B2B payment practices trends, United Arab Emirates 2024

Our survey of companies in the United Arab Emirates reveals key insights into current B2B corporate payment trends. Explore emerging dynamics that could shape the future of business transactions.

27 Sep 2024

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B2B credit risk strains cash flow of businesses in United Arab Emirates

While almost half of companies in the United Arab Emirates tell us that B2B customer payment behaviour has been stable during the past 12 months, this hides a more complex landscape. Swifter payment times are noted in the steel/metals industry, while longer wait times are evident in the electronics/ICT sector. Late payments currently affect an average 51% of all B2B credit sales, and bad debts stand at an average 4% of all B2B invoices. This can strain operational funds and increase fixed costs, and highlights the fact that while payment behaviour may appear stable, underlying financial challenges persist and need to be addressed by businesses.

Negative outlook on insolvency risk among United Arab Emirates companies

Our survey finds a generally optimistic mood among businesses in the United Arab Emirates about the outlook for both B2B customer payment behaviour and Days Sales Outstanding (DSO). The majority, particularly in the electronics/ICT sector, expect payment practices to improve in the year ahead, although 25% of companies, notably in the steel/metals industry, anticipate a deterioration. A similar positivity surrounds DSO, with 40% of businesses expecting an improvement in debt collection efficiency during the months ahead. This is especially so in the FMCG sector, and will help to sustain adequate liquidity levels. Another 40% anticipate stability in DSO, and the rest foresee some deterioration.

Summary

Nearly half of businesses in the United Arab Emirates report consistent payment patterns from their B2B credit customers during the past year. However, trends vary among sectors. The steel/metals industry is seeing quicker invoice settlements, but the electronics/ICT sector faces longer wait times for overdue payments.
Late payments currently affect an average of 51% of B2B credit sales, meaning more than half of invoiced sales are overdue. About 4% of all B2B invoices have become bad debts, which not only results in lost revenue but can also put strain on operational funds and increase fixed costs.
The majority of companies in the United Arab Emirates, especially in the electronics/ICT sector, expect B2B customer payment behaviour to improve in the year ahead. 25%, primarily in the steel/metals industry, anticipate a deterioration while the rest foresee a period of stability.