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India
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Beginner
The half of the cash flow problem that is specific to selling in India: the MSMED Act 45 day ceiling, GST on late payment interest, a collections cadence, and TReDS invoice discounting if you need the cash sooner than your buyer wants to pay.
Net 30/60/90 Payment Terms in India: The Complete Guide
From Treelife 20 min read
- The MSMED Act caps payment at 45 days from acceptance where there is a written agreement, and 15 days where there is not.
- Breaching that triggers statutory interest at three times the RBI bank rate, around 19.5 percent a year compounded monthly.
- Interest or late fees you charge are part of the value of supply under Section 15(2)(d), so GST applies to them.
- A Rs 10 crore ARR business moving from net 30 to net 90 locks up about Rs 1.6 crore in receivables, roughly Rs 19 lakh a year in financing.
- Indian enterprises usually start the clock at the Goods Receipt Note, not the invoice date, so net 45 becomes net 35 or worse.
