UAE AR: issue tax invoices within 14 days of supply (VAT Law), run debtor ageing weekly, and follow up at 30/60/90 days. UAE AP: post supplier invoices on receipt, match to purchase orders, and schedule payments before supplier credit terms expire. Bad debts cannot be written off for VAT purposes until all recovery attempts are documented and 6 months have elapsed.
Accounts receivable — UAE-specific considerations
- Tax invoice timing: UAE VAT Law requires a tax invoice to be issued within 14 days of the date of supply. Late invoicing creates VAT compliance risk — the VAT point may differ from the invoice date, causing return filing issues.
- VAT on credit sales: Output VAT is due in the period of supply (or payment, whichever is earlier for most businesses). Even if the customer has not paid, the VAT must be reported in the next return.
- Debtor ageing report: Run weekly for any business with more than AED 100,000 in outstanding receivables. Standard buckets: current (within terms), 1–30 days late, 31–60, 61–90, 90+ days. Escalate 90+ to formal demand.
- Bad debt relief: If a customer has not paid and you have made reasonable recovery efforts, you can claim back the output VAT after 6 months from the due date. Documentation required: copy of tax invoice, evidence of supply, evidence of non-payment, and evidence of recovery attempts.
Accounts payable — UAE-specific considerations
- Three-way matching: Before posting a supplier invoice, match it to: (1) the purchase order, (2) the goods received note or service confirmation, (3) the supplier invoice. This prevents duplicate or inflated payments.
- VAT on purchases: Input VAT can only be claimed if the supplier has a valid UAE TRN (Tax Registration Number) and has issued a proper UAE tax invoice. Check the supplier’s TRN on the FTA portal before claiming input VAT.
- Payment scheduling: Map all supplier credit terms and schedule payments to fall just before the due date — not early (cash drag) and not late (relationship and credit risk).
- Director/related party payables: UAE CT Law requires arm’s-length pricing for related party transactions. Loans from directors must be documented with a formal loan agreement and market-rate interest (or zero interest must be justified).
UAE businesses sometimes post supplier invoices that are quotations, delivery notes, or pro-forma invoices — not valid tax invoices. A valid UAE tax invoice must include: supplier’s TRN, invoice date, sequential invoice number, description of supply, quantity, unit price, and VAT amount. If the supplier has not provided a valid tax invoice, chase them before claiming input VAT on the return.
Debtor chase process for UAE
Day 1 after invoice
Email invoice to accounts payable contact (not just the person who ordered). Include bank details, TRN, and payment reference.
Day 30 (or terms due date)
Polite payment reminder by email with a copy of the invoice. Reference the due date.
Day 45
Phone call to the AP team. Confirm receipt and ask for payment ETA. Note the conversation in the CRM.
Day 60
Formal demand letter — reference terms, state overdue amount, request payment within 7 days. Copy to the client’s senior manager if known.
Day 90+
Escalate: MOHRE Small Claims (for amounts under AED 100,000) or Dubai Courts / DIFC Courts depending on contract jurisdiction. Stop supply until paid.
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Frequently asked questions
When must a UAE business issue a tax invoice?+
Within 14 days of the date of supply under UAE VAT Law. The date of supply (tax point) is the earliest of: date goods/services are delivered, date of payment, or date the invoice is issued. Failing to issue invoices within 14 days is a VAT administrative violation.
Can UAE businesses claim VAT back on bad debts?+
Yes — after 6 months from the payment due date, if the debt is genuinely irrecoverable and you have documented recovery attempts. File a VAT bad debt relief adjustment on the EmaraTax return. If the debt is later recovered, output VAT must be reinstated.
What is three-way matching in UAE AP?+
Matching the purchase order (what was ordered), the goods received note (what was delivered), and the supplier invoice (what is being charged). All three must agree before the invoice is posted and paid. It prevents duplicate payments and payments for undelivered goods.
How do UAE businesses verify a supplier's VAT registration?+
Use the FTA’s TRN Verification tool at tax.gov.ae/en/tools/trn.verification. Enter the supplier’s TRN to confirm it is valid and registered. Never claim input VAT on invoices from unregistered suppliers or with invalid TRNs.
What court handles unpaid invoices in UAE?+
Dubai: Small Claims Tribunal (RTA) for claims under AED 500,000; Dubai Courts for larger claims. Abu Dhabi: ADCC (Abu Dhabi Civil Court). DIFC and ADGM courts handle disputes under their respective jurisdictions (common law). MOHRE handles employment-related money claims.