# 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.**

## What it means

The credit period sets the due date. "30 days credit" means the buyer should pay within 30 days, counted from the invoice date, the delivery date or the date the goods are accepted, depending on what you agreed. Write the starting point down, because it often causes disputes.

## Why it matters for getting paid

Without a clear credit period, there is no clear "overdue". A due date printed on every invoice makes reminders natural and fair.

For Udyam-registered micro and small suppliers in manufacturing or services, Section 15 of the [MSMED Act](/en/glossary/msmed-act) caps the agreed credit period at 45 days from acceptance, and sets a 15-day default when nothing is agreed in writing. For example, goods delivered and accepted on 1 August with no written agreement should be paid by 16 August, and interest runs from 17 August. Late payment attracts compound interest for the buyer and, under [Section 43B(h)](/en/glossary/section-43b-h), now section 37(2)(g) of the Income-tax Act, 2025, can delay the buyer's tax deduction.

Retail and wholesale traders are excluded from these MSMED provisions by Ministry of MSME Office Memoranda of 2021. If you are a distributor or wholesaler, your own written terms do the work: agree the credit period in writing and, if you want interest on late payment, write the rate into your quotation or invoice terms.

Practical tips:

- Mention the credit period in your quotation, order confirmation and invoice.
- Print the actual due date, not just "30 days".
- Send a reminder a few days before the due date.
- Compare your agreed period with your [DSO](/en/glossary/dso) to see how late buyers really pay.

**Example:** An invoice of ₹75,000 dated 1 October with 30 days' credit from invoice date is due on 31 October.

Read about the [MSME 45-day rule](/en/blog/msme-45-day-rule) and how [udhaar](/en/glossary/udhaar) affects cash flow.

Source: https://udhaar-wapas.com/en/glossary/credit-period