Think Ahead: Why SMEs Need To Start Future-Proofing Their Finances We may have learnt the hard lessons, and that too in a short period of time, but the question remains: how do we prevent history from repeating itself?

The world has changed rapidly and dramatically over the last two decades, primarily driven by the shift towards digitization. Many of our common practices, such as using the yellow pages or relying on maps, quickly became extinct with the emergence of search engines such as Google. Companies that couldn't keep up with these changes crumbled, while others were able to adapt and survive. Therefore, it is a known reality that as the world changes, companies must learn to adapt; otherwise, they will quickly fall behind.

Unforeseen changes have occurred so frequently over the last few years that many workplace practices have failed to keep pace or plan ahead. A prime example here is the COVID-19 pandemic, which blindsided many organizations, and separated those who were able to adapt and expedite remote working processes with agility, from those who fell short. This has also highlighted how critical it is for companies, from government entities and multinationals to SMEs and startups, to be able to quickly and easily evolve from one business model to another.

Take popular retailer, J.Crew, for example, which filed for bankruptcy in 2020, at the height of the pandemic, because it failed to adapt as mall traffic started to decline, and customers moved towards online shopping. This is just one of the many brick-and-mortar casualties we have witnessed in recent years. The good news, however, is that J.Crew has since taken steps to bounce back, but it remains an example that we can learn from. It is imperative that companies have the infrastructure and tools in place to build resilience, so they can easily cater to these new business models with minimal added investment.

We may have learnt the hard lessons, and that too in a short period of time, but the question remains: how do we prevent history from repeating itself? Here are four steps you can take to safeguard your business for the long term:

1. Create agile working environments While flexible practices can often seem difficult to achieve, it is vital. As we have recently witnessed, companies that had agility built into their practices were quickly able to transition to a "distributed teams" models -also known as remote or hybrid working models- during the pandemic. On the other hand, companies that had very little to no flexibility quickly lost valuable employees and struggled to manage operations efficiently.

Since then, we have also seen a shift in the employee mindset. Flexibility is now expected from most workplaces. This is especially true for the new generation who are entering the workforce post-pandemic, as well as working parents who have experienced the benefits of a hybrid work model and flexible work hours. The ability to be able to work remotely is now an expectation- one that is being fulfilled by both multinationals and small businesses.

This has also allowed companies to tackle another major challenge- hiring the right talent to grow their business. Not only has it increased the pool of candidates, but it has also shown companies that they can improve operational efficiency by lowering or eliminating costs, such as employee visas, insurance, and travel allowances.

Related: Six Financial Decisions To Protect Your Business During The COVID-19 Crisis

2. Streamline cash flow management Spending unnecessary hours consolidating and calibrating your finances simply doesn't make sense anymore. This is particularly true for SMEs, where limited resources and budgets are best allocated to building platforms, improving customer service, and growing the company.

The automation of cash flow processes not only eliminates human error (which, in turn, saves companies valuable time that can be invested in other areas of the business), it also reduces the number of work hours needed for manual data entry. Furthermore, real-time insights into funds and spending bring a new level of flexibility by allowing companies to quickly determine where spending cuts can be made, and be prepared for upcoming challenges.

3. Anticipate regulatory developments The UAE has always been forward-thinking in creating a business-friendly environment, and the most prevalent developments have happened in the last 12 months, with the introduction of new visa categories and policies to support the growth of the SME sector. As the market matures, there are also major shifts in what is expected from businesses operating in the country.

The imminent introduction of corporate tax next year means companies now need to be particularly diligent about streamlining processes, and tracking their spending efficiently. Failure to do so could lead to miscalculations when deducting spending from their net revenue, and result in an inflated taxable base. While larger corporate entities might be able to offset these errors, smaller businesses may not fare so well.

Similarly, expected changes in gratuity management schemes within the private sector mean it is critical for companies to be aware of the financial implications on their business. Again, it is especially important for SMEs to be able to predict their cash flows, and have full visibility on their capital reserves at any given point. This will be the key to ensuring compliance while mitigating risks.

Senior management teams, and specifically chief financial officers and financial controllers, must start adopting the practices that will help them navigate this evolving landscape. For some, that might mean automating their spend management process; for others, it could be as simple as integrating tools that offer real-time reporting. Either way, taking small steps to get your finances in order today will reap significant rewards in easing growing pains as these businesses begin to scale up.

Related: Future Proofing The Workforce Of Tomorrow With Technology