If you are a Udyam-registered micro or small enterprise, the large company had to pay you within 45 days of acceptance at most. From day 46 it owes compound interest at three times the RBI bank rate, cannot deduct the expense for income tax until it pays (Section 43B(h)), and can be taken to the MSE Facilitation Council in your state, which aims to decide within 90 days and whose award it must deposit 75% of to appeal. A legal notice citing these usually moves the invoice out of the queue. If you are not registered, a summary suit on the invoice still works.
Why large companies pay small suppliers late
It is rarely personal and rarely about your invoice. Large buyers manage working capital by stretching payables, and small suppliers are stretched furthest because they complain least. Internally, your invoice sits behind approval chains and quarter-end cash plans. Nobody is paid to release it. The MSMED Act changes the incentive: once the company’s finance and tax teams understand that this particular invoice carries compound interest and a disallowed deduction, it becomes cheaper to pay than to hold.
Your four statutory levers
| Lever | What it does to the buyer |
|---|---|
| 45-day limit (s.15) | Any longer credit period in the PO is void; payment was due by day 45 from acceptance (deemed 15 days after delivery if no objection) |
| Interest at 3× bank rate, compounded monthly (s.16) | Interest the buyer cannot deduct for tax; it grows every month the invoice sits |
| Facilitation Council (s.18) | Conciliation then arbitration in your state, 90-day target; award enforceable as a decree; 75% deposit to appeal |
| Section 43B(h), Income-tax Act | The expense is disallowed in the year of accrual if paid late; the tax team notices |
Use the MSME interest calculator to see what the company owes you today. Then read MSME Samadhaan filing.
The escalation that works inside a large buyer
- Write to the accounts payable contact and your business contact together, with invoice, PO, GRN and your Udyam certificate, stating the due date under the MSMED Act and the interest accruing
- If no payment in 7 days, write to the CFO and company secretary; refer to Section 43B(h) and the Facilitation Council
- If still unpaid, have FundRaksha’s advocate send a legal notice to the registered office, marked to the directors, within 24 hours
- If the notice period passes, file on MSME Samadhaan at https://samadhaan.msme.gov.in through the advocate
Large companies respond to the second and third steps because they reach people whose job is compliance rather than cash management. See payment stuck with company.
Will they stop buying from me?
This is the fear that keeps most small suppliers quiet. In practice, procurement and finance are different departments; procurement keeps buying from a reliable supplier, and finance learns to pay this one on time. The companies that do drop a supplier for insisting on lawful payment were extracting free credit, and the account was not profitable. India's No.1 B2B payment recovery company, trusted by 1,000+ businesses, and a large share of its clients continue to supply the buyers they recovered from.
If you are not MSME-registered
A medium enterprise or a trader without Udyam registration does not get the MSMED Act levers, but the invoice is still a debt. A legal notice followed by a summary suit under Order XXXVII CPC for the liquidated sum is the route; the company must seek leave to defend and usually settles. If the vendor agreement has an arbitration clause, that governs. And if you qualify for Udyam registration, register now; it applies to future supplies. Book a free consultation and FundRaksha will tell you which levers you have. See also the government supply industry page if the buyer is a PSU.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.