“If you raise this issue, you will never do business with our entity again.” This stark threat, shared with me by a determined entrepreneur, didn’t come from a shadowy figure. It came from a director at a government entity — punishment for simply asking about a payment her small business was owed for work completed, over a year prior. Across the emerging Sultanate of Oman’s business environment, a silent challenge festers: the systemic, damaging culture of late payments to SMEs and start-ups.
Having worked alongside Omani founders for years, I’ve witnessed the hidden toll. The talented innovator sweating over payroll. The promising start-up owner draining personal savings just to survive while waiting for a client to finally settle an invoice. With SMEs making up a colossal 98 per cent of registered companies in Oman, this isn’t a minor irritation, it’s an economic stranglehold. As we push hard for economic diversification, smoother business processes and attracting investment, allowing this cash flow crisis to continue is like trying to win a race with concrete blocks tied to our feet.
Why Do Payments Disappear?
Large entities, whether public entities or private corporations, understand the vulnerability of smaller suppliers. Adding to this is over-processing quicksand, sometimes referred to as bureaucracy, particularly within the public sector and large companies. Complex approval chains, lost paperwork and outdated procurement systems can turn weeks of waiting into months, or even years. While improvements are happening, Oman’s public sector still wrestles with this inefficiency.
Sometimes, the delay is deliberate. Cash flow management becomes a weapon, with larger players essentially using SMEs as an interest-free credit line to bolster their own liquidity. This practice isn't just unfair; it's corrosive. Underpinning all this is insufficient enforcement and a troubling cultural acceptance.
The Crippling Ripple Effect
Late payments do not only slow down SMEs growth, they also slow down their contribution to Oman Vision 2040 goals. They starve these vital businesses of the working capital needed for daily operations, paying staff, buying supplies, covering rent and investing in growth. Too many potentially successful ventures collapse simply because they run out of money waiting for payments they’ve rightfully earned. When survival is the overwhelming daily focus, there’s no capacity to invest in research, hire new talent, or explore new markets. Ultimately, this creates a significant drag on our entire economy. Unhealthy SMEs mean lower tax revenues, fewer jobs created and slower overall economic progress — directly undermining our national vision. Perhaps most damagingly, it erodes the fundamental trust necessary for a dynamic business environment.
Best Practices
We are not alone in this struggle. Our GCC neighbours face similar challenges, offering valuable blueprints for action. Saudi Arabia took decisive steps with its "Watiq" platform to track government payments and implemented stricter penalties for delays. The Saudi Central Bank (SAMA) also actively champions supply chain finance solutions. The UAE enacted Federal Law No (2) of 2020, mandating 30-day payments for private sector dealings with SMEs (extendable to 60 days only with mutual agreement). Dubai further strengthened this with its "Prompt Pay" policy for government contracts. The European Union's Late Payment Directive sets clear 30-day limits (60 days for public bodies) and empowers SMEs to claim substantial late payment interest and compensation.
Oman Needs Bold Solutions
Mimicking regulations isn't enough. Firstly, we must mandate and enforce with real teeth. We need a robust Omani Late Payment Law establishing strict maximum payment terms. Critically, this law must impose automatic, significant penalties for late payment. These should include substantial interest and fixed compensation that kicks in without forcing the SME into a costly legal battle.
Technology offers powerful tools. We should actively foster “invoice trading platforms”. These fintech solutions allow SMEs to sell verified invoices (especially those owed by government or large corporates) to investors for immediate cash, albeit at a small discount. This transfers the waiting risk away from the vulnerable SME, providing instant liquidity. Globally, such platforms are proving transformative.
Leadership must start at the top. The public sector must become the role model. Implement real-time digital tracking for all SME invoices moving through government approval stages, with strict internal deadlines and clear accountability for delays. Creating an official, secure (and initially anonymous) platform where SMEs can safely report chronic late payers would be powerful.
The Time for Action is Now
Solving the late payment crisis isn't about charity; it's an absolute economic necessity. It demands unwavering policymakers’ will, innovative financial mechanisms, rigorous enforcement, and a fundamental cultural shift where paying SMEs fairly and promptly becomes an unquestioned norm. Having sat with founders facing this relentless pressure, I know the human cost is immense. Let’s end the silence, stop choking our most vital businesses, and finally unleash the true potential of Omani SMEs. Our economic diversification, our growth, our future, they all depend on it. The time for excuses is over. The time for decisive action has arrived.
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