I am the director of a small business in Dubai providing financial advice services. We invoice after completing work for our clients and rely on their prompt payment for the solvency and sustainability of the company. The problems we face are three-fold: some clients delay payment, causing cash-flow problems, others simply appear not to want to pay at all, and others nitpick about the service we have provided in order to secure a discount. This situation is potentially crippling our business. What courses of action are open to us?
You raise three distinct issues: delayed payment of invoices; non-payment of invoices; and disputed invoices. In relation to all three scenarios, it is important to look at the formal contract between the parties, as under UAE law, the agreement between the parties regulates their rights and obligations.
In the case of delayed payment, the contract may provide for a set period for payment and may include a penalty clause for late payment. Contracts should include such a clause (not exceeding the value of the invoice) as an incentive for timely payment. In cases of non-payment without cause, it is advisable to enter into an agreed written repayment plan, which would become a binding contract in its own right, and would mean that you would receive the outstanding amount in an agreed, structured manner.
If the debtor disputes that the sum is due, you should identify the reason for the dispute, and seek a negotiated settlement before considering alternative dispute resolution, such as mediation or arbitration, or litigation.
If agreement cannot be reached, for outstanding amounts below Dh50,000, Dubai Law No 16 of 2009 created a Centre for Amicable Settlement of Disputes. Referral to the centre is a requirement before formal court proceedings can be issued.
If the matter does proceed to a claim in the UAE Courts, it is prudent to send the defaulter a legal notice, warning them of contemplated court proceedings if payment is not forthcoming. This often acts as a spur to payment.
