UAE businesses are leaning more heavily on trade credit to stay competitive, says the survey involving local firms.

According to the Atradius Payment Practices Barometer, nearly half of respondents’ report extending more credit in recent months, with credit sales now making up an average of 47% of business-to-business (B2B transactions). While greater payment flexibility supports sales and relationships, it also heightens payment risk.

Around two in five B2B invoices are paid late, says the report, and substantially more businesses say they are seeing a deterioration in payment behaviour rather than an improvement. Industrial and construction sectors are the most affected, due to the longer and more complex payment cycles typical of these industries.

Customer cash flow constraints are the leading cause of delays (49%), followed by banking processes, internal approvals, and goods or services not being delivered as agreed. As a result:

• 47% of companies face higher financing needs,

• 46% report reduced liquidity headroom,

• and 38% struggle with cash flow planning.

Concerns are also growing that overdue receivables will turn into bad debt.

Looking ahead, customer default risk remains a major concern:

• Nearly half (46%) of respondents expect default risk to rise further

• 39% anticipate it will stay elevated. This cautious outlook highlights the need for continued vigilance.

“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,” said Roeland Punt, CEO of Atradius Middle East. “Payment delays remain widespread and concerns about customer default are increasing, placing greater pressure on liquidity and cash flow planning.

As a result, many businesses are strengthening their approach to credit risk management, combining closer customer monitoring with measures that help safeguard cash flow and support resilience.”

To address these pressures, companies are stepping up credit controls and increasing their use of risk mitigation tools. This includes more rigorous customer assessments, close monitoring of payment behaviour, stronger collections processes, and the use of credit insurance. Credit insurance is particularly common among larger industrial businesses.

Businesses are also mindful of broader macroeconomic and geopolitical risks. Slower economic growth, inflation, cost pressures, and rising interest rates are expected to continue influencing B2B payment behaviour. Despite these headwinds, profitability expectations remain resilient, claims the Barometer report, with a strong majority of businesses reporting rising profit margins even amid the ongoing payment risks and elevated credit pressures.