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Introduction

After years of working with businesses across the UAE and GCC, the team at CMS has seen the same credit management mistakes made time and again — often by experienced, otherwise well-run companies. The good news is that these mistakes are entirely avoidable. Here are the most common ones, and what you can do to protect your business.

Mistake 1: Extending Credit Based on Relationships, Not Risk

In the UAE's relationship-driven business culture, it is common to extend generous credit terms to clients you know personally or have worked with before. But familiarity is not a substitute for due diligence. Many significant bad debts occur within established business relationships — precisely because warning signs are ignored or overlooked out of trust or goodwill.

Mistake 2: No Written Agreement Before Starting Work

Beginning work based on a verbal agreement, a WhatsApp message, or a purchase order with no signed contract is one of the most dangerous things a UAE business can do. Without a properly drafted, signed agreement, your ability to pursue a debt through mediation or the courts is severely compromised. Always get it in writing — before you start.

Mistake 3: Waiting Too Long to Chase Overdue Invoices

Many UAE businesses leave overdue invoices unaddressed for months, hoping the client will eventually pay or not wanting to damage the relationship. This is a costly mistake. Research consistently shows that the probability of collecting a debt drops significantly after 90 days, and dramatically after 180 days. Act early and act professionally.

Mistake 4: Having No Credit Limit Policy

Without defined credit limits, some clients will accumulate large outstanding balances that represent a concentration risk to your business. A single client defaulting on an unusually large balance can threaten the viability of an entire company. Set credit limits for every client, review them regularly, and enforce them consistently.

Mistake 5: Treating All Debtors the Same Way

Different debtors require different approaches. A client experiencing genuine short-term cash flow difficulties needs a different strategy from one who is deliberately avoiding payment, disputing the debt in bad faith, or preparing to leave the country. A professional debt mediator like CMS will conduct a 360-degree debtor profile to determine the most effective approach for each individual situation.

Mistake 6: Neglecting to Use Business Intelligence Reports

Taking on a new client without running any form of credit or background check is a gamble that UAE businesses take every day — and that many live to regret. Business Intelligence Reports are not a significant cost relative to the value of most B2B contracts, and the insights they provide can save you from extending credit to companies with a history of non-payment or financial instability.

Mistake 7: Having No Professional Partner for Debt Recovery

When an invoice goes significantly overdue, many business owners attempt to handle the recovery themselves — with mixed results. Professional debt mediators have the

skills, tools, and networks to achieve faster, higher-value recoveries while keeping you at arm's length from what can be a stressful and time-consuming process. Engaging CMS at the right time is consistently more effective than going it alone.