For micro, small, and medium enterprises (MSMEs) in India, delayed payments can significantly hinder business operations. To combat this issue, the MSME Ministry has established a robust mechanism to address payment delays through the MSME Samadhaan portal. Here’s a comprehensive guide on how MSMEs can use this portal to challenge delayed payments.
Understanding the Impact of Delayed Payments
Delayed payments are a major hurdle for MSMEs, affecting their cash flow and overall financial health. The government’s MSME Samadhaan portal reveals that since October 2017, over 1.89 lakh applications have been filed, involving claims of Rs 43,160 crore. However, only about 36,074 cases have been resolved, releasing a total of Rs 6,235 crore. This situation underscores the need for an effective resolution mechanism.
Also read: 45-Day Payment Rule: MSMEs Prepare for Impending Deadline
Current Payment Norms and Their Impact
Under existing regulations, if a payment to an MSME for supplied products is delayed for more than 45 days, the buyer is required to pay compound interest with monthly rests on the amount at three times the notified bank rate. This policy is intended to incentivize timely payments and penalize delays. However, despite these norms, many MSMEs still face significant challenges in recovering dues. An estimated Rs 10.7 lakh crore is reportedly stuck in such overdue payments, illustrating the substantial financial impact on the MSME sector.
Challenges with Existing Dispute Resolution Mechanisms
While there is a mechanism in place involving state facilitation councils to settle disputes and manage payment filings, the effectiveness of this system has been questionable. These councils can issue directions to buyers to ensure payments are made, but the resolution process can be lengthy. Buyers often prolong the process by appealing awards in higher courts or defaulting on payments. This leads to prolonged financial distress for MSMEs, as the awaited funds remain tied up in legal and bureaucratic challenges, potentially stifling their operational capabilities and growth.
Proposed Reforms to Enhance Payment Execution
Recognizing the inefficiencies and the critical challenges faced by MSMEs in recovering payments, the Ministry of MSME is contemplating a comprehensive overhaul of the existing provisions. The proposed changes aim to streamline procedures and enhance the speed of payment executions. One of the key aspects of the reform is the introduction of an enabling provision that ensures the awards dictated by the facilitation councils are effectively implemented. This move is expected to enforce the rulings more strictly, providing MSMEs with a more reliable and timely financial redressal mechanism, thus safeguarding their interests and financial health.
Step-by-Step Guide to Filing a Complaint on MSME Samadhaan
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Access the Portal:
Start by visiting the MSME Samadhaan portal at samadhaan.msme.gov.in. This platform is specifically designed to support MSMEs in recovering payments.
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Initiate the Case Filing:
Click on the ‘Case Filing for Entrepreneur/MSE Units’ tab. You’ll need to select your registration type—either Udyog Aadhaar Number or Udyam Registration Number.
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Enter Your Registration Details:
Input your registration number and the mobile number or email registered in your certificate. After entering the verification code, click on ‘Validate Udyog Aadhaar’ or ‘Validate Udyam Registration’ depending on your registration type.
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Verification:
Once validated, enter the OTP sent to your registered contact details for further verification.
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Filing the Application:
Post verification, you’ll be directed to the ‘Application List’ page. Here, click on ‘Application Entry’ and start filling out the required fields:
- Invoice Details: Enter the date of the unpaid invoice.
- Petitioner Details: Your details will be auto-filled; just complete any missing information.
- Business Unit and Location: Select the unit from where the dispute arose.
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State Facilitation Council:
Choose whether you want the application sent to the facilitation council in the state where your corporate office is located. Enter your office PAN and the NIC code of the product involved.
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Respondent Details:
Fill in the buyer’s details, including their GST number. You will also need to input the amount owed, work order, and invoice specifics. Upload any supporting documents.
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Submit the Form:
After accepting the declaration, review your entries carefully. Enter the final verification code and click on ‘Final Submit’.
What Happens After Submission?
Both you and the buyer will be notified about the submission of the complaint. The facilitation council will then take up your case, and you can track the status online.
This updated process not only streamlines the application but also ensures transparency and prompt action on delayed payments, helping MSMEs maintain liquidity and continue their operations without disruptions.
The proactive approach by the MSME ministry in facilitating these applications reflects the government’s commitment to strengthening the MSME sector. By leveraging the updated online process, MSMEs can effectively address the critical issue of delayed payments and enhance their financial stability.
This blog explains the updated online process for MSMEs to file against delayed payments in an easy-to-understand format, using short sentences and clear instructions to assist MSME owners in navigating the system efficiently.