Do not supply more on credit to a buyer who is overdue without a written commitment. Offer continued supply on advance payment or cash-against-delivery, with the old balance on a written, dated plan backed by cheques. A buyer who needs your goods will accept; that is leverage, and it recovers old dues more often than refusal does. A buyer who refuses both has told you the account is not worth keeping. In parallel, protect the old debt with a formal demand or legal notice; continued supply does not pause interest or limitation.
Four questions before you decide
- Why is the buyer overdue? Cash-flow stretch, a dispute, or inability? Supply decisions differ for each.
- How dependent are they on you? If they cannot easily switch suppliers, you have leverage. If they can, continued credit is a gift.
- How large is the old debt relative to the new order? Doubling exposure on a buyer who has not paid for the first half is rarely sensible.
- Have they confirmed the balance in writing? If not, no new supply until they do.
Answer these honestly and the decision usually makes itself.
The terms that let you keep supplying safely
| Term | What it does |
|---|---|
| Advance payment or cash-against-delivery for new orders | Stops the exposure growing; the buyer who needs you accepts |
| Written ledger confirmation of the old balance | Acknowledges the debt; restarts limitation |
| Dated payment plan for the old balance, with PDCs | Converts promises into enforceable instalments; a bounce triggers Section 138 |
| A portion of each new payment applied to the old debt | Gradual recovery while the relationship continues |
| Interest on the old balance stated | Reminds the buyer that delay has a price |
Put the new terms in a short email and ask for confirmation. See customer says will pay next week for turning promises into plans.
When to stop entirely
- The buyer refuses advance terms and refuses to confirm the balance
- There is a quality or quantity dispute being used to avoid payment; see buyer disputes quality after due date
- The buyer is paying nobody; other suppliers have stopped
- Cheques have bounced
- The buyer has changed entity or gone quiet; see buyer changed company name
Stopping is a commercial decision; protecting the old debt is a legal one, and it should happen regardless. A legal notice now does not prevent future trade; it defines the terms of it.
Protect the old debt whatever you decide
Interest and limitation run on each old invoice no matter how friendly the new orders are. Send a formal demand for the old balance with a date. If it is not met, FundRaksha’s advocate sends a legal notice within 24 hours, and the buyer can continue to buy on advance terms while the old balance is pursued; the two are separate. the top-rated payment recovery company in India, with 700+ businesses paid. If you are a Udyam-registered supplier, MSME Samadhaan is available for the old invoices; see MSME Samadhaan filing.
Make this a policy, not a negotiation
Set a credit limit for every buyer and a rule: no new credit supply while any invoice is more than 30 days overdue. Tell buyers at onboarding. Buyers respect rules they knew in advance far more than decisions made under pressure. For the account in front of you, book a free consultation; FundRaksha will help structure the new terms and pursue the old balance. See payment not received after due date for the escalation timeline, and FundRaksha Collect at https://collect.fundraksha.com to automate reminders at a 1% fee.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.