Payment terms are the written rules that say when a customer must pay you, how, and what happens if they do not: "net 30", "50% deposit, balance on delivery", "due on receipt". In the UAE and Saudi Arabia they are set before the work starts, on the quote and the contract, and they decide most of your cash flow before a single invoice is issued. This guide covers which terms to use for which kind of client, how terms interact with the VAT rules on when a tax invoice must be issued, what UAE and Saudi law say about late-payment interest and penalties, and a wording block you can adapt. If a client is already late, read how to chase late payments in Dubai instead; this post is about setting terms so you chase less.
What do the common payment terms mean?
| Term | What it means | Cash risk for you |
|---|---|---|
| Due on receipt | Payable the day the invoice arrives | Low on paper; in practice many clients still take 1–2 weeks |
| Net 7 / Net 15 | Payable within 7 or 15 days of the invoice date | Low to medium |
| Net 30 | Payable within 30 days of the invoice date | Medium; the common B2B default |
| Net 60 / Net 90 | Payable within 60 or 90 days | High; you are financing the client |
| End of month (EOM) + 30 | Payable 30 days after the end of the invoice month | Higher than it sounds: an invoice on the 2nd is paid close to 60 days later |
| Deposit / advance | A percentage paid before work starts | Lowest; the work is partly funded |
| Milestones | Fixed amounts at defined stages | Low if milestones are frequent and objective |
| Retention | A percentage of each payment held back until completion or the end of a defects period | High on long projects |
Two things to fix in writing whatever term you choose. First, the start date of the clock: invoice date, delivery date, or the date the client receives the invoice. Second, the currency and method: AED or SAR, bank transfer to a named IBAN, card, or payment link. Ambiguity on either one is where 30 days quietly becomes 50.
Which payment terms should you use for each type of client?
The right term depends less on your preference than on how the client's finance team works. The ranges below are typical market practice, not rules, and a large client will often send you their own terms in the purchase order.
Government and semi-government entities
Expect the entity's own procurement terms and little room to negotiate. Abu Dhabi formalised a rule in 2019 requiring state entities to pay suppliers within 30 days of receiving an invoice, through the Sharaka platform. Saudi government suppliers submit claims and track payment on the Ministry of Finance's Etimad platform. The usual delay is getting the invoice accepted, so match the required format, quote the contract or PO number, and price the waiting time into the bid.
Large corporates and multinationals
Net 30 to net 60 is common, and net 90 is not unusual in retail and FMCG supply. Many pay on fixed run dates, so an invoice that misses a cut-off waits for the next run. Register as a vendor early and ask: "What is your payment run date, and what does an invoice need to be approved first time?"
SMEs
Net 15 to net 30 is the usual range. For a first project with a small client, a deposit is reasonable and rarely offends.
Individuals and consumers
Take full payment for small jobs, and a deposit plus balance on delivery for larger ones. Card payments and payment links suit this group best.
Payment terms by business type: a comparison
| Business type | Typical starting terms | Deposit | Watch out for |
|---|---|---|---|
| Freelancer or consultant | Net 7–15, or due on receipt | 30–50% for new clients | Scope growth with no change in fee |
| Creative or marketing agency | Retainer billed in advance; projects with deposit + milestones | 40–50% on projects | Final milestone tied to "client approval" with no deadline |
| B2B services (IT, facilities, training) | Net 30 | Optional; often for first engagement | Corporate PO requirements and payment runs |
| Trading and wholesale | Cash for new accounts; net 30–60 once credit is approved | Often full payment on first orders | Credit limits exceeded by repeat orders |
| Construction and fit-out subcontracting | Monthly progress claims, paid 30–60 days after certification | Advance payment, often against a bond | Retention (commonly around 10%) and pay-when-paid clauses |
| Events | Large deposit, balance before the event date | 50% or more | Balance due after the event, when leverage is gone |
| E-commerce and retail | Paid at checkout | Not applicable | Card chargebacks and payout delays |
On construction: retention of 5–10% is common in UAE contracts, often released half at handover and half after a defects period of around 12 months, and UAE courts have generally upheld clearly drafted pay-when-paid clauses. Subcontractors should negotiate the retention percentage, release dates and a long-stop payment date before signing.
