MSME Samadhaan for Delayed Payments: Simple Guide for Small Businesses
This guide is for micro and small business owners, especially those operating for one to three years, who are waiting for payment from a customer. It explains the general process. Registration disputes, old invoices and contested supplies may require legal advice.
Quick summary
- Fresh delayed-payment applications are now submitted through the MSME Online Dispute Resolution Portal.
- The process is available to eligible micro and small enterprises registered on Udyam or the Udyam Assist Platform.
- Written payment terms cannot exceed 45 days from acceptance or deemed acceptance. Without a written agreement, payment is generally due within 15 days.
- Delayed payment attracts compound interest, calculated every month, at three times the Reserve Bank of India Bank Rate.
- A strong claim needs correct registration details, proof of supply, an accurate ledger and records of any buyer objection or part payment.
One unpaid invoice can affect salaries, supplier payments, stock purchases and daily cash flow. The Micro, Small and Medium Enterprises Development Act, 2006 gives eligible micro and small suppliers a formal route to claim the unpaid amount and applicable interest. However, the success of a claim depends on the transaction dates and the records available.
What Is MSME Samadhaan?
MSME Samadhaan was launched by the Ministry of Micro, Small and Medium Enterprises on 30 October 2017 to help micro and small enterprises raise and track delayed-payment matters.
The Ministry launched the MSME Online Dispute Resolution Portal on 27 June 2025. It became the route for fresh delayed-payment applications on 15 October 2025. In 2026, a business starting a new claim should therefore use the ODR portal rather than older filing instructions for the Samadhaan portal.
The authority that deals with these claims is the Micro and Small Enterprises Facilitation Council, commonly called the MSEFC. State governments have established 161 Councils across States and Union Territories.
Delayed-Payment Cases at a Glance
| Position as of June 2026 | Official Figure |
|---|---|
| Applications received | 2,56,892 |
| Amount involved | ₹55,244.29 crore |
| Cases disposed of by MSEFCs | 58,148 |
Position as of June 2026
Official Figure
Position as of June 2026
Official Figure
Position as of June 2026
Official Figure
These Ministry of MSME figures show that delayed payments remain a widespread problem for small suppliers.
Who Can Use the Delayed-Payment Route?
| Requirement | What It Means |
|---|---|
| Business category | The supplier must qualify as a micro or small enterprise. Medium enterprises do not receive this specific recovery remedy under Chapter V of the MSMED Act. |
| Registration | The current MSE ODR Scheme lists micro and small enterprises registered on Udyam or the Udyam Assist Platform as eligible. |
| Registration timing | Registration obtained later does not normally protect contracts and supplies completed before registration. Check the registration, order, supply and invoice dates together. |
| Nature of claim | The amount should relate to goods supplied or services provided to a buyer. |
| Evidence | The supplier should be able to show what was ordered, what was supplied, when the buyer received it and how much remains unpaid. |
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Where a contract began before registration but supplies continued after registration, eligibility may depend on the facts and may require legal advice. An invoice shows that an amount was billed, but it may not prove that the buyer received the goods or accepted the service. Keep delivery and completion records with the invoice.
When Does a Payment Become Delayed?
Section 15 of the MSMED Act sets the payment deadline. The calculation depends on the written payment terms and the date of acceptance or deemed acceptance.
| Situation | Payment Deadline |
|---|---|
| Written payment terms | Payment is due on the agreed date, but the agreed period cannot exceed 45 days from acceptance or deemed acceptance. |
| No written payment agreement | Payment is generally due within 15 days from acceptance or deemed acceptance. |
| Written objection within 15 days | The acceptance date may move to the date on which the supplier resolves the objection. |
| No written objection within 15 days | The delivery or service date is treated as the date of deemed acceptance. |
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A purchase order mentioning 60 or 90 days does not extend the legal maximum beyond 45 days.
Example of the Payment Deadline
A micro enterprise delivers goods on 1 June 2026 and the buyer raises no written objection.
- With no written payment agreement, payment is generally due within 15 days.
- With written terms of 30 days, payment is due after 30 days.
- With written terms of 60 days, the legal maximum remains 45 days.
How Is Delayed-Payment Interest Calculated?
Under Section 16 of the MSMED Act, the buyer becomes liable for compound interest when payment is delayed. The interest is compounded every month at three times the Bank Rate notified by the Reserve Bank of India. This rule applies even if the contract mentions a lower rate or says that no interest will be paid.
