MSME Receivable Management: TReDS Initiative
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Small and Medium Enterprises in India — Certificate Course on MSME.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the single most common cause of working-capital stress in MSMEs?
Delayed payment is the single most common cause of working-capital stress in MSMEs. Suppliers often wait 60, 90, or even 180 days to be paid after shipping goods.
How many challenges in trade receivables are identified for MSMEs in the MSME Receivable Management framework?
Eight challenges
Under Section 15 of the MSMED Act, 2006, what is the maximum payment period if there is a written agreement between buyer and MSME?
If there is a written agreement specifying a credit period, the buyer must pay the MSME supplier within 45 days.
What is the typical payment cycle (in days) that MSMEs face from large buyers, far exceeding agreed terms?
90 to 120 days
What is the payment deadline under Section 15 of the MSMED Act if there is no written agreement between buyer and MSME?
If there is no written agreement, the buyer must pay the MSME supplier within 15 days.
Under Section 16 of the MSMED Act, at what multiple of the RBI Bank Rate is compound penal interest charged on delayed payments?
Three times the RBI Bank Rate
At what rate is interest charged on delayed payments to MSMEs under the MSMED Act?
Interest on delayed payments is charged at 3 times the bank rate, compounded monthly, from the appointed day.
What is the effective penal interest rate under Section 16 of the MSMED Act when the RBI Bank Rate is 5.50%?
Approximately 16.50% p.a. compounded monthly
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