Before supplying on credit, confirm the buyer's GSTIN is Active and the name matches the order (a buyer registered in Punjab has a GSTIN starting 03), read the GST filing record, and check court cases and defaults reported by other suppliers. Before the season, also check distributors you supplied last year again, not just new ones. FundRaksha Trust runs the GST check free and the full buyer report in one place.
How credit works in Ludhiana
Hosiery and knitwear units book orders from distributors and brands months ahead of winter, deliver in autumn and collect, if all goes well, after the season. Post-dated cheques are still a normal part of the deal. Bicycle and parts makers supply assemblers and dealers across India, and fastener and machine-tool makers sell to manufacturers and to traders.
Because so much depends on one season, a warm winter or a distributor's overstocking shows up a few months later as delayed payments, returned goods and requests to re-date cheques.
Credit risks typical of Ludhiana's trades
- Season-end returns: unsold knitwear sent back instead of payment.
- Re-dated or bounced post-dated cheques after a weak season.
- Distributors spread across many brands, paying the most insistent supplier first.
- Bicycle dealers stretched by slow retail sales.
- Cheques from a different account than the buyer's own.
Checks to run on a buyer
- Validate the GSTIN with the GSTIN validator. A Punjab registration starts with 03; 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.
Check the GSTIN on every post-dated cheque's drawer. A cheque from a related firm with a different GSTIN is harder to enforce against your actual buyer.
Worked example: a hosiery unit and a distributor in Jammu
A Ludhiana hosiery unit is asked for ₹9,00,000 of winter stock on 120 days by a distributor in Jammu, with four post-dated cheques. The GSTIN is Active and filed regularly, but the Advance GST report shows a default reported by another Ludhiana supplier from last season. The unit supplies ₹4,50,000 against the cheques, holds the rest until the first cheque clears, and diaries the 30-day notice window in case any cheque returns.
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 Punjab can file on MSME Samadhaan before the Punjab Micro and Small Enterprises Facilitation Council (Directorate of Industries and Commerce, Government of Punjab, Chandigarh) 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 Ludhiana.
Sources
Last reviewed: 2026-10-21. Information for Indian businesses; not legal advice.