Top-Rated Debt Collection Agency in United Arab Emirates

Introduction to collecting debt in United Arab Emirates

Do you have trouble getting paid by people in United Arab Emirates? We can help you. When someone owes a debt, we call them the debtor. The person they owe the debt to is called the creditor. If the creditor collects the debt themselves, we call it first-party collection. If the creditor hires someone else to collect the debt, we call it third-party collections.

• While large companies tend to pay their bills on time, smaller businesses may be a bigger risk for not paying. This is because when things go wrong, the owners of these businesses may try to disappear instead of facing prison time.
• The legal framework is complicated and the courts tend to be not independent and reliable, while procedural delays and costs may make it too expensive.
• The law doesn't help much when it comes to getting money back from someone who owes you money. There is supposed to be a way to negotiate with the person, but it hasn't been used very much yet. This means that usually the person who owes the money just gets to keep it, and the person who is owed the money has no chance of getting any of it back.

Days Sales Outstanding (DSO)

Payment terms in the UAE have long been 30 days, but they are now more often 60 days. The average DSO for listed companies is 62 days and it differs a lot from one sector to another. Large oil & gas, construction or service entities usually have longer payment terms, but they will normally pay their debts. Smaller businesses (e.g. general trading) are more likely not to pay their debt, leaving their creditors without anything, since there is no law in the UAE that deals with this efficiently. Most companies in the UAE are actually ruled by foreigners. This means that if there are any problems, those foreigners are likely to disappear instead of taking responsibility. This is because sponsors (the people who support or finance the company) are usually not involved in the company's administration and therefore would not be held responsible for any debts.

Common payment types in United Arab Emirates

The most common payment methods are:

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Bank transfers are a popular way to pay for things internationally. They are fast and secure. And there is a network of banks that support bank transfers. This makes it easy to do them. When you export something, that means you send it to another country to sell it there. An Export Credit Insurance policy helps make sure that the transaction goes smoothly and there aren't any problems. Allianz Trade has a worldwide network of risk offices that keep track of customers' financial well-being and grants them a specific credit limit up to which they can trade. This helps if something goes wrong.

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An alternative to using a bank guarantee is to use a standby letter of credit. This is a type of guarantee that can be used if the debtor fails to meet their contractual obligations. Another option that is becoming more popular is to use an irrevocable and confirmed documentary letter of credit. This type of letter provides assurance that the debtor will make a certain amount of money available to the beneficiary once certain agreed-upon terms have been met.

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If you need money right away, a local bank guarantee might not be the best option since it can take up to a week to process. Checks are often used as payment because they are reliable and can be enforced by the court if they are not paid. In addition, starting from January 2, 2022, the UAE amended its Commercial Transactions Law. This means that the bank is required to make partial payment up to the amount available in the drawer's account. If you write a check and it bounces, you will have to go to court. This process is accelerated if you file for an executive order, which may include seizing the assets of the person who wrote the check. A noteworthy trend is the usage of Post-Dated Checks, which are thus used as a guarantee for payment.

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Bouncing checks is still a problem in this region, but the new law provides a quicker way to recover the value of a bounced check. Letters of Credit are still used by some businesses because they offer short-term financing. They are also appropriate for payments in instalments. Payment in advance and down payments are also common.

The main types of corporate structures are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations

Who is responsible for business debts? It depends on the legal structures that are in place.

• A sole proprietorship is a business that is owned and run by one person. The owner of the business has full responsibility for any debts or losses the business might have.
• There are different types of partnerships. A General Partnership is when two or more people work together and they are both responsible if something bad happens. This means that if the partnership goes bankrupt, both partners will lose everything they own. A Limited Partnership is when there is one or more general partners who are responsible for the debts, and one or more limited partners who are only responsible for a part of the debts.
• There are several types of companies in the UAE. Limited Liability Companies (LLC) are the most common corporate vehicle used by foreign companies doing business in the UAE. A company must have enough money to do what it needs to do and this amount of money must be decided by the partners. Before 2020, a UAE national or company had to own at least 51% of the shares of an LLC incorporated in the UAE. This has changed since 2020, and now foreign shareholders can own up to 100% shares unless there is a special exemption. This means that the shareholders’ contribution to the LLC is limited.
• A Public Joint Stock Company is a company that has money from shares that people own. Partners only need to pay for their share of the company. The company needs enough money to do what it wants, but it cannot be less than approx. EUR 2,3M. A Private Joint Stock Company is a company that does not let just anyone buy shares, but it cannot be less than approx. EUR 500,000.
• Foreign companies can also set up Branches in the UAE. This means that the company is not a separate legal entity and their liability is not limited to their assets. This means that people can ask for money from the parent company if they have a claim against the branch. Finally, Joint Ventures may be set up through a contract by two or more partners who are willing to share the profits or losses from one or more commercial enterprise. Third parties can only make claims against the partner with whom they conduct business.