Did you supply goods to the companies or retailers but have not yet received the payment? Are you struggling to recover your payment dues? If yes, you’ve come to the right place. Today, we’ll be discussing the best ways to recover your business dues from anyone, including large PSUs, corporates, and fortune companies.
The famous advocate, Vinay Kumar, stated from his research that about 27% of the MSMEs receive more than half of their payments after three months. While 31% of MSMEs receive 30% to 50% of payments from the buyers after 90 days.
So, it’s significant to know the best strategies to recover dues from annoying buyers. In this article, you’ll discover the following.
- Impact of pending dues on businesses
- Best ways to recover payment dues from the buyers
- Top-notch payment recovery schemes
- How to apply to them and many more
So, without any further delay, let’s dive in.
Impact of Payment Dues on MSMEs & Small Business Owners
The payment dues from the buyers reduce MSMEs cash flow and lead to working capital complications. Also, it limits the loans and credits from the government. It becomes difficult for the company or business to provide enough salaries or wages for the employees and labourers.
Most business owners mortgage homes and factories to maintain financial stability. While a few business owners are severely prone to mental illness such as stress, depression, etc. If the payment dues aren’t recovered soon, the MSMEs soon decrease their presence in the market due to unproductive work, fewer sales, and profits.
All these factors are the consequences of the payment recovery issues from the buyers. But how do you recover the money from the buyers without filing legal cases legally and spending huge bucks on them? You’ll discover the best solutions in the later sections. Read on.
Best Strategies to Recover Payment Dues from the Buyers
There are a few best ways to recover payment from the buyers. Interestingly, these strategies include neither civil nor criminal proceedings. So, are you curious to know? The modes of payment recoveries are as follows.
- MSMED Act 2006 – This is one of the most significant Acts that you should know to recover all your payment dues.
- MSME Samadhan Scheme – This scheme is presented by the Ministry of Micro, Small, and Medium Enterprises, especially for Micro and Small Enterprises to file payment dues applications on the Samadhaan portal.
Learn more about – What Is MSME? Its Definition
Now, let’s discuss these two types of payment recovery methods from the buyers.
The Indian government has developed several Acts to help MSMEs recover various payment dues from the private companies, PSUs, and individual company owners. MSMED Act is one of the laws to help MSMEs that helps in quick payment recoveries from irritating buyers.
According to this Act, there are numerous ways to take action on the buyers if they aren’t made payment within 45 days. Read all the points mentioned below about significant sections in the MSMED Act to recover all payment dues from small retailers to fortune companies.
- According to section 15, the buyer has to recover all the payment dues to MSMEs under any circumstances within 45 days of the goods purchases. If the buyer and seller have made an agreement, then at least the buyer has to return the payment as per their agreements.
- According to section 16, if the buyer has failed to recover the amount, the buyer has to pay the compound interest along with an additional interest rate. Usually, the additional buyers’ interest is 3X more than the bank rates given by the Reserve Bank of India.
- Section 17 from the MSMED Act says that the buyer has to recover the entire payment and interest.
- Similarly, section 18 of the Act claims that MSMEs can take strict actions on the buyers through MSEFC(Micro and Small Enterprises Facilitation Council) under the necessary conditions if MSMEs haven’t received it within the agreed dates.
- Another primary section from the MSMED Act is Section 23, which says that the deduction of interest paid doesn’t come under Income Tax.
These are the few sections that every MSMEs should know to recover all of their payment dues. And next comes the MSME Samadhaan Scheme. This is one of the best ways to recover payments quickly. Let’s discuss MSME Samadhaan Scheme in detail in the following section.
MSME Samadhaan Scheme
According to the MSMED Act sections from 15 to 24, the delayed payments beyond 45 days of the purchase can be filed against buyers by approaching the MSEFC through the MSME Samadhaan portal (http://samadhaan.msme.gov.in/).
The portal was merely created for the MSMEs to contact the MSEFC for filing applications online against buyers.
MSME Samadhaan Features
- Online Application: Any small or micro-businesses with valid UAN can apply online to recover delayed payments.
- Review Status: Now, you can review the status of your application and delayed payments at the portal 24/7.
- Payment Recovery Dashboard: The enterprises can access the information through the Samadhaan portal dashboard about delayed payments with central ministries. In general, the ministry secretaries can access the data to issue required legit instructions to the buyers.
How to File an Application at the MSME Samadhaan Portal
- Click the given link to reach the Samadhaan portal, here – http://samadhaan.msme.gov.in/
- Then, tap on the “Case Filing For Entrepreneurs/MSE Units” in the top menu section of the website. After that, select either Udyog Aadhar Number to apply. Enter the UAN and verify the captcha. Then, you’ll soon receive an OTP to your email that’s registered with the UAN.
- Enter the OTP and continue. Now, click on the “Application Entry” option. Fill in the required details and either file a complaint or application against the buyer. Ensure you keep all the required invoices or documents that act as proof and make payment recoveries soon.
- After submitting all the documents, the MSEFC forwards the application to the concerned buyer and notifies the status of your application.
That’s it. You’re done with it. If you are looking for the best ways to recover payment dues, filing an application at the Samadhaan portal is an ideal choice. Moreover, it gets your work done with a minimal application fee ranging between Rs. 1000 to Rs. 3000.
As discussed earlier, there are two best possible ways to recover delayed payments from concerned buyers. The first way is to take any action based on the MSMED Act and, the next is applying the MSME Samadhaan Portal. The portal resolves the delayed payments issues faster and helps the MSMEs sustain in the market with colossal cash flow and working income.
Frequently Asked Questions
Who is eligible to apply for the Samadhaan Scheme for payment recoveries?
Anyone (small or micro-enterprises) with the authentic UAM is eligible to apply for the payment recovery application at the Samadhaan portal.
What are the various sections of the MSMED Act that help micro, small, and medium enterprises in recovering payment dues?
The significant sections include Section 15, 16, 17, 18, 22, 23, and 24. There are also a lot more sections included in the Act. Yet, these sections form the core for payment recoveries.
Is UAM (Udyog Aadhaar Memorandum) compulsory to file applications on the Samadhaan portal?
Is it compulsory to file an application at the portal for delayed payments?
Need expert assistance or an education platform for your MSME business or startup? Check out our YouTube video linked below to know more.
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