Performance Metrics
Unpaid project bills from a medium-sized developer pushed our contractor client to the brink of a cash-flow crisis. Through strategic, preventative legal intervention, the complete balance was recovered without costly litigation loops.
540,000 SAR
100% Capital Recovered
0 SAR
Litigation / Court Fees
The Challenge: Accrued Unpaid Bills & Suffocating Cash Flow
A specialized finishing contractor in North Riyadh completed a residential investment project for a prominent real estate developer. Under the final project annex, the developer signed and approved the final project invoice totaling **540,000 SAR**.
However, the developer initiated an aggressive payment delay stretching for over **6 months**, citing general liquidity issues and minor unverified engineering audits. This delay resulted in:
- The contractor's inability to pay basic labor wages and supplier bills, threatening statutory compliance blocks under the KSA "Mudad" platform.
- A severe threat of halting other active development projects due to complete paralysis of working capital.
- An inability to present financial bids for new profitable tenders, causing them to miss massive growth opportunities.
The Solution: Tactical Pressure & Structured Amicable Settlement
Upon taking over the file, Attorney Saleh Al-Mohamadi designed a recovery path focused on **rapid amicable resolution backed by strong statutory pressure**, avoiding Commercial Court trial loops which could drag on for a year. Action parameters included:
- Rigorous Document Audit: Reviewing the original B2B contract, hand-over logs, consultant inspection notes, and approvals to ensure the contractor’s legal position was flawless.
- Serving a Decisive Legal Notice: Drafting and serving a highly commanding final Legal Notice to the developer’s executive board. The notice established a definitive proof of debt and warned of initiating urgent commercial Payment Orders and insolvency proceedings in Riyadh if the debt remained unpaid after 7 days.
- Structured Settlement Negotiations: Realizing the severity and speed of the threatened legal actions, the developer requested immediate mediation. Attorney Saleh Al-Mohamadi led the sessions, successfully dismissing all unverified technical claims.
- Amicable Settlement Agreement: Negotiated a settlement deed where the developer paid 60% of the balance immediately via wire transfer, and structured the remaining 40% in two installments backed by Promissory Notes (SND) compliant with Executive Court standards, coupled with strong delay penalty clauses.
Lessons Learned: How to Protect Your Construction Business
Preventative recommendations for contractors and B2B suppliers in Riyadh:
- Secure Instant Sign-offs: Ensure all project milestones and final balances are formally approved by supervising consultants and the owner immediately, creating absolute legal proof.
- Act Swiftly: Allowing invoice delays to exceed 3 months weakens your working capital and gives the debtor room to delay. Initiate legal action early.
- Promissory Notes as Shields: Integrate Promissory Notes (SND) as standard security tools in B2B transactions to fast-track collections directly before Executive Courts without trial loops.
Retaining specialized corporate lawyers to structure agreements and manage dispute negotiations saves businesses hundreds of thousands of Riyals in wasted court fees.