1 Minute Business Gyan – Day 2
When Sales Are High, But Cash Is Low – The Danger of Delayed Payments
“Hamari sales toh bohot achhi hai, par paisa time pe nahi aata.” I’ve heard this countless times from MSME owners. They feel proud of their revenue growth, but the reality hits when salaries are due and cash isn’t in the bank.
Let me share a real case:
A manufacturer supplying packaging materials had grown fast. Monthly sales? ₹30–40 lakhs. But payment terms with buyers were 90–120 days. No clear follow-up. No overdue penalties. No control.
Within 3 months:
- Cash reserves dried up
- Vendor payments delayed
- GST & EMI dues piled up
- Bank overdraft maxed out
Despite good sales, they were in a cash flow crisis and asking us for more money/overdraft.
How Late Payments Hurt Your Business?
1. Cash Flow Gets Stuck
Even if your business is profitable on paper, it doesn’t matter if the money isn’t in your account. You can’t pay salaries, rent, suppliers, or invest in your growth. You’re basically working for free while your clients are holding your money.
2. You Miss Growth Opportunities
You might have growth plans, new hires, a new product, or marketing campaigns. But all of that needs one thing: cash. If your clients delay payments, you’re left waiting instead of growing.
3. You End Up Taking Loans
To meet urgent expenses, you might start taking loans or dipping into your savings usually at high-interest rates. This creates more stress and adds pressure on your profits.
4. You Strain Relationships
If you can’t pay your suppliers on time, because your payments are delayed that causes tension. It weakens trust and makes future business harder.
5. You Waste Time and Energy
You or your team end up spending hours chasing invoices instead of building the business. That’s time and energy you’ll never get back.
The Business Gyan:
- Revenue ≠ Cash Flow
- Long credit periods from customers can silently choke your business
- You can be profitable on paper but bankrupt in practice
How to Protect Your Business?
1. Be Clear From the Start
Set clear payment terms and get them in writing. Define due dates, grace periods, late fees (if any), and preferred payment methods.
2. Send Smart Invoices
Use professional invoicing tools. Send invoices promptly, and follow up with friendly reminders at regular intervals.
3. Do Basic Background Checks
Before working with a new client, research them. Check reviews or ask other business owners about their payment behavior.
4. Use Invoice Financing or Credit Tools
Some platforms allow you to unlock cash from unpaid invoices or offer quick working capital. You don’t need to wait endlessly anymore.
5. Track and Record Everything
Maintain solid documentation. If ever needed, this helps in disputes or when taking legal action.
From a Credit Officer’s Lens:
When assessing a loan, we don’t just look at turnover we analyze:
- Debtor days
- Collection cycles
- Actual inflow patterns
If your receivables are out of control, you become a high-risk borrower, even if your sales look great.
Cash is king. Control your collections.
Don’t let your growing business die of financial suffocation.
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Join the Conversation
- Have you dealt with delayed payments?
- What helped your business handle this better?
Drop your experience below or DM me if you’d like to vent or share. Let’s help each other grow faster and fairer.
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