Before supplying on credit, confirm the buyer's GSTIN is Active and the name matches the order (a buyer registered in Madhya Pradesh has a GSTIN starting 23), read the GST filing record, and check court cases and defaults reported by other suppliers. For pharma distributors and stockists, also check for reports from other suppliers: they usually owe several at once. FundRaksha Trust runs the GST check free and the full buyer report in one place.
How credit works in Indore
Pithampur's formulation and API units sell to distributors and stockists across central India and to other manufacturers. Distributors in turn give credit to chemists and hospitals, so their ability to pay depends on collections below them. Soya processors buy from farmers and traders and sell oil and meal to refiners, feed makers and exporters, where prices move with the commodity market.
The cloth market works on traditional credit between wholesalers and retailers across Madhya Pradesh, and auto-component units in Pithampur supply larger manufacturers on purchase orders.
Credit risks typical of Indore's trades
- Pharma distributors owing several manufacturers and paying in rotation.
- Expiry and breakage claims set off against invoices.
- Commodity price falls that make soya buyers delay or renegotiate contracts.
- Cloth retailers in smaller towns paying only after the festive season.
- Hospital and institutional buyers with long approval cycles.
Checks to run on a buyer
- Validate the GSTIN with the GSTIN validator. A Madhya Pradesh registration starts with 23; a different prefix means the buyer is registered in another state, which is fine if it matches the billing address on the order.
- Run the [free Trust check](https://www.trust.fundraksha.com/gst-lookup): status Active, legal and trade name matching the purchase order, registration date and constitution.
- Read the filing record in the Advance GST report (129 RP), which also shows registered contacts, associated people and places, and defaults reported by other suppliers.
- For a larger order, the GST + Financial report (499 RP) adds court cases, tribunals and FIRs and the owner's credit score and loan record, fetched with the owner's consent, and ends in a give-credit, caution or avoid decision.
For a stockist or distributor, the defaulter reports in the Advance GST report are often the clearest signal: a buyer slow with one manufacturer is usually slow with others.
Worked example: a Pithampur formulation unit and a stockist in Raipur
A Pithampur formulation unit is approached by a stockist in Raipur for ₹3,90,000 of stock on 60 days. The GSTIN starts 22 (Chhattisgarh) and is Active, registered for six years. The Advance GST report shows filing on time, but two defaults reported by other pharma suppliers within the last year. The unit offers 21 days on a ₹1,50,000 first order with no further supply until it is paid.
If a buyer stops paying
Act early. Start with a payment follow-up, then a legal notice by email and WhatsApp or by registered post with proof of delivery. For a bounced cheque, the Section 138 notice must go within 30 days of the return memo.
A micro or small supplier with Udyam registration located in Madhya Pradesh can file on MSME Samadhaan before the Madhya Pradesh Micro and Small Enterprises Facilitation Council (Commissionerate of Industries (MSME Department), Government of Madhya Pradesh, Bhopal) once the buyer is past the agreed period, which the MSMED Act caps at 45 days. Interest runs at three times the RBI bank rate, compounded monthly.
Report the defaulter so other suppliers are warned, and for recovery help in the city see FundRaksha Indore.
Sources
Last reviewed: 2026-10-21. Information for Indian businesses; not legal advice.