Are you an MSME? Is your Payment Stuck with customers?

Are you an MSME? Is your Payment Stuck with customers?

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Know your Rights 

If you are a registered MSME i.e. if you have obtained an Udyog Aadhar you are entitled to get your payment within 45 days from your customers. Further, you are also entitled to interest at the rate of three times the bank rate notified by RBI.  Current bank rate is 4.65% p.a. Hence, currently you are entitled to interest of 13.95 % p.a. 

However, what can you do to recover your claims? 

Some Good Practices 

First of all, you should ensure that you have provided your Udyog Aadhar Number or MSME registration number in the tax invoice that you have given to your customer. Although this is not a statutory requirement in order to claim your dues under MSMED Act, 2006 it acts like a small deterrent for companies to delay your payments. This is essentially because companies are required to report to the government on MSME dues pending for more than 45 days.

Further always keep your documentation in order. Ensure that you have purchase orders in place along with signatures of authorised representatives of your customer. Also ensure that you have sent a proper tax invoice to your customer and there is a proof of the date when you have sent the invoice and there should be an acknowledgment that your customer has received the invoice. 

Ensure that the payments are not held up because of non-performance of any contractual obligation from your part. If there is a non-performance from your end you need to ensure that you finish it first and adhere to the contract. 

Do written communication via email or letters for follow up of payments. This shall help to create a proper trail of communication which shall establish that you are entitled to the payments and you have tried your best to get your due payment amicably. 

Remember that going to MSME authorities with your complaint might hamper your relationship with your client/customer. So this method should be used only after you have tried your best to resolve the dispute amongst yourselves. 

The Remedy 

After trying your best if you are still not able to recover your dues you can knock on the doors of MSME Department for help. This can be done through Samadhaan portal handled by Ministry of Micro Small and Medium Enterprises. 

Before you proceed to file application of delayed payment: 

  1. You should be ready with the scanned PDF documents of work orders of Respondent and invoices generated by you against those work orders. 
  2. Each file size should not be more than 1MB. 
  3. Maximum three work orders and three invoices can be uploaded. 

Please follow the process below to File application 

  1. Enter Your Udyog Aadhaar Number 
  1. Enter Your Aadhaar Number or Mobile Number as in Udyog Aadhaar(Only For Assisted filing cases) 
  1. Enter verification code as displayed 
  1. Click on Validate Udyog Aadhaar button to receive your OTP on email registered during udyog aadhaar registration. 

Once you have filed your application the council will take action on the same after 15 days. Once the application is accepted an online intimation will be sent to both yourself and your customer via email.  

First, the council will give you an opportunity to mutually settle the dispute. If the dispute is not settled mutually council will have a look at the arguments and can either accept or reject the application. If the application is accepted it gets converted into a case. Council will update case hearing status or hearing date on the samadhaan portal which can be viewed on the portal through Udyog Aadhar No. or Application No./Case No.   

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