Finance & Funding
Receivables Management for MSMEs: Building a Credit Policy That Gets You Paid
By ATTPL Consultancy Marketplace Editorial Team · · 2 min read
How small businesses can reduce overdue payments — setting a credit policy, checking customers, clear invoices and terms, follow-up routines, the MSME 45-day rule, TReDS and when to escalate.
Write a simple credit policy
Sales on credit grow a business, but unpaid invoices can sink it. For many MSMEs, the biggest working capital problem is not profit but money stuck with customers. A simple credit policy and disciplined follow-up can change that.
- Who can get credit, and who must pay in advance
- Standard credit period and credit limits by customer category
- Documents needed before extending credit
- Who can approve exceptions
- When supplies stop if dues are overdue
A one-page policy approved by the owner removes guesswork for the sales team.
Check customers before giving credit
For new customers, verify GST registration, ask for trade references and check their payment behaviour with other suppliers where possible. For larger accounts, review financial statements or a credit report. Start with smaller limits and increase them with a good payment track record. Our customer segmentation guide from ATTPL CRM shows how to group customers by value and risk.
Invoice right, invoice fast
Disputes delay payments. Send accurate invoices immediately on delivery with the PO number, delivery proof and agreed terms. For B2B supplies, follow e-invoicing rules where applicable. Mention the due date clearly on every invoice.
A weekly follow-up routine
- Review an ageing report every week: 0–30, 31–45, 46–60 and over 60 days
- Send a polite reminder before the due date, not after
- Call on the due date and record the promised payment date
- Escalate to senior contacts for amounts beyond 45–60 days
A CRM with reminders makes this routine easier to keep.
Use the protections available
Registered micro and small enterprises are protected by the MSMED Act: buyers must generally pay within the agreed period, not exceeding 45 days, or pay compound interest at three times the bank rate notified by RBI. Delayed payments can be taken to the MSE Facilitation Council through the Samadhaan portal — see our MSME delayed payments guide. Invoices on large corporate buyers can also be discounted on TReDS platforms to get cash early.
Getting help
ATTPL Consultancy helps MSMEs set up credit policies, MIS and working capital plans. For legal recovery steps, ATTPL Legal explains the Samadhaan route, and follow-ups can be automated with ATTPL CRM.
Frequently asked questions
What is a good debtor days figure for an MSME?
It depends on the industry, but debtor days should ideally be close to the agreed credit period. Rising debtor days are an early warning.
Can MSMEs charge interest on delayed payments?
Under the MSMED Act, registered micro and small enterprises can claim compound interest from buyers who pay late beyond the allowed period.
What is TReDS?
TReDS is an RBI-regulated online platform where MSMEs can discount invoices raised on large buyers and get paid early by financiers.
Sources and further reading
This article is general information, not legal or financial advice. Confirm current rules and consult a professional for specific recovery actions.