🇦🇪UAE

تأخير الدفعات النهائية بسبب فترة الضمان (Retainage Cash Flow Drag)

Updated: Feb 20262 verified sources

Definition

Retention monies (typically 10% during construction, 5% post-handover, 5% after defects liability) create prolonged cash flow gaps. Contractors finance projects upfront but receive final payments 6–12 months later. Defect liability periods (commonly 6–12 months per search result [1]) are manually verified, delaying releases beyond contractual dates. For a AED 10M project, 5% final retention = AED 500K held for 6–12 months.

Key Findings

Financial Impact: AED 50,000–500,000 per project in working capital financing costs (12% annual cost of capital on retained 5% of contract value); typical contractor portfolio: 5–10 concurrent projects = AED 250K–5M annual cash flow drag.
Frequency: Per project completion cycle (6–18 months typical); affects 100% of UAE construction contracts.
Root Cause: Contractual withholding mandated by client; defects verification manual and paper-based; no automated reconciliation of rectification milestones.

Why This Matters

This pain point represents a significant opportunity for B2B solutions targeting Building Structure and Exterior Contractors.

Affected Stakeholders

CFO/Finance Controller, Project Manager, Accounts Receivable, Treasury

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

خطأ توقيت ضريبة القيمة المضافة على الاحتفاظ (VAT Timing Mismatch on Retention)

Direct cash flow loss: AED 25,000–250,000 per project (5% VAT on 5% retained amount, for projects AED 5M–50M). Annual penalty exposure (FTA audit non-compliance): AED 5,000–50,000 per invoice × 12–50 invoices/year = AED 60,000–2.5M. Typical contractor impact: AED 150,000–500,000 annually in mishandled VAT timing.

عدم تتبع الفواتير والدفعات الجزئية المفقودة (Unbilled/Untracked Retainage & Partial Payment Loss)

Direct invoice loss: 2–5% of total retention amounts unbilled = AED 100K–500K per contractor per year (assuming AED 100M–500M annual contract value). VAT tracking errors: AED 20K–100K annually. Interest/penalty recovery shortfall: AED 10K–50K annually. Total annual loss: AED 130K–650K.

قرارات غير مستنيرة بسبب نقص البيانات الفورية (Lack of Real-Time Retention Visibility)

Excess borrowing cost: AED 50K–500K annually (10–15% interest on AED 500K–5M in over-borrowed amounts due to retention uncertainty). Missed refinancing: contractor could refinance at 8% but doesn't know retention release schedule; misses 2–3% savings = AED 100K–300K annually on AED 5M–15M portfolio. Delayed cash recovery: manual defect verification adds 30–90 days beyond contract; AED 50K–200K in lost interest/opportunity cost per project × 5–10 projects = AED 250K–2M annually.

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