How do payment terms interact with VAT invoice timing?
Payment terms decide when you are paid. VAT rules decide when you must issue the invoice and account for the tax. The two are separate, and a long payment term does not delay the VAT.
Deadline: In the UAE, a tax invoice must be issued within 14 days of the date of supply. Failing to issue one on time carries a fixed penalty of AED 2,500 per case since 14 April 2026 (Cabinet Decision No. 129 of 2025).
Deadline: In Saudi Arabia, a tax invoice must be issued no later than the 15th day of the month following the month of supply. VAT becomes due at the earliest of the supply, the invoice date, or receipt of full or partial payment.
What this means in practice:
- Deposits create a tax point. In both countries, receiving an advance payment can trigger VAT on that amount. A 50% deposit of AED 20,000 on a AED 40,000 project needs its own tax invoice: AED 20,000 plus AED 1,000 VAT at 5%, total AED 21,000. In Saudi Arabia, a 30% deposit on a SAR 60,000 contract is SAR 18,000 plus SAR 2,700 VAT at 15%, total SAR 20,700.
- Net 60 does not mean VAT in 60 days. You declare and pay the VAT for the period the invoice falls in, whether or not the client has paid. Long terms mean you finance the tax as well as the work.
- Staged contracts. In the UAE, for contracts with periodic payments or consecutive invoices, the date of supply is generally the earliest of the invoice date, the payment due date or receipt of payment, with a 12-month backstop. Saudi Arabia takes a similar approach for continuous supplies. Retention treatment is debated, so confirm it with a tax adviser.
- Saudi e-invoicing. Under Fatoora Phase 2, standard B2B invoices are cleared by ZATCA before sending, so count your terms from the cleared invoice, not a draft.
Can you charge late payment interest or penalties in the UAE and Saudi Arabia?
This is general information, not legal advice. The answer differs by country, so have a licensed lawyer review your wording for each market.
UAE
Business-to-business obligations fall under the Commercial Transactions Law, Federal Decree-Law No. 50 of 2022, in force since 2 January 2023. Interest on a late commercial debt is recognised: it runs from the due date unless the law or contract says otherwise, and a rate agreed in writing is generally the starting point. The law caps the rate where none is agreed, and high rates can be challenged, so choose a moderate one. Compound interest is prohibited under Article 88, and the Federal Supreme Court has applied that prohibition.
Interest is much harder to enforce against individuals not acting commercially. A new Civil Transactions Law (Federal Decree-Law No. 25 of 2025) took effect on 1 June 2026 and changes how compensation and delay damages are assessed, so older template clauses are worth a review.
What to do: for B2B work in the UAE, put a simple late-payment interest clause in the quote and contract, signed before work starts. For consumers, rely on deposits and staged payments instead.
Saudi Arabia
Saudi Arabia prohibits interest as a matter of public policy based on Sharia, and the Civil Transactions Law in force since December 2023 did not change that. Article 178 lets parties agree compensation in advance, except where the obligation is a sum of money. Law firms read this as meaning a late-payment interest charge, a monthly percentage late fee or a "late payment commission" is unlikely to be enforced.
What can still help:
- A claim for actual, provable loss caused by the delay, subject to foreseeability and mitigation. A clause stating that late payment will cause you loss helps show it was foreseeable.
- A right to suspend work after written notice if a payment is overdue.
- Deposits, advance payments and milestones, which reduce what is at risk in the first place.
- Security: a bank guarantee or a promissory note on larger contracts.
What to do: in Saudi contracts, drop percentage late fees and build protection into the payment structure instead.
| UAE (B2B) | Saudi Arabia | |
|---|---|---|
| Contractual late-payment interest | Generally enforceable when agreed in writing; subject to legal limits | Generally unenforceable (treated as interest) |
| Compound interest | Prohibited (Article 88, Decree-Law 50/2022) | Prohibited |
| Fixed late fee per invoice | Treat like interest; keep it moderate and agreed in advance | Unlikely to be enforced for payment obligations |
| Compensation for actual loss | Available | Available, subject to proof and foreseeability |
| Best protection | Clause + deposit + reminders | Deposit + milestones + suspension right + security |
Do early-payment discounts work in the Gulf?
