UAE Accounts Receivable & Credit Control

A practical accounts receivable and credit control routine for UAE SMEs: credit terms, invoicing discipline, weekly ageing reviews, PDCs and VAT bad debts.

Most UAE small and medium businesses do not run into trouble because they cannot sell, but because money they have already earned is sitting in somebody else's bank account. An invoice raised in January and paid in May still counts as revenue, but it does not pay salaries, rent or suppliers in February.

Credit control is the discipline that closes that gap. It is not aggressive chasing, but a set of small, repeatable habits that begin before the sale and end when the cash clears the bank. This guide sets out a routine a small UAE finance team can keep up.

Agree credit terms before the first invoice

Almost every collection argument can be traced back to something that was never agreed in writing. Before you extend credit to a new customer, settle the basics and record them on the customer master file:

Payment terms – the number of days, and whether they run from the invoice date or the delivery date.

Credit limit – a ceiling that reflects what you could afford to lose, not what the customer asks for.

Accepted payment methods – bank transfer, cheque, post-dated cheques or card, with the bank details you will use.

Required paperwork – purchase order numbers, signed delivery notes, or a portal submission that must be completed before the clock starts.

A contact for payments – a named person in accounts payable, not only the salesperson you deal with.

Where the exposure is significant, ask for a trade reference or a partial advance on the first few orders. Tightening terms later is far harder than setting them properly at the start.

Make the invoice easy to pay and hard to dispute

A surprising share of overdue invoices are not refusals at all, but invoices sitting in a queue because something is missing. Each invoice should carry the customer's purchase order reference, a clear description of what was delivered, the delivery note or timesheet reference, the due date written as a date rather than "30 days", the correct VAT treatment and your bank details.

Send it on the day the goods are delivered or the work is completed. Every day between delivery and invoicing adds a day to your collection cycle that no amount of chasing will win back. Raising documents from a single invoicing workspace keeps references, tax treatment and delivery links attached to the document itself rather than living in somebody's inbox.

Review the ageing weekly, not at month end

A receivables ageing report that is only opened during month-end close is a history lesson. Reviewed weekly, it becomes an operating tool. Work through it in buckets, with a different action for each:

Not yet due – confirm the invoice was received and approved. A short courtesy call a week before the due date prevents a great many late payments.

1 to 30 days overdue – a polite reminder by email, with the invoice and supporting documents attached.

31 to 60 days – a telephone call to the accounts payable contact, followed by a written summary of what was agreed.

61 to 90 days – involve the account owner or sales manager, and consider putting new orders on hold.

Over 90 days – treat it as a recovery matter, with a documented decision on whether to escalate formally.

Record the outcome of every contact, so the next person to call is not starting from nothing. A running customer statement showing opening balance, transactions, allocations and closing balance settles most disagreements in a single email, because both sides are then looking at the same ledger.

Treat post-dated cheques as exposure, not cash

Post-dated cheques remain common in UAE trade, and they create a particular control problem: a cheque in the drawer feels like payment, but it is a promise with a date on it.

Keep a register of every cheque received, recording the bank, cheque number, amount, cheque date, the customer and the invoices it is meant to settle. Track each one through its full lifecycle – on hand, deposited, cleared, bounced, replaced or cancelled – so that a returned cheque immediately reappears as an outstanding receivable rather than quietly disappearing. A dedicated PDC register does this while keeping the recognition and clearance entries traceable in the ledger.

Understand how VAT bad debt relief works

When a debt genuinely will not be recovered, the VAT already accounted for to the Federal Tax Authority may be adjustable. Under Article 64 of Federal Decree-Law No. 8 of 2017 on Value Added Tax, and as set out in the FTA's public clarification on the adjustment on account of bad debt relief, a supplier may reduce its output tax where all of the following apply:

VAT on the supply was charged and accounted for to the FTA.

The consideration has been written off, in whole or in part, as a bad debt in the supplier's accounts.

More than six months have passed since the date of the supply.

The supplier has notified the customer of the amount written off.

The relief is limited to the amount actually written off, and the customer has a corresponding obligation to reduce input tax it has already recovered. Because the conditions are cumulative and evidence-based, keep the write-off approval, the customer notification and a record of your recovery attempts together in the customer's file. Confirm the treatment with your tax adviser before adjusting a return.

Provide for what you expect to lose

Writing a debt off is the last step, not the first. Long before that, the accounts should reflect the realistic probability of collection. Applying loss rates to the ageing buckets, with documented overlays for customers you have specific concerns about, produces a defensible expected credit loss estimate and stops the balance sheet carrying receivables at a value nobody believes.

Watch two numbers every month

Two measures will tell you whether credit control is working. The first is days sales outstanding: closing receivables divided by credit sales for the period, multiplied by the number of days in that period. The second is the share of the receivables balance that is more than sixty days overdue. Track both month by month. The trend matters far more than the absolute figure, and a rising trend usually appears well before a cash shortage does.

Both are only as good as the underlying allocation. Posting customer receipts against the specific invoices they settle keeps the ageing honest, so the report you act on reflects the ledger rather than a spreadsheet maintained alongside it.

Put the routine in place

None of this needs a large team. It needs a short weekly slot, clear ownership of each customer, and a system in which the invoice, the delivery evidence, the cheque, the receipt and the statement point back to the same record. If you would like to see how RQM Books handles receivables, statements, advances and post-dated cheques for a UAE business like yours, talk to our team about a walkthrough.

This article is general information about accounting and credit control practice in the UAE. It is not tax, legal or financial advice. Tax positions depend on your own circumstances, and you should confirm them with the Federal Tax Authority or a qualified adviser before acting.