Article · 20 min read

Net 30/60/90 Payment Terms in India: The Complete Guide

Treelife Free Beginner India

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.

  • 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.
Open on treelife.in ↗

The question it answers

  1. Should I bill monthly or annually when I am small and every rupee of runway counts?

Read with it

  1. A short, clear statement of the four reasons annual wins for a small company: cash today, forecastable revenue, materially... Maxio Article · 8 min read 4 Major Advantages Of Annual vs. Monthly Subscription Billing Barrow Hamilton
  2. Connects the billing decision to the number that actually matters, which is how long you survive. Gives you three ratios to... Lighter Capital Article · 14 min read SaaS Cash Flow Analysis Explained Lighter Capital
eChai Partner Brands The partnership →