Sometimes. The standard form is "2/10 net 30": 2% off if paid within 10 days, otherwise the full amount in 30. The cost is higher than it looks: 2% to be paid 20 days earlier is roughly 36% annualised (2% × 365 ÷ 20).
On VAT, the discount changes the taxable amount. On a AED 50,000 invoice, 2% off is AED 1,000, so the client pays AED 49,000 plus AED 2,450 VAT, AED 51,450 in total, instead of AED 52,500. If the invoice went out at full value and the client takes the discount, issue a tax credit note for AED 1,000 plus AED 50 VAT rather than editing the invoice. For most small businesses, a deposit does more for cash flow and costs nothing.
Do card payments and payment links shorten collection?
Usually. A payment link removes the steps between "approved" and "paid": no online banking login, no copying an IBAN. The trade-offs are processing fees, which vary by provider and card type, and payouts that arrive a few days later. Large corporates and government entities will still pay by bank transfer, so offer the link alongside your bank details, not instead of them.
From the platform: In Staks, your payment terms text prints on every invoice, so the terms agreed on the quote go out with the bill. Select Pay by card (Stripe) as the payment method and Staks creates a Stripe Payment Link when you save the invoice and adds a Pay now button to the PDF and the email. Your customer pays on Stripe's hosted checkout without needing a Stripe account. When a card payment settles the invoice in full, the invoice is marked Paid, the activity is logged, and your workspace members get an invoice-paid email. The Stripe connection is included in every plan and uses your own Stripe account. Stripe accepts businesses registered in the UAE; it does not currently list Saudi Arabia as a supported country, so Saudi businesses need a local payment gateway for card payments.
Sample payment terms wording
Adapt this to your business and have a lawyer check it for the country you work in. The late-payment line is written for UAE B2B contracts; for Saudi contracts, use the alternative given.
textPayment terms 1. Deposit: 50% of the total fee, payable on signature of this quote. Work starts when the deposit is received. 2. Balance: the remaining 50% is payable within 15 days of the invoice date. The invoice is issued on delivery. 3. Currency and method: amounts are in AED and exclude VAT at 5%, which is added to each invoice. Payment by bank transfer to the account on the invoice, or by card using the payment link provided. 4. Additional work: work outside the scope in this quote is quoted separately and invoiced when delivered. 5. Late payment (UAE): overdue amounts accrue simple interest at [X]% per year from the due date until payment. Late payment (KSA alternative): if any amount is more than 14 days overdue, we may suspend work after written notice until payment is received, and the delivery timeline is extended by the suspension period. 6. Disputes: any query on an invoice must be raised in writing within 7 days of receipt. Undisputed amounts remain payable on the due date.
Frequently asked questions
Is net 30 standard in the UAE and Saudi Arabia?
It is the most common starting point for B2B work. Large corporates and government entities often apply longer cycles, and freelancers commonly use shorter terms plus a deposit.
Can I ask a new client for a 50% deposit?
Yes. A 30–50% deposit is normal for services, design and fit-out work in the Gulf, and events often ask for more. In both the UAE and Saudi Arabia, remember that a deposit you receive usually needs its own tax invoice if you are VAT-registered.
Can I add a late fee to an invoice that is already overdue?
In the UAE, a charge that was never agreed is much weaker than one written into the quote or contract before work started. In Saudi Arabia, a percentage late fee is unlikely to be enforced either way. Fix it in your terms for the next project rather than adding it after the fact.
Should payment terms start from the invoice date or the delivery date?
From the invoice date, with the invoice issued on delivery. That keeps the clock simple and lines up with the VAT deadlines: 14 days from supply in the UAE, and the 15th of the following month in Saudi Arabia.
Related reading
- How to chase late payments in Dubai
- UAE tax invoice requirements
- Stripe payments, fees and payouts in UAE accounting
- Agency cash flow and advance billing
Set your terms on the quote, repeat them on the invoice, and give clients a fast way to pay. Start a 14-day free trial of Staks to send invoices with your terms and a Pay now button.