A Detailed Guide to UDYAM Payment Regulations

MSMEs encounter numerous obstacles in the smooth operation of their businesses. One major obstacle is the inadequate amount of working capital. Small and medium enterprises require sufficient working capital to conduct daily activities, cover utility expenses, and compensate employees.
A substantial portion of this operating funds comes from the payments that MSMEs receive from their customers for the products/services provided. Nonetheless, if purchasers fail to make timely payments, MSMEs encounter numerous challenges in managing their activities. Numerous businesses come to a halt due to lack of timely funding.

• The Rule of 45 Days and 15 Days
  The Indian government has created a new payment regulation in accordance with the MSME Act to prevent delays or non-payment. In this blog post, we will delve deeper into the recent 45- and 15-day payment regulation aimed at safeguarding MSMEs from defaulters and enabling them to proceed confidently with their business activities.
  The credit period and new payment rules for MSMEs have been outlined in Sections 15, 16, and 2(b) of the MSME Act 2006. Understanding the 45-day payment rule is facilitated by the following key points:
  The vendor (MSME) provides products/services to customers.
  The purchasers and the vendors establish a set timeframe for when payment should be completed for the products/services that were provided.
  The period of time from the sale date to the payment date is referred to as the credit period.
  As per the MSME Act, purchasers are required to make payment to suppliers within 45 days of receiving the goods/services.
  We have provided clarification on the 45-day payment period in this document.
  Therefore, where does the 15-day payment regulation belong? Below are some examples to help you understand this rule better.
• What options do MSMEs have if buyers do not adhere to the payment regulations?
• Due to the updated payment regulations of UDYAM, small and medium enterprises (MSMEs) can feel secure in receiving timely payments from their suppliers. In case they do not get paid within 45 days, 15 days, or the agreed credit period from the delivery date of goods or services, they have the option to lodge a complaint with the facilitation council.
• Per the MSME Act’s Section 16, buyers must pay interest on delayed payments. There are a couple of key points to note about these interest rates.
• Interest rates are compounded on a monthly basis.
• The interest rates are triple the rate set by the Reserve Bank of India.
• The calculation of interest rates begins the day after the agreed credit period ends, which could be 45 days, 15 days, or another mutually agreed-upon time frame.