a no surprises standard. You need to evaluate if the functions in your department are involved in reviewing and reconciling information. These positions are a response from a time when there were significant problems in the data or variances. Even as processes are more and more standardized and computerized, the chances of errors are reduced, these functions remain causing a significant drain to the company’s funds. Consider if the Department or the Company’s review function can be moved to areas that are high priority or high stake.

Getting to 30% or More: Cross-Department and Program Elimination Ideas

cost control

It is highly unlikely that one will find cost saving of 30 percent or more of the existing funds solely within the same department or executing the same programs as before. Contrary to this, it is extremely surprising how much savings can be made by evaluating how a department fits in with other departments of the organization. So, if the goal is to reduce 30 percent or more of the costs, a broader understanding of the organization must occur.

Coordinate Parallel Activities

Many departments in a business carry on functions that are similar or closely similar. In such a scenario, an assessment can be carried out to save costs. An example is the purchase of supplies. Most departments procure supplies on their schedule. If the procurement schedule of the departments can be combined, then the company can avail of the benefit of its purchasing power.

Shift the burden to the most Efficient Location

Of the complaints heard during the Annual Budgeting process, the most common is that a certain department budget could be reduced, but that department has budgeting constraints. Interestingly, when budgeting is taking place, that time is ideal for carrying out cross-department tradeoffs.
Another method of how this problem could be tackled is to outsource activities or workgroups. The case can be made as to whether the needs are so specialized that outsourcing them will not be sufficient; however, this evaluation must be carefully carried out.
Our experience, however, shows that outsourcing can significantly diminish the administrative burden on a company. It should be noted that any change in the organizational structure will be met with resistance. If an outsourcing contract is proposed, the company will most certainly cite security concerns and the burden of creating a contract. However, if several opportunities are presented, then simultaneously, organizations tend to be more willing to face the discomfort.

Eliminate Duplicated Analysis

A problem we have discovered across many large organizations is that most departments are carrying on evaluating the same task from multiple angles [Sales, Marketing, Manufacturing], with each department working not in sync with other departments. In our experience, the most effective and efficient companies carry out such functions in a single coordinated effort. This function is handed over to a single department to be carried out. However, it should be noted that this department will require input from other departments at various stages of the evaluation.

Eliminate Low-Value Meetings and Forums

During one of our assessments, we came across a Company where the upper management was virtually unable to do any task approximately 20 percent of the time due to weekday meetings.
In this case, a cross-department assessment of the meetings can be carried out. The problematic meetings that serve no other purpose than touching base can be re-purposed, consolidated, or eliminated.

Restructure or Cut Cross Department Activities

If the goal is to reduce 30 percent or more of the costs incurred, an unorthodox approach must be taken regarding the reduction of cost. A professional services company for which we carried out the analysis, pride in having the most talented staff available, the time is taken by HR in hiring the staff to meet the criteria set forth did not justify the expenses incurred.
We determined that the six interviewers who were not skilled could be replaced by three interviewers who were more skilled with no change in the candidate’s eventual success. After the implementation of our recommendations, the firm’s performance and cost were reduced.

Eliminate Programs

If the required cost reduction cannot be managed, then another drastic step will be required to be taken. The step will be to remove programs and tasks being carried out by the departments. These will be programs that are the least valuable ones.

Reduce the burden placed on Others

In the end, you should seek out openings to inquire from other departments how you are being overseen. A need to challenge assumptions will be required.

Conclusion

Cost reduction by these percentages is in no way an easy task. However, there is no need to lose hope. If a start is made today, enough ideas can be found to reach your goal.
Both experience and research can indicate that idea generation improves with time and is not a standalone task. It would help if you ensured that the goals you set for each repetition of the cost-cutting process are met in its entirety.
In most scenarios, we observe that when carrying out the unpleasant task of managing cost, the primary tendency is to say this is enough before it is met. You should understand that if an attitude such as this persists, the final goal will most certainly not be met.

What we can do to help

vat service

We at HMAS can help you evaluate your business model and provide tailor-made recommendations to ensure your survival and growth in the economy.

