06
Nov 2019
The economy of any country cannot grow without the presence of robust manufacturing industry in the country. A manufacturing business deals with the production of valuable goods with the assistance of machinery, labour and other tools and resources. The various products produced later form the raw materials for the various other industries. It is because of this reason, and manufacturing industries are indispensable.
Now, as established, the manufacturing industry cannot be removed from the equation of economy of a country, doing each manufacturing business as unique and essential. Even a small factor affecting the manufacturing industry will result in a ripple effect throughout the economy of a country. This is why it is imperative to understand the uniqueness of the business and hire the services of an accountant which will work according to the requirement of the company.
Now for the smooth working of a manufacturing firm, the accountant will have to deal with various things such as the cost of goods sold (COGS), the value of the inventory, the amount of the work in progress, handling all the assets and liabilities of the company and many other factors. The accountant of the business will also act as a management consultant and will draw up a plan as to where the company can spare resources and where the company needs to focus more.
Manufacturing Industries in the UAE
The government of UAE is trying to reduce its reliance on the oil and gas sector and has recognized the potential of the manufacturing industry in the country. At present, the contribution of the manufacturing industry in the UAE economy stands at around 14%. The government has made plans which will increase this percentage to 25% in the next 15-20 years. Currently, the UAE government is focussing on metal production, production of fertilizers and petrochemicals.
The manufacturing sector is the second most prominent driver of economic growth among the non-oil areas. Later, in the long run, there are also plans of the government to invest in other industries such as the production of motor vehicle parts, refining of petroleum products, making of primary pharmaceutical products etc. In future, the manufacturing industry of the country may join hands with similar industries and business in the GCC area to lessen or remove the regional competitions.
The Need for Accounting for Manufacturing Industries
With the manufacturing industries looking at a bright future, this sector requires to tread carefully, even a tiny mistake in the accounting of such companies can take them off track. This is a significant factor for which proper accounting of manufacturing companies is required. The other reasons as to why a manufacturing company may need the services of an accounting firm are given below:
1.Keeping Track of the Expenses and other Financial Data
Keeping track of all the expenses will allow the management of the company to properly allocate the resources of the company and keep checks on ay wastage of the funds. The payments may be fixed and variable, and the job of the accountant is to figure out how can he reduce these expenses of the company. The accountant or the outsourced accounting firm will also monitor various other critical financial data which would allow the management to make informed decisions regarding the future of the business.
2.Choosing between Outsourcing or an In-House Department
The accounting firm will help the management to decide if they want a particular process to be outsourced or done in-house. The accountant will provide all the necessary and concrete financial facts and figures according to which the administration can decide if they need to outsource their activity such as auditing, accounting, bookkeeping, payroll etc. or they need to make a separate department in-house.
3.Performance of a Cost to Benefit Analysis
With the availability of all the required transaction and financial records, the accountant will perform a cost to benefit analysis, which will allow them to direct the company towards a better future. Examining before the management takes any decision will be very beneficial for the company as they will be able to save a lot of time and resources and improve the various manufacturing processes.
4.Attracting Potential Investors
The accountant will prepare a report consisting of the facts and figures after every analysis and also after every quarter. This report will be a significant factor in bringing in the potential investors and will also allow the present investors to understand if the company will justify their investment.
There are many other reasons due to which you should always avail the services of an accounting firm in UAE.
If you are looking for accounting firms in Dubai or the anywhere in UAE, you must avail the services of “JAXA” which would provide you with solutions customized according to the business problem your company faces. “JAXA” also offers various other services such as VAT and Tax calculation, accounting and financial services, and many others. For more details on the services we provide do contact us – we would be happy to help.