A manufacturer selling to dealers and business buyers should check each buyer before the first credit order and again before large orders: GST status and filing record, MCA company data for companies, court cases over dues, reports from other suppliers and, with consent, the owner's credit record. Set a credit limit per buyer, put the terms in a signed purchase order, and if you are a Udyam-registered micro or small enterprise, use the MSMED Act's 45-day limit and Section 43B(h) in your terms.
Before the first order
- GST check. Status, names, constitution and registration date. Start with the free GST lookup.
- Company check. If the buyer is a company or LLP, look up its MCA master data on the company search: status, class, paid-up capital and age.
- Filing record and supplier reports. The Advance GST report shows delays and missing returns and defaults reported by other suppliers.
- Court cases and owner's credit record. The GST + Financial report adds court cases, tribunals and FIRs, and the owner's credit score (with consent), and suggests terms.
- Written terms. A signed purchase order or agreement with the credit period, interest on late payment and jurisdiction.
Use the MSME rules if they apply to you
If you are a Udyam-registered micro or small enterprise, Section 15 of the MSMED Act requires the buyer to pay within the agreed period, which cannot exceed 45 days from acceptance (15 days if nothing is agreed in writing). Late payment carries compound interest at three times the RBI bank rate. Under Section 43B(h) of the Income-tax Act, a buyer that pays late can deduct the expense only in the year it actually pays.
Print your Udyam number and the MSME status on your invoices so buyers are on notice. More in credit terms for B2B sales and FundRaksha Legal's guide to Section 43B(h).
Managing dealers after onboarding
- Set a credit limit and credit days for each dealer in Receivables and watch the ageing.
- Add key dealers to the watchlist for monthly alerts on GST status, court cases and defaulter reports.
- Import your Tally bills-receivable export into the web app so receivables stay current.
- Give your finance team and CA access through the web app for teams.
- Hold dispatches to dealers with overdue bills.
When a dealer delays
Start with follow-up calls and emails, then a legal notice. For larger dues, FundRaksha Legal handles advocate-led recovery, and a micro or small enterprise can file an MSME Samadhaan reference. See how to recover money from customers.
Frequently asked questions
How should a manufacturer check a new dealer?
Verify the GSTIN and filing record, check MCA data if it is a company, look for court cases and reports from other suppliers, and fetch the owner's credit record with consent. Then start with a modest limit.
Can a buyer insist on 90-day credit from an MSME manufacturer?
Not lawfully, if the manufacturer is a Udyam-registered micro or small enterprise. The MSMED Act caps the agreed period at 45 days from acceptance.
What is Section 43B(h)?
A rule in the Income-tax Act under which a buyer can deduct payments due to a micro or small enterprise only in the year it actually pays, if it pays after the MSMED Act time limit.
How often should I re-check dealers?
Before large orders and at regular intervals. The watchlist re-checks GST status, court cases and defaulter reports every month.
This guide is general information for Indian businesses, not legal or tax advice. GST data shown by any tool comes from public records and should be confirmed on the GST portal before you act on it.