One of the major issues that MSMEs in India face is delayed payments. Even after completion of work, MSMEs are often not paid on time and that impacts the cashflow and overall business operations. Understanding this issue, in 2017 the Government of India established MSME Samadhaan – a delayed payment monitoring system for MSMEs.
The word samadhaan means solution. With MSME Samadhaan portal, the government of India wants to ensure that all MSMEs have a solution to the problem of delayed payment, which further restricts their growth.
According to a report, 31,192 MSME units filed complaints for delayed payments involving ₹7,128 crore in the calendar year 2022.
The MSME sector in India is a key contributor to the country’s GDP. Financing and payments has been a recurring challenge for the sector. With the pandemic, the challenge manifolded, which led to the introduction of several new schemes and upgradation of older ones. In this article we talk about what MSME Samadhaan portal is and how MSMEs can use it.
What is MSME Samadhaan and purpose of it?
MSME Samadhaan is an initiative taken by the government of India to settle the delayed payments and disputes regarding it. Distressed MSMEs can lodge a complaint against buyer before the Micro and Small Enterprise Facilitation Council (MSEFC) through MSME Samadhaan’s portal. Once a complaint is lodged, it remains visible for everyone.
Who is eligible for MSME Samadhan?
Any Udyam registered MSME facing delayed payment problem or payment disputes with buyer can raise a complaint on the platform. You can also raise a complaint against PSUs or government agencies if your payment is not made within 45 days.
How do I raise a complaint on MSME Samadhan?
- Visit MSME Samadhaan portal and click on Case filing for MSME Entrepreneur/MSE Units
- Select type of validation of MSME Registration between Udyog Aadhar Number or Udyam Registration Number
- Enter Udyam Registration number/Udyog Aadhar Number
- Enter mobile number that is linked to Udyam Registration number
- Enter verification code as displayed
- Click on Validate Udyam Registration button to receive a one time password (OTP) on your email id that is registered with Udyam registration number
- Fill and submit the application form. Provide asked details such as work order, invoice, etc. You can attach up to five attachments.
- Once the complaint is filed, you will receive an acknowledgement on the registered email id along with the contact address of concerned MSEFC.
Alternatively, you can file a physical complaint by visiting concerned MSEFC office.
Documents required for filing a case on MSME Samadhaan
- Work order received from the buyer
- Delivery challan
- Invoices pertaining to the order
You will also need to keep your Udyam Registration or Udyog Aadhar number handy.
How to check status of your complaint?
- Visit MSME Samadhaan portal
- Login with the help of Udyog Aadhar/Udyam Registration number
- Once login successfully, you will be redirected to the dashboard, where you can check the status
Note: There is often confusion between Udyam and MSME registration and Udyog Aadhar. Udyam is currently the only portal MSMEs need to register on to be acknowledged as a micro, small, and medium enterprise in India.
What happens after you file a complaint?
Once you file a complaint, it is put before MSEFC. The council looks into the matter and verifies it. It then issues an order to the buyer to pay the due amount the along with the interest.
In case you see that there is no action taken, you can contact the concerned MSEFC. You can find its contact details in the acknowledgement that you had received when you filed the complaint.
Tips to tackle the problem of delayed payments
When you are facing an issue of delayed payment from your buyer, you can lodge a complaint against the customer. However, there is the risk of ruining the relationship with the customer and not get business in the future. Having said this, in some circumstances, it becomes necessary to file a complaint. You are the best judge of the situation.
Being a MSME owner this is not an easy decision. On the one hand there is the need for receiving payments in time for business continuity, on the other hand there’s the constant struggle to find new customers.
Here are some of the tips to get paid on time and tackle the problem of delayed payment:
- Draw detailed work order contract: In order to get payment on time, specify timelines of delivery of goods and credit period, payment terms, etc. on the work order. When it is mentioned on paper and agreed by both parties, it is easier to get timely payments. Also, instead of bulk payment, consider taking payments in parts. In this way, there is regular inflow of funds enabling businesses to function.
- Generate invoices on time: Once you complete the order, generate the invoice and ask the customer to pay within specified timelines mentioned in the work order. Follow up with them as the deadline nears. You may also consider including a percentage penalty for late payments in the work order. Alternatively, you may also include provisions for partial payments.
- Find other alternatives: If the customer still does not pay on time, you can choose to file a complaint at MSME Samadhaan. However, that does not immediately eliminate your struggle with cashflow or working capital. In that case, considering taking a SME business loan preferably an invoice financing loan. This type of loan allows you to avail a loan against an approved invoice for a discount. This will help you to maintain continuity of business and not restrict your growth.
In short, there are various ways to deal with the challenge, and depending on your situation, you can choose the best possible way for your business.