MSME delayed payments: how a small brand gets paid

Forty-five days is a ceiling, not a default

Section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 says the buyer must pay on or before the date agreed in writing with the supplier, and that in no case may that agreed period exceed 45 days from the day of acceptance or deemed acceptance. With no written agreement, payment falls due before what the Act calls the appointed day, which section 2(b) sets at the day after 15 days from acceptance expire.

That order matters, because most summaries invert it. Forty-five days is the outer limit on what the two of you may agree, not what you get by default. Silence does not hand the buyer 45 days. Silence hands them 15.

The clock also starts at acceptance, not at invoice and not at dispatch. Issue a written acceptance or rejection promptly and keep the proof, because deemed acceptance is what you will be arguing about a year later.

A purchase order cannot buy more time

This decides whether the terms line on a buyer’s standard onboarding pack matters at all, and the answer sits in the text. Section 15 says the agreed period shall in no case exceed 45 days. Section 16 makes the buyer liable notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force. Section 24 then gives sections 15 to 23 effect notwithstanding anything inconsistent in any other law.

Taken together, a 90 day term on a purchase order does not displace the statutory ceiling. You can sign it. Signing it does not extinguish the right. Worth knowing before you negotiate a clause that cannot bind you, and a separate question from the contract terms that matter after the honeymoon, which cover service levels, liability and exit rather than payment timing.

The interest, and the arithmetic nobody runs

Section 16 makes the buyer liable for compound interest with monthly rests at three times the bank rate notified by the Reserve Bank, running from the appointed day or from the day following the agreed date. Three times, and monthly compounding, are both in the bare section. The liability arises whether or not the supplier asks for it, and section 23 denies the buyer any deduction for that interest.

Then run the sum rather than repeating a rate. The RBI Bank Rate stands at 5.75 per cent as this is written, following the October 2026 policy meeting, so three times is 17.25 per cent a year, applied as 1.4375 per cent a month. With monthly rests that lands near 18.7 per cent over twelve months, so ten lakh rupees held for a year accrues roughly 1.87 lakh in interest alone. The Bank Rate moves. Recompute it on the day you raise the claim instead of carrying an old figure forward.

Udyam status, and the medium enterprise error

Two eligibility points, both widely stated wrongly.

The protection runs to micro and small enterprises only. Medium enterprises do not have it. The clue sits in the name of the body that hears the dispute, the Micro and Small Enterprises Facilitation Council. A medium enterprise chasing a late invoice is an ordinary commercial creditor.

On registration, the 2026 amendment makes filing the memorandum free and voluntary for every MSME, and the courts have long split on whether filing is a precondition to claiming under section 15. The practical answer is cleaner than the legal one: the government portal you file through asks for a valid Udyam registration. An unregistered supplier has an argument and no route. Register before the invoice is old.

Filing has moved, and the timeline is not what you were told

New delayed payment references no longer start on MSME Samadhaan. They go to the Ministry’s online dispute resolution portal, which opened in June 2025 and became the only route for new cases from 15 October 2025. Samadhaan still carries references filed before that date. Your reference goes to the Facilitation Council for your state, of which 161 are now established, and the Ministry presents the route as low cost. No published fee schedule exists to point to, so treat the cost as unconfirmed rather than free.

Now the part to be careful about. The decided in 90 days line in almost everything written on this subject comes from the original section 18(5). Section 18 has since been rewritten to run mediation under the Mediation Act, 2023, and the MSMED (Amendment) Act, 2026 writes explicit clocks into it: 90 days for mediation, 30 days to refer a failed mediation to arbitration, 90 days for the award. Those clocks are enacted and not switched on. The commencement notification of 12 October 2026 gave dates to most of that amendment and no date at all to the three sections covering dispute resolution and enforcement. Plan for a process measured in quarters, not for a statutory promise.

What an order is worth, and whether to use it

Where mediation fails, section 18 sends the dispute to arbitration and applies the Arbitration and Conciliation Act, 1996 as though an arbitration agreement existed, so the award is enforced as an arbitral award. A buyer wanting to challenge it has to deposit 75 per cent of the awarded amount first, under section 19, and that is the provision in this Act carrying real leverage. The 2026 amendment would add recovery as an arrear of land revenue through the District Collector, and would treat the amount as a debt recognised under the Insolvency and Bankruptcy Code, 2016. Both sit in the sections with no commencement date.

Which leaves the decision. This is a statutory claim for money owed on goods you delivered, not the operational money a platform owes you for its own failures, which is what marketplace reimbursement claims covers. Filing against a distributor you can replace is arithmetic. Filing against the chain carrying a third of your volume is a commercial judgment that outlives the receivable, and the category team will hear about it.

Most of what gets recovered is recovered before anyone files, by a supplier who is visibly able and willing to file. Build the file the way collections without wrecking the relationship sets out, then send the interest computation alongside the statement of account so the number sits in front of the person approving the payment run. Keep the reference as the thing you are ready to do, not the first thing you do, and save it for the account that has stopped engaging, which is the signal in when a customer stops paying.