Payment delays have for long been a huge problem for India Inc. An EY report in 2018 estimated that Rs 1.8 lakh crore was trapped as receivables. But it is the medium, small and micro enterprises (MSMEs) who feel the pinch the most. Media reports estimate that large corporations owe Rs 40,000 crore and PSUs Rs 48, 000 crore to MSMEs.
According to a recent report by Zinnov, India has over 75 million small and medium businesses that contribute 40% to the gross domestic product, employ 180 million people and contribute 52% of India’s $535 billion exports. Yet, with limited financial means, MSMEs often swing between life and death. Due to corona virus effect, many MSMEs may shut down shops and others either may become bankrupt or continue to work at a lower capacity than that in pre-covid times.
“The whole concept of slow payments is a huge global issue,” Previse co-founder and CEO Paul Christensen tells Forbes in an interview. “It is a huge global opportunity that no-one has cracked yet. Given the problem is so big, why has no-one cracked it yet? Everyone has tried to solve the problem using process, and changing process at large organisations is really hard.”
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Choked by dues: What efforts are being taken to ease the biggest problem faced by Indian MSMEs?
Haggling is an art. Bengaluru-based Amarpreet Kalkat, 41, cofounder of Frrole - a social intelligence startup - is trying to master it these days. The six-year-old startup has 40-plus customers, mostly mid-to-large firms in media and consumer businesses. Recently, one of them refused to pay his subscription dues of six months.
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