Firms turn to debt collector as Dubai pay crisis deepens

British construction firms are increasingly turning to debt collectors to tackle the problem of unpaid bills in Dubai.

Financial Solutions, a British debt collection firm based in the emirate, said it was trying to recover fees owed to more than 100 UK construction companies compared with the 15 firms on its books eight months ago.

Gavin Jones, marketing director, said: “Construction is our fastest growing sector in the UAE. We’re chasing all sorts of clients, from sole traders to some the biggest developers.”

The company is trying to collect about £7m on behalf of UK construction companies that have been waiting for between six and 18 months for their money. Its clients are smaller firms with turnovers of up to £15m, but Jones said he expected approaches from larger operators as payment problems deepened.

Financial Solutions is thought to be the only British debt collection firm registered in the UAE. Many construction firms have private reservations about using such services because of cultural sensitivities in the region around issues such as reputation and honour.

Evan Anderson, co-founder of consultant Blair Anderson, said: “Using a debt collection agency in Dubai is throwing good money after bad because it’s not a case of can pay, won’t pay, rather it’s won’t pay, cannot pay. It will not go down well either, but if you’re not committed to working in the region perhaps that’s not a problem.”

Earlier this month, it emerged that the Dubai International Arbitration Centre, which handles claims being settled by arbitration, had £3bn worth of cases on its books. It said it expected to have processed 300 of these by the end of 2009, about 80% of which are construction disputes.

UK firms that have admitted to problems with delayed payments in the Middle East include Aukett Fitzroy Robinson, Arup, Atkins, Hyder, Interserve, Marks Barfield and WSP.