As of 5 August 2026, the RBI Bank Rate is 5.50%. The delayed-payment interest rate is therefore 16.50% per year, compounded monthly. The Bank Rate can change, so check the applicable rate when preparing the calculation.
Illustrative Interest Calculation
Suppose ₹4,20,000 remains overdue for five complete months. At 16.50% per year with monthly compounding:
| Particular | Amount |
|---|---|
| Unpaid principal | ₹4,20,000 |
| Approximate interest for five months | ₹29,680 (₹4,20,000 × [(1 + 16.5% ÷ 12)⁵ - 1]) |
| Approximate total | ₹4,49,680 |
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This example is only for explanation. The actual amount can change based on the exact due date, part payments and changes in the Bank Rate.
What Should You Do Before Filing?
Before filing, consider sending the buyer a final written payment reminder. This is a useful practical step, although it is not a separate legal requirement under the MSMED Act. Mention the invoice number, supply date, payment due date, unpaid principal, part payments and a reasonable final date for payment. Keep the message professional and avoid threats.
Next, check whether the buyer has raised a genuine dispute about quantity, quality, delivery or service completion. If an objection was resolved, keep written proof of how and when it was resolved.
Records to Keep Ready
- Udyam or Udyam Assist registration details
- Purchase order, work order or agreement
- Invoice and customer ledger
- Delivery challan, goods receipt note or service-completion proof
- Bank statement and part-payment details
- Credit notes, debit notes or sales-return records
- Payment reminders and buyer responses
- Written objections and proof of resolution, where applicable
Clear billing and receivable records make follow-ups and claim preparation easier. With mazu, businesses can create invoices, track outstanding amounts and review customer-wise receivable and ledger reports in one place.
Also consider whether you should continue supplying the buyer. A regular customer can still create serious cash-flow risk if each new order increases an old unpaid balance.
How to File Through the MSME ODR Portal
The exact screens and document requirements can change, so follow the current instructions shown on the portal.
- Confirm Eligibility: Check the enterprise category, registration status, transaction dates and payment deadline.
- Work Out the Claim: Show the original amount, credit notes, returns, payments received, remaining principal and interest separately.
- Enter the Correct Business Details: Use the supplier’s registered details and the buyer’s legal name rather than only a shop or brand name.
- Choose the Correct Council: Section 18 gives authority to the MSEFC covering the supplier’s location, even when the buyer is in another state.
- Upload Readable Records: Keep invoice-wise documents consistent with the application and customer ledger.
- Submit and Track the Matter: Save the acknowledgement or reference number and respond to portal or Council notices within the stated time.
Do not assume that every Council follows exactly the same administrative process. Check the portal and the relevant Council’s instructions for hearings, documents and any applicable charges.
What Happens After Filing?
The ODR process gives both sides an opportunity to settle before a final decision.
| Stage | What Happens |
|---|---|
| Pre-MSEFC negotiation | The buyer and supplier communicate through the portal and try to reach a settlement before formal Council proceedings. |
| Conciliation | The Council or an institution chosen by it helps the parties try to reach an agreed settlement. |
| Arbitration | If conciliation fails, the Council or a referred institution can decide the dispute and issue an award. |
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The portal also provides a Digital Guided Pathway. It gives the parties an indication of the likely outcome and can help them consider a practical settlement.
Section 18 says that a reference should be decided within 90 days. This is a legal target, not a guaranteed completion period. The actual time can depend on the Council, the documents and the complexity of the dispute. Any settlement should be recorded in writing. It should clearly state:
- The principal amount being paid
- How interest will be treated
- The payment dates or instalments
- Whether any part of the claim remains open
What Happens If the Buyer Challenges the Award?
Section 19 of the MSMED Act places an important condition on a buyer who applies to set aside an award.
A court cannot consider the buyer’s application unless the buyer deposits 75% of the awarded amount. The court may also direct that part of the deposited amount be released to the supplier while the challenge is being heard, subject to suitable conditions.
The deposit requirement does not mean that the supplier automatically receives the complete award as soon as the buyer files the challenge.
Conclusion
MSME Samadhaan gives eligible micro and small suppliers a formal route to recover overdue payments through the MSME ODR Portal. Before filing, check that your registration covers the transaction, calculate the correct payment deadline and organise proof of supply, invoices and payment records.
Review outstanding invoices regularly and send written reminders early. Taking action before several invoices become overdue can reduce pressure on your working capital.