How to Bridge Cash Flow Gaps When Clients Pay in 60–90 Days
Delayed payments are a major hurdle for UAE businesses. With 60–90-day payment terms being the norm, many small and medium-sized businesses (SMBs) struggle to cover operational costs like payroll, rent, and supplier payments. Cash flow shortfalls are a leading reason SMEs struggle, even when the business is profitable.
To manage these gaps, businesses can use both short-term fixes and long-term strategies.
Quick Fixes
1. Milestone Payments: Request partial payments at project stages to ensure steady cash flow.
2. Early Payment Discounts: Offer small discounts to encourage faster payments.
3. Automated Payment Reminders: Use tools like WhatsApp, SMS, or email to nudge clients
about due invoices.
4. Client Diversification: Reduce reliance on a few clients to avoid major disruptions.
Long-Term Strategies
1. Accounts Receivable Automation: Streamline invoicing and follow-ups with ERP-integrated
tools to improve cash collection.
2. Invoice Financing: Convert unpaid invoices into immediate cash, receiving up to 95% of the
approved value, typically within two business days of approval.
3. Payables Financing: Align supplier payments with your revenue cycle to reduce cash-flow
strain.
4. Real-Time Cash Flow Monitoring: Use dashboards to track receivables, overdue payments,
and forecast potential shortfalls.
Platforms like Kema simplify these processes, offering automation, financing, and analytics tailored for UAE SMBs. By adopting these solutions, businesses can reduce overdue payments, cut processing times, and maintain financial stability, even with long payment terms.
Why Cash Flow Gaps Happen
Cash flow gaps are a common challenge for UAE and GCC businesses, often caused by structural inefficiencies in payment and financing practices. For SMBs, understanding these delays is the first step to building better cash flow systems.
Long Payment Cycles Delay Revenue
SMBs frequently experience significant delays between completing work and receiving payments. Government and large corporate contracts are particularly prone to this — payments may take 60–90 days or longer, often due to multiple approval layers and manual cheque clearing.
Cheque settlements can add extra days to the cycle.
SMBs Pay Costs Upfront but Wait for Revenue
Businesses often cover operational costs upfront — salaries, rent, materials — while waiting months for customer payments. This timing mismatch effectively forces SMBs to finance their clients without earning interest, straining working capital.
Banks Don’t Lend to SMBs Easily
Traditional banks rarely provide quick working capital to smaller service-based companies. Bank working-capital facilities often require extensive documentation and longer approval cycles, which can miss immediate cash-flow needs. They also tend to favor asset-backed lending, which excludes many service-oriented firms with limited collateral.
Quick Fixes to Manage Cash Flow Gaps
When client payments are delayed, it can create immediate cash flow challenges. While long-term strategies take time to implement, small and medium-sized businesses (SMBs) often need quick and practical solutions to bridge the gap between recurring expenses and late payments - all without jeopardizing important client relationships.
1. Split Payments into Phases
Breaking large invoices into smaller, milestone-based payments can help secure funds as you progress through a project. Instead of waiting 60–90 days for a full payment, you can receive funds at key stages, ensuring a steadier cash flow. For example, a marketing agency might request an initial deposit, followed by payments tied to specific deliverables.
This approach not only improves liquidity but also aligns payments with project progress.
2. Offer Discounts for Early Payment
A small discount for early payment can benefit both you and your clients. Clients save money, while you receive funds sooner. For instance, offering a modest discount for payments made well before the standard 60-day term can improve your cash flow without significantly impacting profit margins. Displaying the discount clearly on invoices and communicating its value in AED can further encourage clients to pay promptly. The trick is to balance the discount so the liquidity boost outweighs the cost.
3. Send Payment Reminders Automatically
Sometimes, payment delays happen because invoices are simply overlooked. Automated reminders can help keep your invoices top-of-mind. Professional, well-timed nudges sent via email, SMS, or WhatsApp can prompt clients to process payments sooner.
In the UAE, WhatsApp is a widely used business tool, making it an effective channel for reminders. A multi-channel approach ensures that your payment requests are seen and acted upon, even by busy clients.
4. Diversify Your Client Base
Relying too heavily on one or two major clients can make your cash flow vulnerable to delays. By working with a broader range of clients across industries and regions in the GCC, you can reduce the risk of one late payment causing a significant disruption. Alongside diversifying your portfolio, it’s essential to conduct proper credit checks and nurture strong relationships with each client to maintain stable payment patterns.
These quick fixes can provide immediate relief while you work on implementing more sustainable cash flow strategies.
Long-Term Solutions for Better
Cash Flow
1. Automate Accounts Receivable (AR)
Manual invoicing and chasing payments waste time and create errors. By automating AR, you ensure invoices, reminders, and reconciliations happen consistently.
Automation tools can integrate with popular ERP systems like QuickBooks, Zoho, Microsoft Dynamics, Odoo, and Workday, helping streamline collections and reduce administrative overhead.
