Posted , in Business model
Getting paid in the Middle East: Is it ever going to get any better?
- Julie Ahadi
There are some things in life that are inevitable: a thunderstorm during the summer on the one day you forget to take an umbrella; your child being ill the night before that really important client meeting. Something far more inevitable than any of that, even, is the challenge consultants face when trying to secure timely and full—or even partial—payment from clients in the Middle East.
Consultants new to this hinterland of unreliable payment etiquette can find it shocking at first—similar to becoming a new parent, there’s often no amount of warning that can prepare you for what you are in for when doing business in the Middle East. Even consultants with years of experience working in the region and dealing with this problem as a matter of course tell us it’s something that continues to exasperate them.
The reasons behind this situation are many—some cultural and some practical—but, in summary, relationships are still key to doing business in this part of the world, and without good ones, money owed to you will most likely stay that way for an unbearably long time. Even good relationships won’t guarantee smooth transactions—and in any case, it’s in every consulting firm’s best interest to ensure there’s enough money in the bank to tide you over for the worst-case scenario—but they’ll certainly help. Secondly, payment methods and processes have been slow to mature in this region in comparison to other parts of the world, so it’s simply taken longer to initiate, track, and complete transactions. But after all this time (we’ve been covering this issue within our GCC Market Trends report since 2012), what we really want to know is whether the situation is getting—or is likely to ever get—any better? Or, should we accept that this will be the situation forever more, move on, and as one Emirati consultant advised us, “change the record”?
It’s an interesting question. While many of the consultants we talked to this year are still pulling their hair out over a perceived void in rules of engagement—especially in Saudi Arabia—we have spotted some reasons to be optimistic. Without comparing the GCC to what may happen elsewhere in the world, there have been some fundamental changes taking place: Cash may not necessarily be flowing much faster, but there is at least more clarity about processes and the status of invoices. These initiatives are also being encouraged from the top down, with reports that the Saudi government, for example, are now putting in place better systems for approvals and payments. And if they’re trying, then anything’s possible.
Increasing client maturity is also starting to help, and as clients’ appreciation of the value being delivered by consultants grows, the hope is that non-payment will become less of an issue. But let’s not fool ourselves: This is still a problem that continues to present one of the biggest challenges to consulting firms working in the region, adversely affecting planning, resourcing, communications, and sometimes even solvency. It seems inevitable, therefore, that the thorny issue of getting paid in the Middle East is going to be a staple feature within our annual GCC Market Trends report for a while yet.