Management and Business Consultancy

Each year across the United Arab Emirates, many businesses give hundreds of thousands of Dirhams in “consultancy services” to Management and Business consultant. Unfortunately, much of this money is in return for unnecessary Information and poorly implemented recommendations. In today’s cash strapped environment businesses need to understand better what business consulting assignments can achieve and accomplish. They need to ask more from their adviser, who in their turn must increase their learning to satisfy these expanded expectations.

Not a Single Purpose Assignment

Management and Business Consulting includes a broad range of activities, and many firms and their members often define these practices quite differently. A particular way of categorization is to assess these in terms of the capabilities of the specific Consultant, e.g. competitive analysis, corporate strategy, operations management, and human resources.

A second approach is to view the business consulting process as a sequence of phases: entry, contracting, diagnosis, data collection, feedback, implementation, and so on. Perhaps the most useful way of evaluating the consulting process is to consider what the purpose of consulting is. In the following diagram, the primary and additional goals of consulting arranged.

Management constancy

The management and business Consulting purposes in their order of hierarchy are:

  1. Providing Information to a Client
  2. Solving a Client’s Problems
  3. Making a diagnosis, which may necessitate redefinition of the problem.
  4. Making recommendations based on the diagnosis.
  5. Assisting with the implementation of recommended solutions.
  6. Building a consensus and commitment around corrective action.
  7. Facilitating client learning—that is, teaching clients how to resolve similar problems in the future.
  8. Permanently improving organizational effectiveness.

 

The lower-numbered purposes are better understood and practiced by most business consultants. Clients thus, more request these business consulting outcomes. However, some consultants, aspire to a higher stage of the pyramid.

 

Purposes 1 to 4 are considered as essential functions by most consultants and in a business consulting scenario, purposes five to 8 are the ones that add value to the client. However, it should note that these higher purposes could not achieve unless the lower objects have acquired first. They are essential to competent consulting even if not recognized as explicit goals when the engagement begins.

Moving up the list of the pyramid, and towards more ambitious purposes requires increasing sophistication and skill in the process of business consulting.

We will discuss each of these goals and purposes to give a better understanding.

Providing Information

Perhaps the most common reason for acquiring the services of a business consultant is this. The provision of Information compiling it may involve attitude surveys, cost studies, feasibility studies, market surveys, or analyses of the competitive structure of an industry or business.

Often the situation occurs where a Client merely requires Information. But Information that a Client requires is often different from what requested from a Business Consultant. Seemingly impertinent questions from both sides should not be cause for offense—they can be highly productive. Moreover, professionals have a responsibility to explore the underlying needs of their clients. They must respond to requests for data in a way that allows them to decipher and address other needs as an accepted part of the engagement’s agenda.

Solving Problems

Clients often give consultants severe problems to solve and complicated issues to resolve. For example, a client might wish to know whether to make or buy a component, acquire or divest a line of business, or change a marketing strategy. Or management may ask how to restructure the organization to be able to adapt more readily to change; which financial policies to adopt; or what the most practical solution is for a problem in compensation, morale, efficiency, internal communication, control, management succession, or whatever.

Seeking solutions to the problems mentioned above is certainly a legitimate function. But the Consultant also has a professional responsibility to ask whether the question posed is the one that requires solving.

In many scenarios, most business consulting requirements put forth by the client are not what cause the problems in the first place. The underlying causes need to be understood and communicated to the client by the Consultant.

Effective Diagnosis

Business Consultants are effectively diagnosticians. However, it can be said that the relationship between a business consultant and his client can be strained during the consulting process. Competent diagnosis requires more than an examination of the external environment, the technology and economics of the business, and the behavior of non-managerial members of the organization.

When clients participate in the diagnostic process, they are more likely to acknowledge their role in problems and to accept a redefinition of the consultant’s task. Top firms, therefore, establish such mechanisms as joint consultant-client task forces to work on data analysis and other parts of the diagnostic process.

Recommending Actions

The engagement characteristically concludes with a written report or oral presentation that summarizes what the Consultant has learned, and that recommends in some detail what the client should do. Firms devote a great deal of effort to designing their reports so that the Information and analysis are present, and the recommendations are convincingly related to the diagnosis on which they are based.