Automated reminders sent via email, SMS, or WhatsApp help keep invoices top of mind for clients. In the UAE, where WhatsApp is widely used for business communication, these reminders often see better response rates than email alone. These tools can also adjust the tone and frequency of reminders based on how close an invoice is to its due date, ensuring professionalism while maintaining persistence.
Adding payment links to these messages makes it even easier for clients to pay. These secure links can accommodate various payment methods, such as credit cards, Apple Pay and wire transfers, catering to diverse client preferences. Together, automation and streamlined payment options can significantly improve cash flow reliability.
2. Convert Unpaid Invoices into Cash
Unpaid invoices don’t have to mean cash flow problems. Invoice financing allows you to unlock the value of these receivables. With this option, you can receive 70–95% of the invoice value upfront, while the remaining balance (minus fees) is paid once the client settles the invoice.
There are two primary methods: factoring, where a third party takes over collections, and discounting, which lets you retain control of customer relationships. For instance, if you have an AED 100,000 invoice due in 90 days, invoice financing could provide AED 90,000–95,000 immediately. This ensures you can handle expenses like payroll and supplier payments without waiting months for client payments.
3. Align Vendor Payments with Income
Payables financing can help you better match your outgoing payments with incoming cash. Instead of adhering to standard supplier terms while waiting 60–90 days for client payments, you can negotiate extended terms with your vendors. By extending payment deadlines by
30–60 days, you create breathing room to manage cash flow more effectively.
This approach ensures that your outflows are better aligned with your inflows, reducing the pressure on your finances. When paired with other strategies, such as invoice financing and automation, it creates a more balanced cash flow system.
4. Monitor Cash Flow in Real Time
Real-time data is a game-changer for cash flow management. Dashboards that track metrics like AR aging, days sales outstanding (DSO), and potential shortfalls allow you to stay ahead of issues before they escalate.
Modern AR platforms provide detailed reports that highlight overdue invoices and use predictive analytics to forecast potential cash flow challenges. These forecasts are based on factors like current receivables, historical payment patterns, and upcoming obligations. By integrating these tools with your ERP system, you can ensure your analytics are always up to date. Automated alerts can notify you when key metrics hit critical thresholds, enabling you to act quickly and avoid disruptions.
How Kema Helps Businesses Overcome Cash Flow Challenges
Managing cash flow becomes much easier when paired with the right technology. Kema is designed to tackle the specific challenges faced by UAE SMBs, especially those dealing with extended 60–90 day payment terms. By integrating automation, financing options, and real-time insights into one platform, Kema helps bridge cash flow gaps. Here’s a closer look at how Kema's tools simplify receivables, financing, and vendor payments.
Kema’s AR Automation
Integrates with your existing ERP system and automates follow-ups using multi-channel reminders. Invoices automatically include secure payment links, and collections are tracked in real time. Buyers can view invoice details and history on the Kema invoice page and pay via secure links.
Kema’s Invoice Financing
Eligible SMBs can access up to 95% of approved invoice value, typically within two business days, following credit approval and KYC verification.
Funds are advanced directly, while repayment occurs once the client settles the invoice — freeing up working capital without bank loans or collateral.
Kema’s Analytics & Alerts
Dashboards show live invoice statuses, aging reports, and payment trends, ensuring your finance team stays proactive. These insights help you spot trends in client payment behavior and anticipate potential cash flow issues before they escalate.
Conclusion: Managing Long Payment Terms Successfully
Dealing with 60–90-day payment cycles demands both immediate actions and sustainable processes. Businesses that combine automation, financing, and proactive cash-flow monitoring can transform cash-flow challenges into a competitive edge.
A huge percentage of SMBs now see digital payment platforms as essential for scaling, making the real question not whether to modernize your AR processes, but how quickly you can implement these changes. Turning cash flow management from a constant challenge into a competitive edge can make all the difference for sustainable growth.
FAQs
What are the best short-term strategies to manage cash flow gaps when clients take 60–90 days to pay?
Negotiate milestone-based or phased payments so cash comes in throughout the project. Offer modest early-payment discounts, and use automated reminders via WhatsApp, email, or SMS to prompt faster settlements. Diversifying your client base can also minimize exposure to late payers.
How can SMBs in the UAE use technology to automate accounts receivable and improve cash flow?
Automation tools like Kema’s AR platform integrate with ERP systems such as QuickBooks, Zoho, Odoo, Microsoft Dynamics, and Workday. They automate invoicing, reminders, and reconciliation, reducing manual work and improving collection times.
What are the benefits of invoice financing for SMBs, and how does it differ from traditional bank loans?
Invoice financing lets businesses unlock up to 95% of approved invoice value without providing hard collateral. Unlike bank loans that can take weeks to approve, this financing is typically available within two business days of approval, helping SMBs manage payroll, supplier payments, or growth needs more easily.
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