Mar 17, 2021

 “How do I get my client or customer to pay my invoice” is a question we frequently get asked by members of Female Fusion. Many female-owned small businesses find this is one of the main challenges when running their own company. Late payment or non-payment of invoices is a huge frustration from our members. If you’ve never had a business before, or you’ve worked in a larger company, finding your way through procurement and payment processes in the UAE or GCC region can be daunting. There are two problems in the payment of invoices in this region – organisations that have complicated or antiquated systems and processes and entrepreneurs who don’t fully understand just how many steps you need to follow to get paid!

There are four areas where all larger organisations in the region need to improve if they are to help support small and medium-sized enterprises (SMEs).

Cut back on the procurement red tape

Some procurement systems are so exhaustive that it can take hours to complete the registration process. This is standard throughout the region, not just in the UAE. If you’re a small team, this is admin time that can be difficult to justify. Organisations are also missing out on some fabulous SMEs because they simply do not have the time or resources to wade through unnecessary procurement processes.

 Provide fair payment terms and stick to them

Fair terms for SMEs should be payment in advance, or within no more than 30 days of delivery of the product or service. During the pandemic, many organisations tried to push out payment terms to preserve cash flow, but the problem with this, is that it hurt small businesses the most, who were already severely crippled by the poor economy.

 Make employees accountable for paying invoices

Responsible business practice should be that employees are accountable in any organisation for paying supplier invoices on time, even more important for those of small businesses. Often the reason for late payment is that the team responsible for paying invoices don’t have a proper process to follow and someone along the chain hasn’t submitted documents or the invoice in the correct way. This can delay invoices by weeks or months, and is not the fault of the supplier.

Make a commitment to pay bills to small businesses on time

Many companies and organisations around the world make this part of their ethical operating practices and it should be the same here. Sadly, it’s not, or becomes more of a PR exercise, rather than standard business practice.

Until companies and organisations update their procurement and payment processes in this region, SMEs also need to tighten up how they work with their customers and clients.

 Don’t do any work without a contract

It sounds simple, but we hear from many entrepreneurs that they’ve completed work, or provided products, without a contract. Contracts are so important, and they allow you to set your payment terms and jurisdiction, and protects you if something goes wrong. We often suggest using DIFC as a jurisdiction, so that if things do go wrong, companies can easily file a case with the small claims tribunal in the DIFC.

 Understand the payment process

Because the procurement and payment processes can be so complicated in the UAE, it’s important to find out what process you need to follow for each and every organisation you deal with to get your invoices paid on time. For example, some organisations might need a proposal, purchase order (PO), registration on a procurement system, are there any other documents or signatures required to ensure work is completed or the product is received? We also suggest to find out who the contacts are in the finance department should you need to follow-up on payment.

 Invoice promptly and correctly

One reason why payments get delayed is that invoices aren’t created correctly. SMEs need to get better at invoicing promptly with the correct information on the invoice. Typical items include: itemising the service or product provided, date of delivery, purchase order, correct company information, including TRN number if required, and the correct bank account details.

 Follow-up and follow through

Business owners also need to know their numbers, and when their invoices are due. This is where a finance and accounting system such as Xero, Quickbooks or Zoho can be hugely beneficial, it tracks it for your business – don’t rely on Word or Excel. If a customer doesn’t pay within the standard terms, follow-up and find out when the invoice will get paid. If after 30-45 days the invoice is still not paid, and the client or customer doesn’t seem willing to pay, this is when you can go to the small claims tribunal in the DIFC.

Organisations in the whole GCC region need to act fairly and responsibly towards SMEs. Understanding how to navigate the procurement and payment processes for different organisations in this region can be a full-time job for some companies – and something they should not have to do. More than 90% of businesses in the UAE are considered SMEs, which means they run smaller operations, have less access to funding and cashflow, therefore late payments or non-payments can cripple a small business.

As we rebuild post-pandemic, SMEs will be the backbone of the economy and need to be supported to grow and build their businesses. Fair procurement and payment terms are necessary to help us grow the economy.