A Big Company’s Payment Date Is A Small Company’s Payroll Date - Souradeep Ganguly

For a large company, an invoice awaiting payment may be part of a routine process. For the small business that raised it, that same invoice can determine whether salaries are paid, materials are purchased and the next order is accepted.

The gap between an invoice and the money reaching a supplier is substantial. Reporting on Recordent’s Indian SME Receivables Report 2026, The Times of India noted an invoice payment cycle of 73 days, despite 82.6% of invoices carrying credit periods of zero to 30 days. The report analysed approximately 1.1 lakh MSMEs and more than one million transactions.

For a small business, that waiting period can span more than two monthly payroll dates. Employees’ salaries, raw-material purchases and transport expenses continue to fall due while money remains tied up in invoices. The owner may need to borrow, use personal savings or postpone purchases to keep operations running.

The pressure can also pass to other businesses. Atradius’ 2023 India survey found that 55% of businesses polled delayed payments to their own B2B suppliers to maintain liquidity. One delayed payment can therefore contribute to a chain of cash-flow problems across suppliers and smaller vendors.

This is why payment behaviour deserves leadership attention. The money retained by one company may be the money another business needs to pay its people and fulfil its next order.

This is where India’s working-capital conversation needs to begin.

Around 2019, our exposure to enterprise payment workflows brought a recurring disconnect into focus. A supplier could complete an order, deliver the goods and have its invoice approved, yet wait another 60–90 days for payment. Meanwhile, its own commitments continued to fall due.

What stayed with us was that neither side necessarily considered the transaction a problem. The buyer was following agreed payment terms. The supplier had made a sale, perhaps even a profitable one. But the money needed to keep the business running remained unavailable.

Profitability on paper offered little comfort when salaries, transportation expenses and payments to smaller vendors were due.

We often discuss this situation as a shortage of credit. That is part of the picture. The more basic question is why a business that has already delivered value must arrange additional financing to sustain itself until payment arrives.

Borrowing can bridge that gap, but it comes with a cost. When suppliers repeatedly finance the wait for their customers’ payments, that cost becomes part of doing business. It can reduce the margin on an otherwise sound order.

There is also a difference between an overdue payment and a long, agreed credit period. Both can create pressure, but they require different responses. Buyers should resolve overdue obligations promptly. Where longer terms are necessary, they should consider how suppliers can access funds during the waiting period.

What particularly stood out to us was the imbalance in access. A corporate buyer might have established banking relationships, while a smaller supplier with an approved invoice still struggled to secure short-term liquidity.

That observation shaped the thinking behind InvoRush.

We wanted to bring financing options into the buyer–supplier transaction itself. Through InvoRush, a supplier with an approved, eligible invoice can request early payment. A financing partner evaluates the request and, if approved, disburses funds directly to the eligible beneficiary. The buyer settles its obligation on the agreed due date.

InvoRush provides the technology that connects these steps; it is not the lender.

Financing still involves interest or a discount. Depending on the arrangement, the supplier, buyer or both may bear that cost. Being clear about those terms matters as much as making the process easier.

But financing cannot replace responsibility for payment. Corporate leaders should treat payment performance as part of supplier management, alongside quality, price and delivery. Suppliers need clear timelines, timely invoice approval and someone accountable when the process stalls.

India’s working-capital challenge is sometimes the distance between earning money and receiving it. Closing that distance requires attention from buyers, financiers and technology providers alike.

A payment decision reaches beyond a finance department. It reaches the supplier’s employees, smaller vendors and the owner trying to keep every commitment. Their deadlines deserve a place in the buyer’s decisions.

The above information is the author's own; Outlook India is not involved in the creation of this article.