Untold numbers of seemingly convincing reports, submitted at great expense, have no real impact because—due to constraints outside the Consultant’s assumed bailiwick—the relationship stops at the formulation of theoretically sound recommendations that can’t be implemented.

In the most successful relationships, there is not a rigid distinction between roles; formal recommendations should contain no surprises if the client helps develop them and the Consultant is concerned with their implementation.

Implementing Changes

The Business Consultant attends a proper role in implementation is a matter of considerable debate in the profession. Some argue that one who helps put recommendations into effect takes on the part of the manager and thus exceeds consulting’s legitimate bounds. Others believe that those who regard implementation solely as the client’s responsibility lack a professional attitude since recommendations that are not implemented (or are poorly implemented) are a waste of money and time.

Active work on implementation problems requires a level of trust and cooperation that is developed gradually throughout the engagement.

Building Consensus and Commitment

Any engagement’s usefulness to an organization depends on the degree to which members reach accord on the nature of problems and opportunities and appropriate corrective actions. Otherwise, the diagnosis won’t be accepted, recommendations won’t be implemented, and valid data may be withheld.

Facilitating Client Learning

Management consultants like to leave behind something of lasting value. This means not only enhancing clients’ ability to deal with immediate issues but also helping them learn methods needed to cope with future challenges. It does not imply that competent professionals work themselves out of a job. Consultants facilitate learning by including members of the organization in the assignment’s processes.

Learning during projects is a two-way street. In every engagement, consultants should learn how to be more effective in designing and conducting projects.

Organization Effectiveness

Sometimes successful implementation requires not only new management concepts and techniques but also different attitudes regarding management functions and prerogatives or even changes in how the primary purpose of the organization is defined and carried out. The term organizational effectiveness is used to imply the ability to adapt future strategy and behavior to environmental change and to optimize the contribution of the organization’s human resources.

Increasing consensus, commitment, learning, and future effectiveness are not proposed as substitutes for the more common purposes of management and business Consulting but as desirable outcomes of any effective consulting process. The extent to which they can be built into methods of achieving more traditional goals depends on the understanding and skill with which the whole consulting relationship is managed.

What is Accounting?

The term accounting is way broader, going into the realm of designing the bookkeeping system, establishing controls to form the system is functioning well, and analyzing and verifying the recorded information. Accountants give orders; bookkeepers follow them.

Bookkeeping incorporates the issues in estimating the monetary impacts of financial action. Moreover, accounting includes the capacity of budgetary detailing of qualities and execution measures to the individuals who need the information. Business managers, investors, and lots of others rely on financial reports for information about the performance and condition of the entity.

Importance of Accounting

Accounting is essential for trivial business owners because it helps the owners, managers, investors, and other stakeholders evaluate the business’s financial performance. Bookkeeping gives necessary data regarding cost and income, benefits and misfortune, liabilities and resources for higher psychological procedures, and arranging and controlling systems inside a business.

The principle goal of bookkeeping is to record financial transactions inside the books of records to measure and communicate financial information. Additionally, charge revealing offices expect you to hold books at the very least level that tracks salary and use.

There are three necessary fiscal reports produced by your records.

It is critical you retain your financial records clean and up to point if you want to keep your business afloat. Here are just some of the explanations why it’s essential for your business, big or small!

 

 

 

 

 

 

 

 

 

 

 

The Accrual vs. Cash Basis of Accounting

To properly implement bookkeeping, companies must first choose which basis of accounting they’re going to follow. Companies can choose from two basic accounting methods: the cash basis of accounting or the accrual basis of accounting. The difference between these kinds of accounting is predicated when the corporate records a sale (money inflow) or procurement (money outflow) within the books.

 Cash BasisAccrual Basis
DefinitionRecord transaction only if cash is received or paidRecord transaction when it occurs, whether or not cash is received or paid
Example: You procured 100 units of a product and will pay for it next month.No transaction recordedTransaction recorded through accounts payable (liability) account

What is Bookkeeping?

