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Late payments hurt businesses: Regus

DUBAI - A majority of entrepreneurs in the UAE declared their stress levels had risen markedly during the past two years with late payment being their main concern, according to a new study released on Monday by Regus, a leading provider of workplace solutions.

Globally, entrepreneurs related that they are most concerned with falling profits and revenues. “The second key concern, however, was a lack of cash or working capital to invest in the economic upturn, followed closely by worries over late payment,” said Mark Dixon, chief executive of Regus.

“In the UAE in particular, late payment was the main concern of entrepreneurs followed by reduced bank credit and falling revenues,” he said.

Worldwide, some 46 per cent of entrepreneurs saw their stress levels rise over the past two years, a finding underscoring that the difficult economic environment had not only left a mark on business attitudes but also on entrepreneur’s personal lives, so closely tied up with their business lives.

In the UAE, 62 per cent respondents said their stress levels peaked mainly due to concerns over late payment followed by reduced bank credit and falling revenues, the study revealed.

“Small businesses provide an important barometer of growth and innovation in any country. Entrepreneurial success is an indicator for innovation and future wealth generation,” said Dixon. “Given its importance, the concerns and obstacles faced by this segment are likely to have significant repercussions on the economy as a whole,” he noted.

“As small and medium enterprises, or SMEs, in the UAE exit a period of economic difficulty and prepare to invest in the upturn, their concerns reveal that pressures around securing capital to invest are great,” said Dixon.

“In addition to this, SMEs in the UAE, where banks are reported to generally reject 50-70 per cent of credit applications from small businesses, continue to feel hampered by lack of access to credit,” he added.

An earlier survey by Regus Business Tracker revealed that business leaders in the Gulf have a more positive view of their economic future than their peers around the world. The survey found that most Gulf-based business leaders expect a robust local economic recovery to begin in the first half of 2010, with 78 percent of respondents predicting local economic growth within a year.

According to the International Monetary Fund, or IMF, the UAE’s gross domestic product (is expected to grow 2.4 per cent this year, a strong turnaround from its 2.5 per cent decline last year.

This is nearly double the earlier projection of 1.3 per cent for the UAE economy by the IMF and close to a projection by the UAE Ministry of Economy of about 2.5 per cent.

The latest edition of the IMF’s half yearly status report, Global Economic Prospects, also projected 3.2 per cent GDP growth for the UAE in 2011. A recent report by Economist Intelligence Unit, or EIU, showed that the UAE economy is set for an average 5.1 per cent annual growth in the next 10 years, a pace higher than the most upbeat global trend projections,

The next phase of growth of the Dh1 trillion UAE economy will be mostly driven by the non-oil sector, which will account for two-third of the economy in the next decade, said Jane Kinninmont, who authored the report for the Economist Intelligence Unit, or EIU.

“A growth of 5.1 per cent may appear higher by the global trend which is below four per cent, but given the UAE annual growth record of 7.3 per cent in the past decade, it is achievable,” Kinninmont said.

issacjohn@khaleejtimes.com