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While construction in Dubai is looking towards a very welcome revival in terms of new contracts, payment delays remain a fundamental issue. Late payments are becoming a regular occurrence, with a six month lag now commonplace. With the slowdown in the number of projects and these payment delays presenting significant challenges for contractors, many have resorted to debt financing in an attempt to somewhat regulate their cash flow.
As Niall Greene, Managing Director in the Middle East states:
"Cash flow is thus the key — the contractor should not allow a project to get to a stage where they are reliant on debt to finance it ... this could be very high risk ... unless of course there is a separate agreement with the client for a lump-sum deferred payment based on sales.”
Read the full article from Gulf News here.