Before supplying on credit, confirm the buyer's GSTIN is Active and the name matches the order (a buyer registered in Uttar Pradesh has a GSTIN starting 09), read the GST filing record, and check court cases and defaults reported by other suppliers. For contractors working on government projects, also check court cases, which often show disputes with sub-suppliers. FundRaksha Trust runs the GST check free and the full buyer report in one place.
How credit works in Lucknow
Chikan garment makers employ embroiderers across the city and nearby districts and sell finished pieces to retailers and boutiques nationwide, often on long credit and sometimes on sale-or-return. Government suppliers and contractors, from stationery and furniture to civil works and medical equipment, are paid after inspection and bill processing.
Construction contractors buy materials and services from local suppliers on credit, and pay as their own government or private bills clear. Pharma distributors serve chemists and hospitals.
Credit risks typical of Lucknow's trades
- Contractors paying sub-suppliers only after their government bill clears.
- Boutiques and retailers holding chikan stock on sale-or-return for long periods.
- Hospital and institutional buyers with slow approvals.
- Year-end budget timing delaying government payments.
- New contracting firms set up for a single project.
Checks to run on a buyer
- Validate the GSTIN with the GSTIN validator. A Uttar Pradesh registration starts with 09; 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.
A contracting firm registered only months before a large order may have been set up for one project. Check the PAN for other GSTINs and the owner's record before giving credit.
Worked example: a Lucknow steel stockist and a road contractor
A Lucknow steel stockist is asked for ₹7,80,000 of TMT bars on 60 days by a road contractor working on a district project. The GSTIN starts 09, registered eight months ago. The GST + Financial report shows regular filing but two recovery suits by other material suppliers and a thin owner credit history. The stockist supplies in weekly lots of ₹1,50,000 against payment for the previous lot.
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 Uttar Pradesh can file on MSME Samadhaan before the Uttar Pradesh Micro and Small Enterprises Facilitation Council (Directorate of Industries, Government of Uttar Pradesh, Kanpur) 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 Lucknow.
Sources
Last reviewed: 2026-10-21. Information for Indian businesses; not legal advice.