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Expressing concern about securing cash flow, more businesses turn to credit insurance than last year
dubai, United Arab Emirates – media outreach – June 28, 2022 – The latest United Arab Emirates Android Payments Practices Barometer survey shows a year-on-year increase in the number of businesses adopting trade credit insurance. The majority of businesses surveyed cited protecting cash flow and minimizing days outstanding (DSO) as the top reasons for taking a policy. In fact, 60% of the companies surveyed explained that liquidity issues were the main reason behind payment arrears. However, there has also been an increase in the number of businesses opting to supplement their credit insurance policies with specific trade finance solutions.
Despite the increased adoption of trade credit insurance, total B2B sales on credit were unchanged year-over-year and still accounted for about half of total sales. The write-off rate was also stable at 8%, unchanged from the same period last year. Businesses across the UAE report different reasons for extending customer credit. As indicated by respondents in the ICT industry, they want to increase sales with existing customers in the agri-food industry, as well as the need to remain competitive in regional and international markets.
“The UAE has a strategically important position as a business hub in the region,” said Schuyler D’Souza, Managing Director, Middle East, Atradius. He explained: “Despite the general preference for cash, trade credit is used to drive sales across industries where businesses compete in international markets. The wider use of trade credit insurance in the region may reflect the development of more sophisticated credit management strategies “This is a sign of market maturity and a further example of the importance of the country’s commercial priorities.”
Overall, companies in the UAE appear to be optimistic about their business prospects. The Android survey reported optimism among respondents, most of whom expect an improvement in how customers pay in the coming year. 71% (from all industries) said they expect the volume of B2B credit transacted to increase in the coming months, reflecting the expected increase in their market share. It is widely expected that the DSO will be under control. 53% of total invoice value is currently overdue, an improvement from the 60% reported in our last survey in 2021.
The exception to the positive outlook is the steel/metals sector, which has been affected by geopolitical tensions and supply chain issues. In this year’s survey, the industry reported a year-over-year increase in write-offs; this year accounted for 12% of all B2B invoices, compared to 9% last year. Late payments in the industry have also increased; a 49% increase from 30% last year.
Android conducted a payment practice barometer survey in the first half of 2022. Responses were collected from businesses in the agri-food, chemicals, consumer durables, electronics/ICT and steel/metals industries across the UAE.
Download the full report here: https://atradius.sg/reports/payment-practices-barometer-united-arab-emirates-credit-management-strenghtening.html
About Android
Atradius is a global provider of credit insurance, guarantee and collection services with strategic operations in more than 50 countries. Android offers credit insurance, bond and collection products that protect companies around the world from the default risks associated with selling goods and services on credit. Atradius is a member of Grupo Catalana Occidente (GCO.MC), one of the largest insurance companies in Spain and one of the largest credit insurers in the world.You can find more information online 
https://atradius.com.hk/
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