A person is bound to have the most number of interactions with the retail industry and seeing the steadily increasing retail sector in UAE, the number of such communications will increase. UAE, in general, is considered as a haven for the retail industry. One can find retail outlets of all known and unknown products and services. Because of the boom in the retail sector in the UAE, both the private and the government sector are making efforts to convert the retail business into the cash cow for the country.
The steps taken by the government to strengthen the retail industry are supported by the assistance from the private business owners, and this partnership has started showing results. GCC’s retail sector is predicted to grow by 22% by 2023 with UAE accounting for most of the sales. The retail sector is further supported by the population growth, rise in the per capita gross domestic product and the expanding tourism industry which helps the retail sector's acceleration and help the GCC countries efforts to diversify their economy and move the focus from the hydrocarbon sector.
With a prominent presence of shopping malls and commercial avenues all over UAE and the increasing retail presence in the country, the businesses must keep track of all their transactions so that it is easier for them to keep a count of their profitability in the long run. Apart from this, the retail industry has to tackle the problem of seasonality. All the stated issues can be handled by the proper use of accounting and bookkeeping in the organization.
Let’s try to grasp the concept of how accounting can help a retail business.
Advantages of Accounting in the Retail Sector
Accounting processes differ according to the different domains the business organization is in. So, it is vital for an entity to be aware and understand the accounting process which is relevant to the industry. The advantages of using accounting services in the retail sector are:
1.Tracks and Manages Inventory
Proper accounting will allow the management of the retail business to properly manage the overall inventory available in the business properly. A retail store cannot afford to keep empty shelves, and similarly, it should take care that it does not over-invest in products as it will tie up all the funds of the company. This would also allow the accountants to calculate a date when all the stock needs to be replenished. The management can be either done manually (LIFO method, FIFO method, Weighted average method) or by using computerized inventory management systems.
2.Allows Managing Payroll Function
Keeping step by step information of the payroll is a significant activity especially in the retail sector there are both permanently employed people and temporary staff which are hired according to the need and requirement of the business. The salary of both the type of employees will differ, and there would be a change in the salaries paid every month. Moreover, there is the difficulty of calculating the correct tax liability of each person and then deducting it from the salary. This makes the payroll an essential and complicated task.
3.Assists in Calculation of Taxes
As all the goods or services and any transaction conducted would be tracked, the right amount of tax to be paid to the concerned authorities can be easily calculated. The calculation of VAT is pretty complicated and requires a knowledgeable accountant to handle the issue of tax.
4.Aids in Reconciliation
The accounting process will see to it that all the data recorded in the books of accounts are correct. If there is a discrepancy in the two data, the reports prepared at the end will not be able to show the proper financial picture of the company. An accountant can also use accounting software to reduce the number of errors in the reports
5.Helps in Decision Making
All the proper and accurate books of accounts are available at a single place. Thus it is very easy to collate all the available data and take a decision for the future of the company which would help in the growth of the company in the long run. For this, accounting software can also be utilized as it will provide the possible available options available to a retail business and also compare the projections of every available alternative.
According to a saying “Time is Money” and proper accounting measures will take care of saving much of time for the company. Following the appropriate accounting procedures will not only speed up the process of collecting and analysing data of the company but will also provide time and data to the management of the business, so the other parts of the business are focused upon.
A business can obtain many advantages by incorporating proper accounting procedures in the operations of the company. It is very important that a retail firm chooses an accounting firm according to the requirements of the business and what category of functions does the accounting firm specialize in.
There are many accounting firms in UAE and “JAXA” is one of them. It is considered as one of the most reputed and expert accounting firms and will help you and your business to overcome your accounting problem and would provide expert and professional advice to its clients which would allow your business to succeed. They also provide a range of other services such as VAT services, Taxation services, Audit services, etc. For details about the various service that JAXA provides do contact us, we would be happy to help.