How registered MSMEs can get their customers to pay up
I often hear fellow entrepreneurs complaining that clients are either not paying on time or simply not paying up. This is a significant problem, especially if you are dealing with Indian customers.
Thankfully, the Indian government has strong provisions in place to protect the payments of registered Micro, Small or Medium Enterprises (MSMEs). We at IndiQus have successfully handled a couple of such payment issues by exploiting our rights as an MSME.
The process we followed is as follows:
- Register your company as an MSME and obtain a Udyog Aadhaar Number (UAN) here.
- Ensure you get formal purchase orders and delivery proofs for all orders.
- On all invoices, mention, "XYZ Ltd. is registered under the MSMED Act, 2006. Udyog Aadhaar Number (UAN) - XXXXXXXXXXXX (Delayed payments beyond 45 days attracts interest at a rate three times of the bank rate notified by RBI)".
- If any customer delays your payments unreasonably, notify them that you would be approaching the MSME Samadhaan for your pending payments if they do not release the same in X days.
- If they still do not release payment, file a complaint on MSME Samadhaan's website
- The customer would receive a government notice (like IT notice) and has to respond with compliance in 15-30 days.
The complete MSME Samadhaan process is as follows
We have used the process mentioned above to get large overdue payments from two customers.
Many entrepreneurs are also worried about taking action against non-paying customers, fearing loss of business. Frankly, I feel such customers are not worth working with as they will simply add to your stress. As customers have the right to fire you, likewise you also have the right to fire him.
I hope this helps you get your hard-earned money. All the best!
(Many thanks to Esha Shekhar for advising us on the above.)
(Edited by Evelyn Ratnakumar)
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)