Survey Reveals Alarming B2B Payment Delays Among Indian MSMEs

Recordent, India’s premier credit and payments reporting platform for B2B transactions, recently conducted an extensive survey to assess the payment trends and challenges faced by over 2,800 of its member businesses nationwide. The survey, which analyzed data from two financial years (FY 21-23), focused on eight major business hubs: Mumbai, Ahmedabad, Kolkata, Bengaluru, Chennai, Delhi, Hyderabad, and Pune. The findings provide crucial insights into the payment behaviors of Micro, Small, and Medium Enterprises (MSMEs) across these cities.

The report revealed significant concerns in cities like Hyderabad, Kolkata, Chennai, and Pune, where approximately 52% of payments made or received by businesses remained overdue for more than 90 days. In contrast, Mumbai demonstrated relatively better payment discipline, with only 29% of payments falling into the overdue category. Other cities such as Bengaluru, Delhi NCR, and Ahmedabad displayed varying levels of delayed payments, ranging from 42% to 49% beyond the 90-day mark.

When it comes to the timely collection of payments, Mumbai and Ahmedabad emerged as leaders, with 36% and 38% of trade receivables collected on time, respectively. On the other hand, Chennai, Pune, and Hyderabad showed significantly lower efficiency, with just 18%, 19%, and 22% of payments collected within the expected timeframe. These disparities underscore the differences in repayment practices among Indian cities.

Further analysis of the payment behaviors among SMEs identified five critical factors influencing their creditworthiness:

1. 1. Comprehensive Credit Assessment: Evaluating new customers using GST, ITR, PF filings, financial statements, and credit bureau reports is essential.
   2. Effective Communication: Ensuring timely communication with the right contacts through reminders, payment ledgers, and statements is crucial.
   3. Automation of Routine Tasks: Automating reminders, statements, and notices can significantly improve efficiency.
   4. Early Warning Systems: Detecting payment anomalies early is key for timely interventions.
   5. Periodic Review of Credit Behavior: Regularly reviewing customer credit behavior over 45/90/180 days through sales, receipts, and credit analysis is vital for managing sales and credit exposure effectively.

Winny Patro, CEO and Co-founder of Recordent remarked on the report, emphasizing the importance of these findings in understanding the payment dynamics across major Indian cities. He highlighted the growing need for transformational tools that streamline collections management, helping businesses overcome the challenges posed by delayed payments. Patro noted that by leveraging modern technology solutions like Recordent’s platform, companies can effectively track payments and reduce potential losses.

In a move to further support SMEs, Recordent recently announced plans to host over 100 knowledge and networking events, targeting more than 10,000 SMEs across the country. These initiatives, including the launch of SME Meet-ups, aim to empower businesses with best industry practices and essential strategies for addressing late payments and credit risk challenges. The meet-ups provide a unique opportunity for SMEs to connect with industry experts, network with peers, and learn valuable practices for sustainable growth.

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