The 45-day payment rule for MSMEs and other top SMB stories of the week

The enforcement of Income Tax Law 43(B)H, which mandates micro and small enterprises (MSEs) to settle payments to suppliers within 45 days, has sparked discussions within the MSME ecosystem. 

Concerns about sudden order cancellations and the potential for MSEs to lose business to medium and large enterprises have prompted anticipation of modifications to the rule among traders and enterprises nationwide. Here is a recap of the events from last week.

CAIT urges FM to postpone MSME 45-day payment rule

The Confederation of All India Traders (CAIT) held discussions with Finance Minister Nirmala Sitharaman, requesting a delay in the enforcement of the 45-day payment rule for MSMEs and seeking a resolution for concerns associated with Income Tax Law 43(B)H.

Praveen Khandelwal, Secretary-General, CAIT, appreciated the government's step in introducing this provision in the Income Tax Act, which ensures timely payments to micro and small enterprise traders within 45 days to maintain a seamless cash flow. 

However, he emphasised the importance of heightened awareness among traders regarding this provision and proposed a one-year deferment of its implementation. Putting forth this proposal during the meeting, Khandelwal argued that the delay would afford traders ample time to better understand and adhere to the law.

Read the full story here.

Other top picks of the week

How SMBs can overcome customer experience gap

With the generative AI boom, customers expect lightning-fast responses and personalisation that give them a sense of being understood. However, there remains a noticeable gap between customer expectations and what CX leaders, particularly in SMBs, believe they are delivering.  

Despite 73% of SMB customer experience (CX) leaders in India rating their ability to personalise customer experiences as good, 84% of consumers feel that most companies could do a better job on this front, according to Zendesk CX Trends 2024 report. This gap isn’t merely limited to personalisation. 

Customers aren’t happy about the measures taken by brands to protect their personal data, which is now an important aspect of customer experience. In fact, as per the report, 72% of SMB CX leaders believe they are doing enough to protect customer data, but customers disagree with this, and 73% of them believe most businesses are not doing enough to protect their data. When we get to the bottom of it, small businesses must understand customer perceptions to truly deliver the experiences they crave.

Read the full story here.

Things to consider before taking a business loan

In the face of adversity, business loans serve as crucial lifelines for maintaining cash flow. Yet, for small and micro enterprises (SMEs), securing credit demands a meticulous approach to avoid lurking dangers such as Non-Performing Assets (NPAs). 

As per a report by the Reserve Bank of India (RBI), the gross Non-Performing Assets (NPAs) from banks totalled Rs 5.7 lakh crore as of March 2023. Given the unpredictable business environment, it is imperative to thoroughly evaluate various factors before pursuing a business loan to ensure that the credit aligns with your business requirements and financial capabilities. Here are the key considerations to keep in mind.

Read the full story here.