How MSME can recover payments from their Customers
Section 15 of MSMED, 2006 provides that buyers of goods or services have to make the payment to the supplier of goods or services within 45 days from the supply of goods or services. Where any buyer fails to make payment of the amount to the supplier, as required under S. 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three (3) times of the bank rate notified by the Reserve Bank.
If any entity who have registered themselves under MSME and facing problems to recover long pending dues from their customers may approach the Micro and Small Enterprise Facilitation Council (MSEFC) for recovery and to take appropriate action against them. Each State Governments have to establish Micro and Small Enterprise Facilitation Council (MSEFC) for settlement of disputes on getting references/filing on Delayed payments. (Section 20 and 21)
Steps to be taken for recovery
1. Register your company/LLP/Partnership etc. as an MSME and obtain a MSME certificate [Udyog Aadhaar Number (UAN)].
2. Keep record of all formal purchase orders from customers and delivery proofs for all orders.
3.On all your invoices, mention, “your entity name and UAN” along with a note that “Delayed payments beyond 45 days attracts interest at a rate three times of the bank rate notified by RBI, compounded with Monthly interest”.
4. If any customer delays your payments unreasonably beyond 45 days, inform them that you would be approaching the MSME Samadhaan for your pending payments if they do not make the payment in X days. MSME Samadhaan is a Portal created by Office of DC (MSME), Ministry of Micro, Small and Medium Enterprises (MSME) where Micro and Small Enterprises (MSEs) can file their applications online regarding delayed payments.
5. If they still do not release payment, file a complaint at www.samadhaan.msme.gov.in
6.The customer would receive a notice from Micro and Small Enterprise Facilitation Council (MSEFC) asking them to respond with compliance in specified time period (usually 15 to 30 days). MSEFC will decide the matter within 90 days from the date of making application. [S.18(5)]
7. MSEFC of the State after examining the case filed by MSME unit, will issue directions to the buyer unit for payment of due amount along with interest as per the provisions under the MSMED Act 2006.
8. If the Appellant (not being the supplier) wants to file an appeal, no application for setting aside any decree or award by the MSEFC shall be entertained by any court unless the appellant (not being supplier) has deposited with it, the 75% of the award amount. (S. 19)