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Every MSME owner knows this feeling: Sales are happening. Work is moving. But cash in the bank still feels tight.
When you look closely, the problem is rarely “no business”. Most of the time, the problem is no clear visibility on collections.
Who will pay this week? Who is already overdue? Which payments are stuck in disputes? Which customer only promises but never pays on time?
The surprising truth is this:
👉 Most MSMEs don’t have a collection problem.
👉 They have a collection data problem.
Let’s talk about how MSMEs can actually collect the right data, without heavy systems or big investments.
1️⃣ It Starts With Customer Master Data (At the First Sale)
In many MSME, a sale begins on a phone call or WhatsApp. We raised the invoice. We dispatched the material. But no one properly records:
- Credit period
- Payment mode
- Who handles payment on the customer’s side
Later, when the payment is delayed, the team doesn’t even know whom to chase.
What works better: At the first sale itself, capture just these basics:
- Legal name of the buyer
- GSTIN
- Accounts contact person & mobile number
- Credit period (30/45/60 days)
- Preferred mode of payment
Real example: A metal trader added just one extra column — “Customer accounts person name”. Follow-ups reached the right person instead of the purchase team. Collections improved within two months.
2️⃣ Invoice-Level Data Must Be Clean and Complete in MSME
Many MSMEs raise invoices properly, but they don’t track:
- Due dates
- Dispatch proof
- POD (Proof of Delivery)
And this is where disputes begin.
What to capture daily:
- Invoice number & date
- Due date
- Invoice value
- Customer name
- Dispatch / POD reference
This can be maintained in:
- Tally /Zoho/QuickBooks/ Any accounting software
- Or a simple daily Excel register
Real example: A textile unit often heard, “Material not received” as the reason for delayed payment. Once they started linking POD with invoice data, disputes reduced sharply and so did delays.
3️⃣ Receivable Ageing Must Be Reviewed Weekly, Not During Audit in MSME
Most MSMEs look at ageing once in a few months, usually when auditors ask.By then, the real damage has already happened.
What should be reviewed weekly:
- 0–30 days
- 31–60 days
- 61–90 days
- Above 90 days
Real example: A packaging unit found that just 3 customers formed 55% of its 90+ days overdue. We paused fresh credit to these customers. Within one quarter, working capital pressure reduced significantly.
4️⃣ Payment Data Must Be Linked to Bank Credits - MSME
In many MSMEs, the only thing checked is: “Bank balance has increased.”
But the real work is to link:
- Who paid
- Against which invoice
- How much
- Whether TDS was deducted
What helps:
- Daily bank statement download
- Simple receipt register
- Matching UTR/cheque to invoices
Real example: A service firm found ₹6.5 lakh sitting in bank but not adjusted to any invoices. Their outstanding report showed overdues for months only because we didn’t match the bank credits.
5️⃣ Follow-Up Data Is as Important as Invoice Data for MSME
This is the weakest link in most MSMEs.
Usually: Sales team says, “I will follow up.” No one records it.Two weeks later, no one remembers what they promised.
What should be recorded after every follow-up:
- Date of follow-up
- Person spoken to
- Customer response
- Promised payment date
- Any dispute raised
This can be:
- A simple Google Sheet
- A CRM
- Even a structured WhatsApp Business log
Real example: A machinery supplier started logging just 3 lines after each follow-up call. Defaulters reduced because customers realised we were tracking them systematically.
6️⃣ Dispute Data Must Be Captured Separately in MSMEs
Many receivables are delayed not due to lack of money, but because of:
- Rate mismatch
- Quantity issues
- Quality complaints
- GST differences
What should be recorded:
- Dispute reason
- Amount under dispute
- Supporting documents
- Status (open / resolved)
Real example: A food processing MSME found ₹18 lakh stuck in “pending” which was actually already resolved verbally. Once dispute data was cleaned, their real outstanding figure dropped sharply.
7️⃣ From Data to Control — Simple Monthly Metrics for MSMEs
Once the basic data is in place, MSMEs can easily calculate:
- Days Sales Outstanding (DSO)
- Collection efficiency %
- Overdue as a % of total receivables
- Top 5 customer exposure %
These don’t need advanced systems. They only need:
✅ Clean invoice data ✅ Clean bank matching ✅ Regular ageing review
8️⃣ Where AI Fits in (Without Making It Complicated)
Some MSMEs now use basic automation and AI to:
- Predict which customers may delay
- Send automatic reminders
- Forecast next month’s collections
- Flag unusual drops in payments
But one truth remains: 👉 AI only works when the basic data is already clean. Dirty data only produces faster wrong results.
A Simple Truth From the Ground
When collections are weak, most owners believe the reasons are:
- Tough market
- Bad customers
- Slow economy
But in practice, it usually comes down to:
- Incomplete invoice data
- No proper bank matching
- No follow-up records
- No dispute monitoring
The day a business clearly sees:
- Who owes
- Since when
- Why it is pending
- When the next payment is expected
Collections start improving — naturally, without pressure or legal steps.
