The Association of Chartered Certified Accountants (ACCA) is calling on SMEs and individuals to take decisive action in reviewing and managing their finances as 2024 draws to a close. 

 

Against the backdrop of rising costs, fluctuating income, and increasing regulatory demands, conducting a robust year-end financial review is essential for maintaining resilience and positioning for success in 2025.

 

ACCA’s latest insights indicate that inflation and escalating costs remain top concerns for SMEs, with 58% highlighting these as their biggest challenges. The combination of global economic uncertainty and new regulatory demands, such as tax compliance and ESG reporting, further underscores the need for careful financial management at year-end.

 

Five key tips for effective year-end financial reviews

Compare budgets with actual performance: Reviewing discrepancies between planned budgets and actual spending highlights areas of inefficiency and provides opportunities to realign for the upcoming year. This is a critical step for maximising profitability and ensuring accurate financial forecasting.

 

Prepare for tax and compliance: The UAE Ministry of Finance recently reminded businesses of strict penalties for late corporate tax filings, which include fines of up to AED50,000 ($13,613) for non-compliance. This underscores the importance of ensuring accurate record-keeping and timely submissions. For SMEs, year-end is an opportune moment to review financial records, reconcile accounts, and consult with tax professionals to avoid errors and fines. Additionally, businesses should explore available deductions, particularly for ESG or technology investments, to optimise their tax position while supporting sustainable growth.

 

Strengthen cash flow management: With inflationary pressures squeezing margins, maintaining a strong cash position is crucial. Prioritise paying off high-interest debts and focus on creating liquidity buffers to weather potential volatility.

 

Leverage technology and AI: The UAE's SME sector is undergoing a transformation, driven by technological advancements. As the Middle East continues to embrace digital innovation, businesses leveraging these tools are better positioned to streamline operations and scale effectively. The adoption of AI-driven analytics further enhances decision-making, helping SMEs identify trends and opportunities to remain competitive in a dynamic business environment. This can also support compliance with complex ESG and reporting requirements.

 

Embed sustainability into business models: Beyond compliance, sustainable practices provide competitive advantages. Nearly 50% of SMEs now face ESG reporting requirements, and integrating green practices not only aligns with regulations but attracts investment and eco-conscious customers.

 

Positioning for future success

Kush Ahuja, Head of Eurasia and Middle East at ACCA, comments: “The year-end offers an opportunity to assess financial performance and prepare for upcoming challenges. By embracing new technologies, embedding sustainability and focusing on talent development, SMEs can build a foundation for resilience and growth in 2025.”

 

SMEs, which represent 90% of businesses in the GCC region, play a pivotal role in economic development. However, as highlighted in ACCA’s research, these businesses face hurdles such as cost pressures, talent shortages and ESG compliance. Addressing these proactively through strategic planning and leveraging tools like AI and PropTech can unlock new opportunities.

 

Broader context and strategic insights

ACCA’s recent Global Economic Conditions Survey shows rising economic confidence in the Middle East, driven by robust non-oil sector growth and increased capital expenditure. Despite global challenges, the region remains resilient, with SMEs at the forefront of economic recovery and innovation.

 

Similarly, the ACCA study SMEs: Business Challenges and Strategic Innovation Opportunities highlights the need for tailored solutions, emphasising cost control, digital adoption and workforce upskilling as top priorities. Ahuja notes that embracing these strategies can unlock growth potential, even amid a volatile global landscape.--TradeArabia News Service