/ How do I manage customers who do not pay on time?

Over the past few years, the Indian economy is growing tremendously. Today India is one of the hotspots for doing business across the world. It offers numerous benefits such as best-in-class infrastructure, skilled manpower, abundant resources, favourable government policies, ease of doing business in the country, etc. This attracts more and more companies to incorporate their business in India. In fact, many foreign companies aim for selling in India by setting up their regional base in the country.

Being unknown to the new land, foreign companies often find it difficult to manage their payments in India. In this article, we try to explain the common payment practices in India and the payment behaviour of the customers.

The payment behaviour of customers in India is similar to that of other countries. It majorly depends upon the financial well-being of the customer’s organization. Therefore, it is crucial to assess the financial health of the customer’s organization before entering into any transaction of selling in India. The credit assessment will help you understand the likelihood of receiving payments from your customers and their payment discipline.

In order to boost business, companies in India grant trade credit to their customers. It is the lifeline of running a successful business. But, when you allow trade credit to your customers, it is important for you to know if they are capable of meeting the agreed terms of the contract. Verifying your customers saves your business from potential risks.

In order to access the creditworthiness of your customer, you can ask them to fill up a form that contains details such as the registered address of the company, details of key operating personnel, PAN and TAN of the organization, GST registration numbers if any, etc. Apart from this, you can analyze the customer’s organization by using the information available in the public domain. It will help you understand the company’s financial status, order status, inventory position, internal processes, etc. Another effective way is to check the ratings given to these companies by credit rating agencies. It provides a holistic view of the creditworthiness of the company.

Maier Vidorno Altios’s sales order management team can help you effectively set up your business in India. Our experienced team can also handle your order processing, local logistics, import, export, payment and more.