Delayed payments to MSMEs by their buyers is the biggest problem being faced by the MSMEs. The buyers may be Large Corporates, Public Sector Enterprises, Government companies, Government Departments and even other Micro Small and Medium Enterprises.
The delayed payments adversely affect the cash flow of these MSMEs. Many a times, most of the MSMEs are using the financial assistance from the banks and financial assistance. Since their cash flow is adversely affected due to the delayed payment issue, there loan accounts are bound to be in stress and then may be classified as NPA.
It also limits the capabilities to do the business by these MSMEs.
There is no full proof system for the timely recovery of the dues of the MSMEs, though there are many statutory provisions which may assist timely recovery of delayed payment to MSMEs. The MSEs are entitled to interest @ 3 time of bank rate in case their payment is delayed for more than 45 days, as per the provisions of Micro Small and Medium Enterprises Development Act 2006.
Insolvency and Bankruptcy Code 2016 is also helpful in timely recovery of delayed payment of the sellers or the Service providers, though it is not a recovery code.
TReDS is also assisting MSMEs in their timely payments.
We at Chamber of Indian Micro Small and Medium Enterprises is helping the MSMEs in getting their delayed payment with these innovative ideas and legal provisions.
We provide special consultancy on a case to case basis for the delayed payments to MSMEs. Please submit your details to us . we will contact you.