Payment-terms risk

Last reviewed: 2026-06-27

What is the risk of selling on payment terms?

Payment-terms risk is the risk a business takes on when it sells goods or services on payment terms — invoicing a customer now and being paid later. If the customer pays late or not at all, the seller absorbs the loss. It is the most common counterparty exposure for non-financial companies.

In the UAE’s B2B economy, where net terms and project milestones are routine, payment-terms risk is everywhere — and a buyer that looks healthy can still be the subject of judgments or enforcement actions that signal payment trouble ahead.

Managing it means setting limits and terms based on a counterparty’s real risk, which is why a check of its litigation and regulatory history before extending terms is more useful than its marketing or its balance sheet alone.