More Than 50% Of The MSMEs Payments In B2B Are Due Above 90 Days

MSME payments in the B2B segment play a huge role in deciding the flow of income in the companies. However, delayed payments above 90 days lead to a disturbed cycle giving issues like no loan approval to MSMEs. Thus, the Finance Minister announced a 45-day payment rule to MSMEs. However, they are still struggling for more than 90 days to receive the payment on time. Let us have a look at the current MSME payment system below.

MSME Payments In B2B Are Still Getting Delays, Find Out The Reason Below

MSMEs are getting delays in the payments in the B2B segment. It is taking place in the different major Indian cities. The data states an average of 50% of the payments have a delay of more than 90 days. If we talk in percentages, Mumbai performed better than other tier 1 cities in terms of having less number of delayed payments. Mumbai has 29% of the payments overdue for more than 90 days. While, the cities like Hyderabad, Kolkata, Chennai, and Pune had 52% of payments delayed for more than 90 days. The other cities like Bengaluru Delhi NCR, and Ahmedabad had this number between 42% to 49%.

On the other hand, the ratio of payments collected on time is also improving. Ahmedabad is on the top in timely payments with 38% of payments collected on time. The second highest performance is of Mumbai with 36% payments on time. While, cities like Chennai had 18%, Pune 19%, and Hyderabad 22% of the payments on time. Several factors can affect the creditworthiness of the MSMEs. It varies from different sectors. The major issue for the MSMEs facing a lack of credit availability is their irregular payment cycle.

The MSMEs don’t get payments on time. Thus, it leads to banks and creditors not trusting them with the return. Winny Patro CEO and Co-founder of Recordant states that the MSMEs and SMEs need modern technology to track the payments properly. They can reduce the issues and delays to some extent with the use of automation and modern technology. Thus, managing the things properly matters a lot. The company is also focusing on conducting 100+ knowledge and networking events for SMEs and MSMEs.

The government’s focus on MSMEs increased with time. The expectations are that these events will be helpful for the MSMEs to gather more awareness about the issue. It will encourage MSMEs to find the solutions on a local basis as well. The government is also launching different schemes for its welfare. Stay tuned for more information.