B2B Payments

US Firms Claim Delayed Payments From Saudi Arabia

U.S. suppliers are growing more vocal about what they have said are lengthy payment terms from government customers in Saudi Arabia, recent reports in The Wall Street Journal (WSJ) said.

The publication reported on Thursday (Jan. 31) that defense contractor General Dynamics claimed Saudi Arabia has more than $1 billion in unpaid invoices, related to an order of military trucks. Construction firm Bechtel and Boston Consulting Group have also raised concerns about delayed and late payments from Saudi Arabia, according to unnamed sources.

Reports noted that the U.S. Department of State discussed the issue with Saudi officials last year, citing one unnamed source, with the nation now having delayed billions of dollars in payments to U.S. and Canadian contractors.

A spokesperson for the Saudi Ministry of Finance said 99 percent of invoice value was paid within 90 days last year. However, unnamed Saudi officials said the late payments are a cash flow management tactic, as the country struggles with a government budget deficit linked to high spending and declining oil prices.

"It is a strategy," the source said. "The government knows they can get away with it, and would not want to have an alarming budget-deficit figure."

Saudi Arabia Minister of Economy Mohammed Al-Tuwaijri told the publication last month that the government is not intentionally delaying supplier payments. Rather, some supplier contracts are in dispute, while other issues like incomplete work have also delayed payments to vendors.

"We are pushing to pay everyone on time," he said at the time.

Some corporations in the U.S. and Canada have said the delayed payments from Saudi Arabia have impeded their ability to operate efficiently.

Late payments "significantly impacted the free cash flow we expected last year," said General Dynamics CFO Jason Aiken during an investor conference earlier this week. According to reports, the public comment was a rare show of tension. The defense industry has historically struggled with late payments from Saudi Arabia, but rarely have industry players made the issue public.



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