MSMEs: The Backbone of India's Economy
Delayed Payments
Large buyers often pay small suppliers late, forcing them to borrow just to keep going, and the law tries to limit delays.
Waiting for money can kill a healthy small firm.
The problem
A small supplier delivers goods but is paid months later, leaving it short of cash.
The law
The MSMED Act requires buyers to pay within 45 days of acceptance, with interest for delays.
Enforcement
Small firms may hesitate to complain to avoid losing large customers.
TReDS
An online platform called TReDS lets suppliers sell invoices to financiers for quick cash.
An invoice discount
A supplier sells a bill due in 90 days at a small discount to get cash immediately.
Ignoring payment terms when taking orders
Late payments can turn a profit into a crisis.
Key takeaways
- Late payments hurt small firms.
- The law sets a 45-day limit.
- Complaints are risky.
- TReDS speeds up cash.
No recording for this one yet - EconReader can read it aloud for you.