Delayed or non-realization of dues from buyers is leading to many accounts becoming NPAs and forced towards insolvency or liquidation. The owners and operational creditors of such enterprises end up giving up their businesses for no fault of theirs due to non-payment of their bills by their buyers. Such businessmen face the threat of being closed or taken over thereby destroying their reputation, goodwill, social status and causing hardship for themselves and employees.
This problem has been hanging for a long time without any satisfactory preventive solution from the available administrative or legal framework.
IOUX has launched an innovative solution to prevent the problem of delayed payments by introducing legal mechanisms called Invoice Payment Commitment and Cheque Payment Assurance.
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Invoice Payment Commitment
Execute an Agreement with your Buyer for an undertaking to make payment of Invoice(s) on due date(s).
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Cheque Payment Assurance
Execute Cheque Payment Assurance Undertaking for an undertaking by Drawer / Payer to honour the cheque on due date.
- Online Execution of legally binding Invoice Payment Commitment for timely payments of Bills & Invoices
- Provision to create & eSign a Master Sales Agreement only once to take care of all future sales & invoices.
- Cheque Payment Assurance Undertaking for timely payment of Cheques
- Automatic reminders & follow-up with your buyers/debtors for timely realization of Sales Invoices & Bills
- Web & Mobile based Instant Creation & eSigning with IOUX’s vetted document templates, with eKYC & eStamping.
- Serves as evidence for any legal proceedings & MSME facilitation council leading to faster resolution.
- Easier to submit your application for Financing of Invoices & Bills at IOUX
- Improve Working Capital Resources
- Improved Cash Flow and Working Capital Resources
- Ability to extend better payment terms to buyers
- Easier for enterprises to Quality & Faster Credit Approvals
- Amount borrowed can grow with your business
- Up to 100% finance based on track record.
- No/Very Low collateral option
Other Related Links:
MSME Development Act- Statutory Provisions for Delayed Payment of Bills of MSMEs
"The Micro Small and Medium Enterprises Development Act 2006" section 15 and 16 had made provisions to mitigate the problem of delayed payment, whereby it was provided that all payments of bills and receivables of MSMEs should be paid in not more than 45 days and any buyer who fails to make payment to the MSMEs as per agreed terms or maximum within 45 days, would be liable to pay monthly compounded interest at three times the Bank Rate notified by the RBI. Further, The MSME Development Act 2006 section 18 also made provision that in case of any dispute with regard to realization of principal and interest, the MSMEs could make a reference to 'The Micro and Small Enterprises Facilitation Council’.
The Micro, Small and Medium Enterprises
Development Act, 2006
Gazette, May 1, 2016
MSME Facilitation Councils
Section 20 of The MSMEs Development Act provided that these Micro and Small
Enterprises
(MSME) Facilitation Councils (MSMEFC) would be established by the State Governments
and
conduct proceedings to resolve all the referred cases within a period of 90 days
from the
date of receiving their references.
At the time of enactment of MSME Development Act in 2006, it was felt that the
aforementioned provisions would deter the buyers of MSMEs’ products from committing
payment defaults, but the experience of last 12 years indicates that the mechanism
of
establishing MSME Facilitation Councils for resolution of the cases of delayed
payments has
not proved to be very effective as firstly, only few cases are referred to these
Councils as
compared to total number of defaults & delays and secondly, the units apprehend
retribution by way of loss of their future business from their buyers if they report
their cases
of delays to facilitation councils and demand penal interest.
In view of delays in resolution of cases filed before the MSME Facilitation
Councils, there is a
need to devise alternative solutions to resolve this issue, as the MSMEs are caught
in a vicious
cycle, where they avoid reporting their defaults to such Councils so that they do
not suffer
on business relationship, despite being vulnerable and at the same time, are able to
realize
their payments.
Therefore, In spite of above legal provisions MSMEs are not able to realize their
bills and
invoices on time as it takes long time in getting any relief from the legal
provisions.
MSME Facilitation Councils
MSME Samadhaan - Delayed Payments Monitoring System
Ministry of MSME has launched a specialised portal for facilitating the MSMEs to report cases of their delayed payment of bills to draw the attention of their buyers, the MSME Facilitation Councils and the Ministry of MSME, where they can file online applications, which would be reviewed by MSME Facilitation Councils (MSMEFC) to take up such delayed cases for disposal and to expedite their decision on the pending cases., Such cases of delayed payments will also be visible to concerned Central Ministries, State Governments, Public Sector Enterprises (PSEs) etc for taking a note and pro-active action for their payment.
MSME Samadhaan - an Initiative of Ministry
of MSME, Govt. of India
Champions Portal of the Ministry of MSME, Govt. of India
Ministry of MSME has launched a specialised portal for facilitating the MSMEs to report cases of their delayed payment of bills to draw the attention of their buyers, the MSME Facilitation Councils and the Ministry of MSME, where they can file online applications, which would be reviewed by MSME Facilitation Councils (MSMEFC) to take up such delayed cases for disposal and to expedite their decision on the pending cases., Such cases of delayed payments will also be visible to concerned Central Ministries, State Governments, Public Sector Enterprises (PSEs) etc for taking a note and pro-active action for their payment.
- To help the MSMEs in this difficult situation in terms of finance, raw materials, labour, permissions, etc.
- To help the MSMEs capture new opportunities in manufacturing and services sectors.
- To identify the sparks, i.e., the bright MSMEs who can withstand at present and become national and international champions.
