Abu Dhabi Finance finds 'optimistic' outlook for 2017 amongst UAE SMEs

20 March 2017 Sponsored Content: 60% of SME owners claim that delay in receiving payments from clients will be the biggest challenge for 2017, indicating continued pressure in the cash-flow cycle

Abu Dhabi Finance, a leading UAE specialist mortgage finance company providing solutions to individuals and businesses, today published the results of its Small and Medium Enterprises (SME) sentiment survey for Q1 2017.

The research was designed to measure the perceptions of business owners across Dubai, and operating across a range of industries, including manufacturing, publishing, industrial supplies, construction and transportation.

Key Highlights:

Outlook  for 2017 with 100% of respondents expecting revenues to increase;

  • 60% of SME owners claim that delay in receiving payments from clients will be the biggest challenge for 2017, indicating continued pressure in the cash-flow cycle;
  • 70% are planning to increase headcount; and
  • 70% of respondents are planning to increase their product lines.

Commenting on the research findings, Chris Taylor, CEO Abu Dhabi Finance, “We are pleased to see that SMEs expect their revenues to increase in 2017 from what was undoubtedly a challenging year in 2016.

"It is a positive sign that most businesses intend to hire new employees as this further endorses the picture of economic confidence in the UAE’s manufacturing and services industries.  However, with many SMEs still indicating that cash-flow remains a key challenge, it is clear that there are still funding challenges to overcome.”

Review of 2016

A total of 40% of SMEs surveyed confirmed that there was no change in their annual revenues in 2016, while another 30% confirmed an increase of more than 10%.  Impressively, more than 10% of those surveyed reported that they have further improved year-on-year revenue growth during 2016 compared to 2015.

In regard to personnel, 80% reported no change in headcount in 2016; with the remaining 20% reducing headcount by at least 10%.

90% of SMEs reported increased delays in receiving payments from clients as their biggest challenge in 2016. This was primarily a result of economic challenges in the region and, in some case, resulted in companies experiencing an increase in the average time for outstanding payments from 50 to 150 days. Such findings supports research by Coface, the French credit insurer specializing in protecting clients from their customers defaulting, which found that 2016 was a particularly tumultuous year for trade with many companies having to wait twice as long for payment as a year earlier.

Sentiment for Q1 2017

100% of respondents are either positive or very positive in terms of revenue expectations, with all respondents anticipating a positive increase in sales revenue.

70% of SMEs surveyed are planning on increasing their headcount, with 30% planning on maintaining a similar workforce. Of those looking to hire additional employees, the top three sectors are manufacturing, publishing and industrial supplies.

Regarding their future plans, 70% of respondents are planning to expand their product range, with the top two sectors being heavy construction and manufacturing.

50% of respondents claimed that they expect the cost of finance to decrease in 2017 and 40% expect no change in access to funding, supporting their plans for business expansion.

Finally, 60% of SME owners expressed that their biggest concern in 2017 is the receipt of timely payments from clients, particularly those exporting to international markets.

Chris Taylor added, “We look forward to continuing to support the SME sector with our innovative commercial real estate financial solutions. SMEs who own their commercial real estate have proven to be more resilient to economic challenges.

"The finance solutions we offer enhance the stability of a business and our products allow business owners to effectively manage their cash-flows which in turn means they can focus on growing their revenues and product lines.”

Abu Dhabi Finance PJSC has conducted this survey independently to gauge the perceptions and outlook of the business community in Dubai.