Entrepreneurs setting up a local business have to understand how to manage their cash position and understand their cash flow statement. Whether it’s in a UAE free zone or on the mainland, getting expert help can help new businesses manage their finances better.
Importance of a Cash Flow Management in UAE
Managing your cash flow is imperative for new businesses. These are some reasons you should be paying attention to your cash flow:
- Handling tax obligations: Keeping an eye on your cash flow helps you plan better for the VAT in UAE and corporate tax deadlines. Otherwise, you’ll risk not having enough funds to pay what you owe.
- Avoid shutdown: Most businesses in the UAE end up shutting down because they run out of cash. Having a healthy cash flow will help make sure you have enough money to pay ongoing expenses like utilities and rent.
- Supports growth: Your cash flow forecast allows you to confidently make growth decisions, telling you exactly when to invest in new hires or projects. You can also commit the right amount of funds without the risk of running your daily operations dry.
- Raise funds: A healthy cash flow statement proves to banks and investors that you are stable and reliable. This makes it much easier to borrow money or get better terms from suppliers.
5 Cash Flow Mistakes in UAE to Avoid
These are some of the cash flow mistakes that every entrepreneur has to avoid:
1. Confusing Revenue for Profit
- You might think your business is doing well when sales are high, but that does not always mean you are making a profit.
- Many entrepreneurs in the UAE confuse cash flow vs profit, which leads to poor financial decisions.
- Profit is what remains after you cover all your costs, not just the money coming in.
- To avoid this, you should review your cash flow statement regularly and understand the difference between income and profit.
2. Sticking to Manual Cash Flow Management
- Managing your cash flow manually makes it easy to miss details or make mistakes.
- If you are still using spreadsheets, it becomes harder to spot trends or see where your money is going.
- Automating your system using accounting software and creating a cash flow forecast can help you make better financial decisions.
- With better tools, you gain more control over cash flow management in the UAE.
3. Mixing Personal and Business Finances
- Using one bank account for both personal and business expenses can make your finances difficult to handle.
- To get a clear picture of your finances, you need separate accounts and review a sample cash flow statement that reflects only business activity.
- This will help you monitor your expenses and reduce stressors during tax season.
4. Not Chasing Money Owed to You
- Unpaid invoices is one of the most common business cash flow issues in 2025.
- When you let clients delay payments, your business feels the pressure.
- Every entrepreneur has to follow up, send reminders, and have strict payment terms.
5. Mismanaging Tax Obligations
- Ignoring your tax responsibilities can ruin your cash flow.
- If you do not track your tax deadlines or set money aside in advance, it can lead to a shortage of cash and penalties.
Cash flow mistake
How to fix them
Confusing revenue for profit
Regularly review your cash flow statement to understand actual profit. Always separate revenue from costs clearly
Sticking to manual cash flow management
Use accounting software to automate and track your cash flow accurately
Mixing personal and business finances
Open separate bank accounts and keep all your records clearly divided
Not chasing money owed to you
Set clear payment terms, send reminders, and follow up on unpaid invoices
Mismanaging tax obligations
Plan tax payments in advance by setting aside funds regularly. Work with a cash flow advisor to stay on top of deadlines
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What are Some Cash Flow Improvement Strategies?
Improving your cash flow is essential to keep your business running smoothly. Here are some effective strategies you can use:
- Prepare a cash flow forecast to predict your incoming and outgoing cash.
- Plan for your tax payments by setting aside money regularly and meeting deadlines. For example, you can set aside 15% of your monthly revenue in a separate account for VAT payments.
- You can work with a cash flow advisor if you need help creating strategies to manage your cash position.
- Stay on top of your invoices by setting clear payment deadlines and following up quickly on overdue payments. You can even offer small discounts for early payment that can encourage clients to pay faster.
Let the Experts at A&A Associate be Your Cash Flow Advisor
- A&A Associate offers expert accounting and bookkeeping services for clients across the UAE. Our services help entrepreneurs and SMEs maintain healthy cash flow, manage their books, stay on top of tax deadlines, and analyse their financial performance to boost growth.
We also house internal and external auditors in Dubai, who can help you check your internal controls and establish robust financial practices. Get in touch for a free consultation!
Financial Compliance in the UAE Oil and Gas Sector
If you run an oil and gas business in the UAE, there are financial rules you need to follow that go beyond regular accounting. These rules help you keep your trade licence valid. Here are the main areas you should pay attention to:
- Corporate tax: You need to follow the corporate tax rules for oil and gas companies. You have to keep clear records of your income and expenses. You also have to track how profits are shared with your partners.
- VAT: You will deal with transactions that involve imports, exports, or services subject to VAT in UAE. You should avoid mistakes in reporting VAT because they can cause serious financial and legal problems.
- Trade licence: You have to renew your trade licence regularly. You also need to keep your financial statements up to date.
- Cross-border payments: Banks review large international payments carefully. If your records aren’t in order, your payments might be delayed or blocked.
- Health, safety, and environment costs: Authorities and investors want to see how you spend on safety and protecting the environment. You need to make sure these expenses are clearly shown in your accounts.
- Contracts and agreements: You often have deals that involve sharing production or recovering costs. If you don’t record these properly, it can cause disputes with your partners.
Work With A&A Associate’s Expert Auditors
A&A Associate offers expert internal and external auditors who can conduct an independent review of your operations and financial statements. We are also the UAE’s largest business setup advisory, offering end-to-end company formation services for clients across the UAE. Get in touch for a free consultation!
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