It has been observed that trade credit is one of the areas which is perceived by
MSMEs to be a major bottleneck in their business growth. Customers want credit
which in most of the cases goes beyond 90 days/120 days. With increased credit
comes the risk of delinquency. However the Government of India has put in place a
legal mechanism wherein the adequate protection is provided against this risk.
However this requires transactions to be conducted aligned to the provisions of this
statute. If the business transactions are conducted in a way which is aligned with
provisions of the statute the customer is bound to pay within the credit period
provided in purchase order or 45 days where no purchase order is issued or where
no credit period is specified in the purchase order.
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