Challenge in Collecting Dues - Inputs on Solutions
Friends,
Below are the key issues highlighted by you that an SME or small business faces when collecting past dues/receivables from private and public corporates.
Kindly review them and help identify specific solutions to these issues.
We will then submit the same to Ministry of Finance, Corporate Affairs and any others so actions can be taken on this front.
We look forward to your inputs!
Collecting receivables/pas dues from Public and Private Corporates - Key Issues
1. Corporates and Government entities delay the payments for small entrepreneurs
2. Buyers arm-twist the small players
3. Bad debts are common
4. Many large corporates don’t honor even written contracts
5. Some companies simply refuse to pay irrespective of the credit period
6. Big companies normally ask for very long credit periods. This seriously affects the cash flow of SMEs
7. Many SMEs are forced to shut down due to their payments being stuck
8. Pending receivables also result in small industries not being able to pay to suppliers, resulting in a raw material shortage
9. Many times, bribes are demanded to get the payments cleared
10. An SME at times has to bribe to win business, negotiate on prices, then again bribe and negotiate to collect dues
11. There is very little an SME can do if a large private corporate delays or defaults
12. The overdraft facility in banks cost heavily
13. Most of the small scale units are unable to pay their dues in time
14. Most of the times SMEs fail to speculate credit risk
15. The credit rating mechanism is below average in India and SMEs don’t trust it or know about it
16. There is no effective legal mechanism to address contractual violations on payments by Government departments, private companies more
Below are the key issues highlighted by you that an SME or small business faces when collecting past dues/receivables from private and public corporates.
Kindly review them and help identify specific solutions to these issues.
We will then submit the same to Ministry of Finance, Corporate Affairs and any others so actions can be taken on this front.
We look forward to your inputs!
Collecting receivables/pas dues from Public and Private Corporates - Key Issues
1. Corporates and Government entities delay the payments for small entrepreneurs
2. Buyers arm-twist the small players
3. Bad debts are common
4. Many large corporates don’t honor even written contracts
5. Some companies simply refuse to pay irrespective of the credit period
6. Big companies normally ask for very long credit periods. This seriously affects the cash flow of SMEs
7. Many SMEs are forced to shut down due to their payments being stuck
8. Pending receivables also result in small industries not being able to pay to suppliers, resulting in a raw material shortage
9. Many times, bribes are demanded to get the payments cleared
10. An SME at times has to bribe to win business, negotiate on prices, then again bribe and negotiate to collect dues
11. There is very little an SME can do if a large private corporate delays or defaults
12. The overdraft facility in banks cost heavily
13. Most of the small scale units are unable to pay their dues in time
14. Most of the times SMEs fail to speculate credit risk
15. The credit rating mechanism is below average in India and SMEs don’t trust it or know about it
16. There is no effective legal mechanism to address contractual violations on payments by Government departments, private companies more
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Oct 31
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Sep 30
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Sep 23
I am afraid that dues are mounting by the attitude of the collecting agencies. while they attack harshly on persons having small dues whereas they are afraid of initiating action against the persons/institutions having large amounts of dues. I am sure there will not be this question if the concentration is made on large dues first. more
Aug 14
As a banker,I hve seen SSI units closed for the reasons stated.There should be a law that 50% of the order should be paid before its execution.20 to 25% should be paid for subseqent order,if there are dues pending from the previous order.Penalty should be imposed,if the full payment is not made in the credit period stipulated.Poor units who are the sole supplers to the big industira lcompanys are the worst sufferes. more
Aug 03
