MSME Advisory
MSME Delayed Payments: The 45-Day Rule and Samadhaan
By ATTPL Consultancy Marketplace Editorial Team · · 3 min read
How micro and small businesses can recover delayed payments: the 45-day rule, interest on late payment, MSME Samadhaan and practical steps.
The 45-day rule under the MSMED Act
For many micro and small enterprises, the biggest threat is not a lack of orders but money stuck with customers. Large buyers sometimes hold payments for months while the small supplier pays wages, GST and suppliers on time. Indian law gives registered micro and small enterprises specific protection against delayed payments. Knowing these rights, and using them sensibly, can transform a business's cash flow.
The Micro, Small and Medium Enterprises Development Act, 2006 requires a buyer to pay a micro or small enterprise supplier within the period agreed in writing, which cannot exceed 45 days from the day of acceptance of goods or services. Where there is no written agreement, payment is due within 15 days. If the buyer pays late, it is liable to pay compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India.
Who is protected
These provisions protect suppliers that are micro or small enterprises registered on the Udyam portal at the relevant time. Medium enterprises are not covered by the delayed payment provisions. If you are not yet registered, Udyam registration is free and online; see what MSMEs should know about Udyam registration, and our registration services can help you complete it correctly.
Filing a case on MSME Samadhaan
MSME Samadhaan is the Ministry of MSME's online portal where registered micro and small enterprises can file delayed-payment applications against buyers. The application goes to the Micro and Small Enterprises Facilitation Council (MSEFC) of the state, which first attempts conciliation and, if that fails, can take up arbitration or refer the matter. The portal also lets suppliers track the status of their cases.
- Keep purchase orders, invoices, delivery challans and proof of acceptance ready.
- Note the date of acceptance and any written payment terms.
- Calculate the principal due and the interest claimed.
- File the application with accurate buyer details.
Tax rules that push buyers to pay on time
Income-tax rules introduced in recent years deny a buyer a deduction for amounts owed to micro and small enterprises if they are not paid within the time allowed under the MSMED Act, until the year in which they are actually paid. Many large buyers have tightened their payment cycles as a result. Mentioning your Udyam status clearly on quotations and invoices reminds buyers of these obligations.
Practical steps before going legal
- Put payment terms in writing in every purchase order or contract.
- Show your Udyam number and payment terms on every invoice.
- Send polite reminders as the due date approaches and immediately after it passes.
- Escalate to senior management of the buyer with a statement of account.
- Send a formal legal notice if needed; our sister company explains how to send a legal notice in India.
Most disputes are resolved at the reminder or notice stage when the supplier is organised and firm.
Keep the customer relationship in mind
Legal remedies are powerful, but most small suppliers also want to keep their customers. A useful approach is to start with documented, professional reminders, then a meeting at a senior level, and only then a formal notice or Samadhaan application. Many buyers settle once they see that the supplier knows its rights and has its paperwork in order. Where a relationship has clearly broken down, recovering what is owed matters more than future orders.
Other ways to unlock cash
Invoice discounting on the TReDS platforms, regulated by the RBI, allows MSMEs to sell receivables from eligible large buyers and get paid early. Working capital limits from banks, backed by schemes such as credit guarantees, can bridge gaps. ATTPL Finance explains MSME loan options in Rajasthan, and good accounting discipline, as described in our monthly bookkeeping checklist, shows exactly how much is overdue.
Build a culture of collections
Treat collections as part of sales, not an afterthought. Review ageing reports weekly, set credit limits for each customer, link sales incentives to collected revenue and avoid over-dependence on a single large buyer. Digital tools and ERP systems help track receivables in real time; ATTPL IT builds such solutions for growing businesses.
Talk to ATTPL Consultancy
ATTPL Consultancy helps MSMEs with Udyam registration, compliance, delayed-payment documentation and working capital planning. Explore our compliance management services or contact us.
Frequently asked questions
Within how many days must a buyer pay an MSME supplier?
Within the agreed period, which cannot exceed 45 days from acceptance, or within 15 days if there is no written agreement, for registered micro and small enterprises.
Can medium enterprises use MSME Samadhaan for delayed payments?
The delayed payment provisions of the MSMED Act cover micro and small enterprises. Medium enterprises are not covered by these provisions.
What interest can an MSME claim on late payment?
Compound interest with monthly rests at three times the bank rate notified by the RBI, as provided in the MSMED Act.
Sources and further reading
This article is general information, not legal or tax advice. Rules and procedures change; consult a professional for your case.
