Recordent, a leading credit and payments reporting platform for B2B transactions, conducted a survey on B2B payment trends and challenges faced by over 2800 of its member businesses, from across the country. 55% of these member businesses hail from eight major business hubs, including: Mumbai, Ahmedabad, Kolkata, Bengaluru, Chennai, Delhi, Hyderabad, and Pune. And the report below sheds light on the payment trends and challenges faced by these MSMEs. The timeframe of two financial years (FY 21-23) was taken into consideration.
According to the report, Hyderabad, Kolkata, Chennai, and Pune exhibited concerning payment behaviour, with nearly 52% of payments made or received by enterprises remaining overdue for more than 90 days. In contrast, Mumbai demonstrated a much better payment behaviour with 29% of payments overdue for more than 90 days. Other cities such as Bengaluru, Delhi NCR, and Ahmedabad showed varying degrees of delayed payments beyond 90 days, with percentages ranging from 42% to 49%.
Diving into the statistics of payments collected in time, Mumbai and Ahmedabad lead with 36% and 38% of trade receivables collected in time. In stark contrast, Chennai, Pune, and Hyderabad lag significantly, with dismal figures of 18%, 19%, and 22%, respectively. This data highlights a notable disparity in repayment efficiency among Indian cities.
In-depth analysis of SME payment behaviour reveals five key factors influencing creditworthiness. Comprehensive credit assessment of new customers utilizing GST, ITR, PF filings, financial statements, and credit bureau reports is critical. Effective communication via timely reminders, payment ledgers, and statements to the right contacts is essential. Automating routine tasks like reminders, statements, and notices significantly enhances efficiency. Early warning systems that detect payment anomalies are crucial for timely interventions. Lastly, periodic review of customer credit behaviour over 45/90/180 days through sales, receipts, and credit information analysis is vital for effective sales and credit exposure management.
Commenting on the report, Winny Patro, CEO and Co-founder of Recordent, said, “This survey provides valuable insights into the payment dynamics across major Indian cities, underscoring the challenges faced by MSMEs and SMEs. Businesses are increasingly looking for transformational tools that can streamline collections management, helping to overcome these challenges. By leveraging modern technology solutions like ours, we can effectively track payments and mitigate potential losses for companies.”
