Common payment terms for UAE businesses and how to choose yours

Most UAE B2B invoices use one of a handful of terms. Each shifts risk and cash between you and the customer, so it is worth knowing exactly what you are offering.

• Cash or payment on delivery: common in retail, wholesale counters and with new customers
• Advance payment or deposit: services, custom manufacturing, events, fit-out
• Net 30, 60 or 90 days: standard B2B credit, measured from invoice date
• End of month plus days, e.g. 30 days EOM: payment due 30 days after the month in which you invoiced
• Milestone billing: contracting and projects, tied to signed completion certificates
• Post-dated cheques: still used in trading and real estate, especially for instalments

Credit is a loan to your customer. Offering 90 days instead of 30 on AED 500,000 of monthly sales ties up an extra AED 1 million of working capital. If you fund that with an overdraft at, say, 9% a year, the cost is around AED 90,000 a year, which is real money against the margin on those sales.

Large customers, especially government-related entities and big developers, often impose their own terms. You may not be able to change those, but you can price for them. Our view: a quote for a 90-day customer should carry a higher price than the same quote to a 30-day customer, and owners should say so openly.

Start new customers on advance or short terms and extend credit once they have paid on time for a few months. Look at their trade licence, how long they have traded, who signs, and whether they paid other suppliers you know on time. Put an explicit credit limit alongside the term so a customer on net 30 cannot build up AED 400,000 of exposure.

Review terms every six months. A customer who paid in 25 days for a year has earned better terms; one who now averages 70 days on net 30 should go back to advance payment for new orders.

A Sharjah supplier sells AED 60,000 monthly to customer A on 30 days and AED 60,000 monthly to customer B on 90 days. Customer A carries about AED 60,000 of receivables at any time; customer B about AED 180,000. At a 9% funding cost, B costs roughly AED 10,800 a year more to serve, before any extra collection effort or bad debt risk.

If gross margin on each account is 15%, or AED 108,000 a year, B’s terms eat 10% of that margin. That is the number to bring to the next price negotiation.

Set each customer’s default term and credit limit in HelloBooks, and the due date on every invoice follows automatically. The AR ageing report shows who is paying inside terms and who is not, and reminders run against the due date. Ask the AI agent “which customers on 30-day terms are averaging over 45 days to pay?” and it answers from actual payment history.

When a sales person tries to raise an invoice that takes a customer over their limit, the agent can flag it for approval. Approval rules like that are configurable; partner firms setting them up for clients can request custom rules through /book-a-demo.