Payments in Dubai: On the receiving end

“I would think very hard about working in Dubai again. It has done us a lot of damage.” So says David Marks, the co-founder of architect Marks Barfield. Anyone reading about what happened to him after his client in the emirate quietly stopped paying its bills will find it easy to empathise with his sentiments. Many won’t have to try at all, as they will be in pretty much the same position.

The damage to Marks Barfield so far is £700,000 or 30% of last year’s turnover. Of course, that doesn’t include the time Marks and his senior management spent bargaining on the phone, justifying every dirham their company was claiming and finding out which address to send the invoices to. Other firms have probably suffered similar miseries, and taken bigger hits, but nobody can be quite sure: so far Marks Barfield is the only one prepared to publish and be damned. A survey by the Association of Consulting Engineers estimates that its members alone are owed about £400m so far.

Veterans of the Middle East will tell you that the region doesn’t play by the same rules as, say, Europe or North America. The shadow of feudalism is still visible in its business methods, and firms must spend years building up relationships with clients, patrons and protectors. That said, even the worldly wise looked at the surreal city of Dubai and concluded that the Middle East boom would never end. And the thing is, actually, it hasn’t. Although this particular emirate will be quiet for some time there are opportunities across the rest of the region that UK firms would be mad to turn their backs on. What this whole scenario has done – apart from cause a huge amount of pain – is to remind everyone to tread carefully. Scrutinise clients, choose those with the best payment record (Marks Barfield’s client had been in business for only four years), and preferably those owned by the state. And ask yourself one vital question: if the job did stop, what would be the consequences for your firm?

What are the chances that UK firms will be paid what they are owed? Well, the British government has been active behind the scenes, lobbying the Dubai government to lend a hand, but so far without any great effect. The only real hope in sight is a pick up in the economy, whereupon cash will begin flowing through the system once again – and there are some signs that this may be happening; for those firms that have been punished for doing nothing more than provide a first class professional service, it can’t happen too quickly.

If …

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Keith Clarke, are you getting this?
Denise Chevin, editor