Dampened liquidity means average payment delays now reach 123 days
There was a 26 per cent rise in late payments in the UAE for the construction sector during 2016, with average payment delays now reaching 123 days, according to data from French export credit agency Coface.
The construction sector, along with metal traders and building materials suppliers experienced the greatest increase in late payments during the year, which overall increased by 8 per cent.
Sectors | Days of Payment Delay (Average) | Average Payment Terms | Total Average Payment (DSO) |
---|---|---|---|
Chemicals | 21 | 45 | 66 |
IT & Electronics | 75 | 30 | 105 |
Metals & Construction | 123 | 120 | 243 |
General trading | 47 | 30 | 77 |
Food | 34 | 45 | 79 |
Petrochemical | 48 | 30 | 78 |
Source: Coface
Notifications of overdue have increased in key sectors of the countrys economy. Comparing figures of third quarter 2016 from the previous quarter of the same year, the highest increase of overdue notifications in the UAE was registered from the metal traders and building materials or construction sector (+26 per cent), followed by the general trading sector (+22 per cent), says Massimo Falcioni, Cofaces chief executive officer for the Middle East.
There has been a shortfall of liquidity in region due to a drop in government deposits because of lower oil prices has caused the cashflow crisis for the industry which is now entering its second year.
Cashflow was a major concern for construction companies throughout 2016, and it was consistently the worst performing metric of MEEDs Construction Market Index which tracks sentiment for five metrics including turnover, orderbook, cashflow, headcount and outlook.
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