Bookkeeping is an essential subset of accounting. Accountancy refers to accumulating, organizing, storing, and accessing the financial information base of an entity, which is required for two basic purposes:

Bookkeeping (also called recordkeeping) may be thought of because of the financial information infrastructure of an entity. The financial information base should be complete, accurate, and timely. Every recordkeeping system needs quality control built into it, which is called internal controls.

Bookkeeping involves the recording, on a day to day, of a company’s financial transactions. With legitimate accounting, organizations are prepared to follow all data on its books to shape fundamental working, contributing, and financing choices.

Clerks are people who deal with every money related datum for organizations. Without clerks, organizations wouldn’t bear in see any problems their present money related position, besides the exchanges that happen inside the corporate.

Accurate bookkeeping is additionally crucial to external users, which has investors, financial institutions, or the govt. – With legitimate accounting, organizations are prepared to follow all data on its books to shape basic working, contributing, and financing choices.

Importance of Bookkeeping

Clerks are people who deal with every single budgetary datum for organizations. Without accountants, organizations wouldn’t bear in see any problems their present fiscal position, moreover, the transactions that happen inside the corporate.

Many small companies don’t hire full-time accountants to figure for them due to the cost. Instead, small companies generally employ a bookkeeper or outsource the work to a knowledgeable and professional firm. One important thing to notice here is that several people that will start a new business sometimes overlook the importance of matters like keeping records of each penny spent.

Activities of Bookkeeping

Book-keeping comprises of plenty of functions and activities bundled together. Some such activities are

Bookkeeping vs. Accounting

 

BookkeepingAccounting
Bookkeeping consists of recording financial transactions in an exceeding logical fashionAccounting concerns itself with summarizing of such recorded financial transactions
It is the basis of the method of accountingAccounting is that the basis for the Business Language
Financial statements aren’t part of the bookkeepingPreparing financial statements is that the ultimate aim of accounting
Managers don’t take decisions based on bookkeeping recordsAccounting records are accustomed to assist managers in making decisions
Bookkeeping doesn’t have any branchesAccounting has branches like Cost Accounting, Management Accounting, etc.
It is done by bookkeepers, who don’t require any special skill or knowledgeAccountants, on the opposite hand, require special accounting knowledge and skills

Difference Between a Bookkeeper and an Accountant

An accountant is accountable for assessing and interpreting the organization’s financial data and reporting thereon. An accountant possesses a higher skill set than a bookkeeper, whose primary responsibility is handling the actual recording of the company’s financial transactions. An accountant usually encompasses a degree or certification and is paid better than a bookkeeper. Typically, a bookkeeper reports to the accountant.

A bookkeeper doesn’t require any formal training; however, a bookkeeper’s job is vital. The info a bookkeeper is liable for gathering and managing affects how an accountant interprets the corporate financial information. Supported this information, the accountant provides recommendations to management or the company’s owners about spending, tax issues, or other business concerns.

Duties of a Bookkeeper?

The obligations of an accountant differ, contingent upon the corporate. Here is a breakdown of the duties ordinarily identified with an accounting job:

A bookkeeper also incorporates a duty to keep the information he processes confidential, as he will be privy to sensitive financial information, including payroll salaries.

Duties of an Accountant

The duties of an accountant can be segregated into four areas:

Data Management – Overseeing how data is stored, managed, and updated. For example, a bookkeeper might recommend the software for a double-entry bookkeeping system of accounting, but the accountant would approve it.
Financial Analysis and Consultation – Properly assessing data and advising management.
Financial Reports – having the ability to generate quality standard business reports and statements required by businesses.
Regulatory compliance – Being updated on government regulations and ensuring the corporate is following industry standards.

Why Outsource to Accounting Firms in Dubai?

It’s been mandated within the UAE Commercial Company of 2015 that maintaining proper books of account for a minimum of five years is now a legal requirement. VAT in UAE implemented now. It’s a time of tax returns filling; books of account should also be maintained for five years.

