Glossary
The words you’ll hear when you sell on credit and recover payments — explained simply.
Credit Period
The credit period is the number of days, agreed between supplier and buyer, after invoice or delivery within which the buyer must pay.
Demand Letter
A demand letter is a formal written request from a supplier to a buyer to pay a stated overdue amount by a clear deadline.
DSO (Days Sales Outstanding)
DSO, or Days Sales Outstanding, is the average number of days a business takes to collect payment after making a credit sale.
Khata
A khata is a ledger or account book, the bahi-khata, where a business records credit given to each buyer and payments received.
Legal Notice
A legal notice is a formal demand, usually sent through an advocate, that tells the buyer legal action may follow if the dues are not paid.
MSME Samadhaan
MSME Samadhaan was the Ministry of MSME's delayed-payment portal. New applications by micro and small suppliers are now filed on the MSME ODR portal, odr.msme.gov.in.
MSMED Act
The Micro, Small and Medium Enterprises Development Act, 2006 is the central law that defines MSMEs and protects micro and small suppliers from delayed payment.
Overdue Ageing
Overdue ageing groups unpaid invoices by how many days past due they are, usually 0–30, 31–60, 61–90 and over 90 days.
Promise to Pay
A promise to pay is a buyer's clear commitment to pay a specific amount by a specific date, recorded so it can be tracked as kept or broken.
RBI Bank Rate
The Bank Rate is a rate published by the Reserve Bank of India; three times this rate is the interest on delayed payments to micro and small suppliers under the MSMED Act.
Section 43B(h)
Section 43B(h), now section 37(2)(g) of the Income-tax Act, 2025, lets a buyer deduct late dues to a micro or small supplier only in the year they are actually paid.
Udhaar
Udhaar is goods or services given to a buyer now with payment promised later, the everyday Indian name for trade credit between businesses.
Udyam Registration
Udyam Registration is the government's online MSME registration that classifies a business as micro, small or medium and issues an Udyam number.
UPI Payment Link
A UPI payment link is a tappable link or QR code that opens the buyer's UPI app with your account and the exact amount already filled in.