Businesses in the UAE are leaning more heavily on trade credit to stay competitive, as well as drive growth and strengthen customer relationships.
Nearly half of respondents, according to the latest Atradius Payment Practices Barometer, reported extending more credit in recent months, with credit sales now making up an average of 47% of B2B transactions. Although this greater payment flexibility supports sales and relationships, it also heightens payment risk.
Persistent payment delays and rising default concerns are putting increasing pressure on liquidity and cash flow management. Around two in five B2B invoices are paid late, and substantially more businesses report a deterioration in payment behaviour than an improvement, the study noted.
Looking ahead, customer default risk remains a major concern, with 46% of respondents expecting default risk to rise further, while 39% believe it will stay elevated.
Atradius Middle East CEO Roeland Punt said, “Trade credit continues to play a vital role in supporting business growth across the UAE, but companies are having to balance expanding trade opportunities with a more challenging payment environment.”
Risk mitigation
To address these pressures, companies are stepping up credit controls and increasing use of risk mitigation tools, including more rigorous customer assessments, close monitoring of payment behaviour and credit insurance. Credit insurance is particularly common among larger industrial businesses.
Businesses are also mindful of broader macroeconomic risks. Slower economic growth, inflation, cost pressures and rising interest rates are expected to continue influencing B2B payment behaviour.
The full report can be accessed here.