There are many things to be done in an organization, and it’s always challenging to fulfill the legal requirements and keep track of business strategies to be consistently within the race with businesses. With this, the accounting side of an organization is quite challenging to manage. Accounting and bookkeeping services in UAE are being offered by HMAS, as outsourcing could be a significant option for companies.

Outsourcing accounting & bookkeeping services in UAE is a prudent move. It can help organizations significantly, especially once you are outsourcing from an accounting services company that uses the foremost up-to-date accounting software in Dubai.

HMAS offers accounting services in Dubai/UAE that maintain quality accounting and financial records. At HMAS, our accountants provide standardized accounting and bookkeeping services in Dubai, which allows the business to run efficiently and effectively. We follow International Financial Reporting Standard (IFRS) to supply well-maintained accounting and bookkeeping services and accounting solutions to ensure higher sales and growth of the company.

Benefits of Hiring Accounting Firms in Dubai/UAE

HMAS is one of the foremost reliable accounting firms in Dubai. We make sure that all the financial data is in proper format and must meet the criteria of the international standards and therefore, the scope of work to supply the effective accounting services in UAE which constitutes:


  • Accounting and bookkeeping

    We offer our professional services from large sized clients to small size entrepreneur.

    Our services can help:
    • Realtime information of business
    • Correct period-end technical adjustments
    • Accurate business decisions
    VAT services

    We offer complete outsourcing to manage VAT affairs correctly and timely.

    Our services can help:
    • Platform for information sharing, reminders and file transfer
    • Expert opinions on technical matters
    • Providing training to the employees
    VAT Software

    A reliable accounting software is essential to support the business strategies.

    Our services can help:
    • Analyzing the nature of business and suggestion of software accordingly
    • Regular support services after implementation of software
    • Follow-up training to ensure the client is “on the right track”
    Business Advisory

    Professional advisory that can lead an organization on a right track of business success.

    Our services can help:
    • More accurate business strategy for business plans
    • Improved decision making leading to optimize use of resources
    • Recommendations for the most suitable remedial steps

Corporate Advice

  • Drafting of business agreements
  • Advice on ownership structure of business
  • Advice on legal issues and court matters
  • International taxation advice
  • Advice on repatriation of funds
  • Advice on transfer pricing matters


Accounting Software

  • VAT Complaint Features
  • Point of Sale Solution
  • Inventory Control Management
  • Payroll Management
  • Sales and Receivables Management
  • Purchase and Payable Management
  • Accounting and Finance
  • Customization Options
  • Advanced Reporting & Analysis Features


Taxation (VAT)

  • VAT registration
  • Filing of VAT returns
  • VAT risk management
  • VAT for E-commerce
  • Maintenance of record of VAT matters
  • Expert Advice on VAT issues
  • VAT evaluation and Planning
  • VAT dispute resolution
  • Representation before Authorities
  • VAT training


Accounting

  • Maintenance of general ledgers, subsidiary ledgers
  • Controlling trial balance
  • Preparation of annual, half yearly, quarterly and monthly financial statements
  • Preparation of management reports
  • Accounting advice & technical opinion
  • Preparation & review of accounting manual


Outsourcing

  • Accounting services
  • Day to day bookkeeping
  • VAT compliance services
  • Payroll and salary administration
  • Management of accounts receivables/customer invoices/payments
  • Management of accounts payable/disbursement/supplier invoices


Consultancy

  • Standard Operating Procedure (SOP)
  • Project Management
  • Project Feasibility
  • Financial Projections
  • Business Evaluation
  • Financial Modelling
  • System and Operations Review
  • Evaluation of Internal Controls


Information Technology

  • ERP Implementation
  • Information System Review
  • Development of IT Strategy
  • Implementation of Off the Shelf ERP
  • Alignment of IT requirements
  • IT support to increase value to the business


Business Advisory

  • Operations and process improvement
  • Budgeting and Forecasting
  • Merger and Acquisition
  • Joint Venture and Business Sales
  • Physical Verification of Assets
  • Cost Management and Reduction


Human Resource (HR)

  • Recruitment of staff
  • HR Policies and Job Descriptions
  • Payroll Services
  • Employees Benefits Plans
  • Succession Planning