Getting Paid: protect your cash flow and tackle overdue payments

Protecting cash flow needs controls before credit is extended and a clear response when payment is missed. UAE suppliers and service providers should verify the customer, define payment and acceptance terms, monitor exposure, keep delivery records and escalate overdue accounts before delay weakens their position. Where a large balance sits with one customer, the problem is no longer routine follow-up. It is a management and liquidity risk.

Protect cash flow before extending credit

Before supplying on credit, confirm the customer's exact legal name, trade licence details, billing entity and the authority of the person placing the order. The contract or purchase order should state the price, VAT treatment, credit period, payment milestones, invoice requirements and how delivery, acceptance and rejection work. A clear time limit for raising discrepancies makes it harder to delay payment with an objection raised months after performance.

Set a credit limit that reflects the customer's payment history and your ability to absorb delay. Where exposure is high, consider deposits, advance payments or security. Keep the purchase order, signed contract, invoices, delivery notes, goods-received records, completion certificates and acceptance correspondence from the start.

Control receivables before delay becomes a recovery problem

Keep an aged receivables report by customer and invoice, reconcile balances regularly and deal with deductions or disputes as they arise. Send statements before the due date and confirm every payment commitment in writing: the amount, the date and the person responsible.

Escalation should depend on more than the amount. Useful triggers include days overdue, repeated broken promises, exposure above the approved limit, requests for more supply despite arrears and signs of financial distress. When a trigger is reached, management should decide whether to hold credit, suspend supply where the contract allows, ask for security or refer the account for legal assessment.

Escalate material and concentrated exposure

For industrial suppliers, construction-material businesses, healthcare distributors and service providers, a single customer owing a large share of receivables is not simply a late payer. It affects liquidity, forecasting and commercial decisions. A material or concentrated balance should go to ownership, finance and credit control rather than stay in routine follow-up.

Market data points the same way. The Atradius Payment Practices Barometer UAE 2025 reported that overdue invoices affected 58% of B2B sales in the UAE.

Build a written recovery file

Good records matter, but it is important to state the evidence rules accurately.

Electronic evidence. Federal Decree-Law No. 35 of 2022 (Law of Evidence in Civil and Commercial Transactions) recognises electronic records and correspondence as evidence. Their weight depends on authenticity, content and context (Law of Evidence, Arts 29 and 53–59).

The AED 50,000 rule. Article 66 of the Law of Evidence requires transactions over AED 50,000 to be proved in writing, unless an agreement or another provision says otherwise. Commercial obligations, whatever their value, may be proved by any means unless the law or the parties' agreement provides otherwise (Commercial Transactions Law, Art. 91).

Commercial books. Merchants must keep commercial books and supporting documents for at least five years (Commercial Transactions Law, Art. 29).

In practice, bring the contract or purchase order, invoices, delivery confirmations, a reconciled statement and the full correspondence into one recovery file showing when the debt fell due and that it remains unpaid. For a large balance, prepare the file as though it may go before a court.

Before starting proceedings, consider whether a formal demand, negotiation, a payment plan or settlement will produce a better net recovery. Any arrangement should be in writing, state the agreed balance and dates, set out what happens on default and preserve your rights if payment is missed.

Choose the right legal route

UAE routes at a glance (general information)

Payment orders. Under Articles 143 to 150 of Federal Decree-Law No. 42 of 2022 (Civil Procedure Code), a creditor may apply for a payment order where the debt is established in writing (paper or electronic), due and for a fixed sum. The creditor must first give the debtor at least five days' notice to pay (Art. 144). The judge decides the application within three working days. The order can be challenged by a grievance within 15 days of service where its value is within the Court of First Instance's final limit (AED 50,000); the judge's decision on the grievance is final. Larger orders may be appealed, with the grounds filed with the appeal (Art. 147). Payment orders are subject to expedited execution (Art. 148). Cheques are excluded because a bounced cheque is already an executive instrument (Art. 143(2)).

Source: Federal Decree-Law No. 42 of 2022, Arts 29(1)(b), 143(2), 147(1)–(2) and 148.

Bounced cheques. Under Article 667 of Federal Decree-Law No. 50 of 2022 (Commercial Transactions Law), a cheque that the bank marks as unpaid for lack or insufficiency of funds is an executive instrument. The holder can apply directly to the execution judge for execution of all or part of the amount, without first filing a full case to prove the debt; a partly paid cheque can be executed for the balance (Art. 648(2)). Issuing a cheque without sufficient funds is no longer, in itself, a criminal offence, but bad-faith and fraud-type conduct can still be penalised (Commercial Transactions Law, Arts 673–684).

Execution. Once a creditor holds an executive instrument (a judgment, payment order or qualifying cheque), the execution judge can order measures under the Civil Procedure Code, such as attachment of the debtor's assets or of amounts owed to the debtor by third parties, subject to the legal conditions. Which measures are appropriate depends on the facts.

DIFC Courts. If the contract gives jurisdiction to the DIFC Courts, a creditor should consider whether proceedings there are appropriate and how a judgment would be enforced. Under Article 7 of Dubai Law No. 12 of 2004 (as amended by Dubai Law No. 16 of 2011), a DIFC Courts judgment to be enforced outside the DIFC must be final and executory, translated into Arabic and certified for execution by the DIFC Courts. It is then enforced by the Dubai Courts execution judge, who may not review the merits.

When insolvency enters the picture

Timing matters because insolvency changes leverage. Under Article 16 of Federal Decree-Law No. 51 of 2023 (Financial Restructuring and Bankruptcy Law), an ordinary creditor, or a group of creditors, may apply to open restructuring or bankruptcy proceedings only if:

1. the debt is unconditional, undisputed and payable ;
2. the debt meets the minimum amount set in the Executive Regulations (Cabinet Resolution No. 94 of 2024); and
3. the creditor has served notice to pay and the debtor has not taken the necessary measures to repay within 30 days of the notice.

Secured creditors may apply only where the value of their security falls short of the debt by at least the amount set in the Executive Regulations (Art. 16(2)). A debtor that stops paying its debts as they fall due may be treated as having ceased payment (Bankruptcy Law, Art. 1).

Once a customer shows signs of distress, delay can move an unsecured supplier from active recovery into a crowded creditor position. Time is no longer neutral.

Practical checklist

• Confirm the customer's legal identity, authority and credit limit.
• State payment, invoicing, delivery, acceptance and dispute terms clearly.
• Keep purchase orders, invoices, delivery records and correspondence.
• Reconcile balances and record payment commitments.
• Escalate on age, amount, concentration, broken promises and distress signs.
• Assess negotiation, payment plans, settlement, payment orders, cheque execution and proceedings against the facts.

If a material overdue balance or heavy exposure to one customer is affecting your cash flow, you can contact NJA at nja.ae/book.html . Any legal scope and fees are agreed after assessment.

Join Nasir Salman, Co-Founder and Chief of Legal at Jasim Al Haddad Advocates & Legal Consultants (NJA), at the Getting Paid webinar on Thursday 22 October 2026, 10:30 a.m.–12:00 noon UAE time, on Microsoft Teams. Register: nja.ae/debt-recovery.html .

General information only, not legal advice. No outcome is promised.