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The UAE is home to nearly 1.4 million operating companies of which almost 90% constitute Small and Medium Enterprises (SMEs). The SME sector contributes more than 60% to the non-oil GDP and employs more than 86% of the private sector workforce. SMEs are considered the backbone of the UAE economy and yet face one of the most persistent challenges — delayed payments and constrained access to Working Capital.

Globally, several business jurisdictions have recognised this issue and implemented structured mechanisms to protect SMEs. In India, under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, payments to micro and small enterprises must be made within an agreed timeline capped at 45 days. Delays attract penal interest, and disputes are addressed through dedicated facilitation mechanisms. Recent tax provisions have further strengthened enforcement by linking deductibility of expenses to actual payment; thereby creating a strong incentive for timely settlement.

The European Union (EU) also embraces a similar philosophy where public authorities are generally required to pay within 30 days and businesses within 60 days, with automatic interest and compensation applicable for delays.

Further, as of 2026, the EU is undergoing a significant transition to a stricter new Late Payment Regulation focused on improving cash flow and combatting persistent payment delays. The UK and Australia have added another layer by mandating public reporting regimes to create accountability and reputational pressure on large corporates dealing with SMEs.

The above-mentioned frameworks adopted across the globe highlight a common objective - protecting liquidity in SMEs by embedding payment discipline into the system.

James Mathew is CEO and Managing Partner, UHY James &

The UAE is well positioned to adopt a similar approach. As e-invoicing is set to be implemented from 2027, invoices will be digitally validated, time-stamped, and reported through systems aligned with the Federal Tax Authority. This will provide regulators with clear visibility on invoice flows, enabling informed policy intervention and strengthening commercial transparency.

While streamlining payment timelines is important for the UAE business landscape, it is equally imperative to turn the spotlight on access to finance which remains a critical gap within the SME sector. Despite the significant economic contribution SMEs bring forth to the UAE, the SME sector receives approximately 10% of total bank funding. This highlights a structural imbalance that requires urgent correction. Improving credit quality to the sector will enable resilience, foster trust, and unlock sustainable growth within the segment.

As a professional Chartered Accountant leading an audit, advisory, tax & consulting practice in the UAE, I believe there is a strong case for banks to earmark dedicated funding pools for SMEs. With the UAE’s ecosystem offering far greater transparency today — through Corporate Tax filings, audited financials, VAT compliance, and data from the Etihad Credit Bureau a shift towards data-driven lending is the need of the hour to improve credit quality and confidence in the segment.

With e-invoicing strengthening visibility and policy support shaping discipline, the path forward is clear: protect SME liquidity, unlock funding, and enforce payment discipline.

In a system built on trust, cash flow is not just operational it is key to survival.  The way forward for the UAE’s SME ecosystem hinges on a disciplined, structured approach to financial management where transparency, timely payments, and robust internal controls are prioritized while banks in the UAE must move beyond conventional frameworks to provide SMEs access to finance.  Only a shared commitment where SMEs embrace discipline and banks reinforce support will help the ecosystem evolve into one that is both resilient and future ready.

James Mathew is CEO and Managing Partner, UHY James &. He is also Convener – Professional & Business Services at IBPC Dubai.