Startups and SMEs across Dubai are confronting a growing cashflow crisis as a trend of delayed and overdue corporate payments intensifies, creating significant operational strain. According to a new report from the British Chamber of Commerce Dubai, an increasing number of businesses are struggling with invoices that are being paid late, and in some worrying cases, not at all.
A Worsening Trend
The slowdown in payment cycles is a recent and noticeable shift, according to Katy Holmes, CEO of the British Chamber of Commerce Dubai. “Payment cycles have noticeably slowed compared to earlier this year,” she explained. This delay is forcing teams to divert critical resources away from growth and innovation. “These delays are not only straining cashflow but also draining productivity. Teams are now chasing payments two or three times more than usual, time that could otherwise be spent on core business activities.” This comes as tighter liquidity across the region raises concerns about the knock-on effects for early-stage ventures that lack the financial buffers to withstand such disruptions.
The Ripple Effect on the Economy
Small and medium-sized enterprises are the backbone of the UAE’s economy, accounting for 94 percent of all companies and contributing 53 percent of the nation’s GDP. The impact of late payments is therefore a systemic issue. Jen Blandos, founder and CEO of Female Fusion, a community for female entrepreneurs, highlighted how extended payment terms of 45-90 days from larger corporations create severe pressure. “For many SMEs, this creates real cashflow pressures,” Blandos said. “It’s not that the business isn’t profitable. They’re simply waiting far too long to be paid for work already completed.” Rupert Tait, founder of Smith Tait Design, echoed these concerns, stating, “We’ve had customers in the past who have told us they’ve used our fee on their own payroll.”
Legal Disputes on the Rise
The financial strain is increasingly translating into legal action. The Dubai International Financial Centre (DIFC) Courts reported a 38 percent year-on-year surge in claims during the first half of 2025, with 650 cases filed for a total value of AED 6.7 billion. More telling for the startup and SME sector, the Small Claims Tribunal saw a dramatic 73 percent jump in cases, handling 458 disputes. Danish Qazi, a senior associate at BSA Law, identified construction, real estate, and SMEs as the hardest-hit sectors, attributing the problem to “economic uncertainties brought about by global events.”
Alternative Financing as a Lifeline
In response to these challenges, many affected businesses are seeking alternative financial solutions to maintain liquidity. Peer-to-peer lending platforms are seeing a notable increase in activity as companies look for short-term capital to bridge the gaps left by unpaid invoices. UAE-based Beehive, for example, has reported a “steady rise” in funding requests from firms needing to manage their cashflow while awaiting payment.
About British Chamber of Commerce Dubai
The British Chamber of Commerce Dubai (BCCD) is a business group dedicated to supporting UK companies operating in Dubai and those exploring opportunities in the region. It provides a platform for networking, advocacy, and business support, facilitating trade and investment between the UK and the UAE. The chamber plays a crucial role in representing the interests of its members and highlighting key economic trends impacting the business community.
Source: AGBI
