In a nation that lives on credit, it can be a distinct advantage for a company to offer customers credit terms. Extending credit is a great way to earn customer loyalty. But it’s tricky territory because customers who need credit can also easily become customers who go bust and never pay their bills.
Whenever a cheque is dishonored by the banker of the beneficiary (bank in your case), a criminal case may be initiated by the beneficiary of the cheque who shall be the complainant in this matter. Article 401 of Federal Law No. 3 of 1987 on issuance of Penal Code (the “Criminal Law’) of UAE states: “Detention or a fine shall be imposed on anyone who, in bad faith, gives a draft (cheque) without a sufficient and drawable balance or who, after giving a cheque, withdraws all or part of the balance, making the balance insufficient for settlement of the cheque, or if he orders a drawee not a cash a cheque or makes or signs the cheque in a manner that prevents it from being cashed.
The same penalty shall apply to anyone who endorses a cheque in favour of another or gives him a bearer draft, knowing that there is no sufficient balance to honour the cheque or that it is not drawable.”
Based on the above provision, it is the discretion of the Public Prosecution Court to decide the quantum of punishment, that is whether it should be fine or detention or both. Normally, a travel ban is imposed on the person who has 
signed a dishonored cheque.
In case you are a victim of business fraud
FTDC experts will Police Cases on your behalf and collect your bad debts.
GUIDELINES FOR DOING SAFE BUSINESS.
How do you know who should get credit terms and how much credit to give them?
Follow these do’s and don’ts.
Do check references. Call your customers’ vendors and find out if they pay their bills on time. Also try to learn the terms of those bills; for instance, are they used to paying in 45 days or 60? This will give you a sense of whether they are accustomed to paying on terms promptly. Call several references to get a better picture of the customer’s payment history.
At FTDC we can guide you on proper contract drafting and do the proper checks and balances for your in country and cross border trade.
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