Elevated working capital pressurises SMEs due to rising receivables: Report

New Delhi, April 8 (KNN) Small and micro enterprises (SMEs) in the country are going through elevated working capital pressures largely due to rising receivables with their buyers and lack of a similar increase in creditors, according to ratings and research firm India Ratings & Research (Ind-Ra). 

According to the data of the top 1,500 non-financial large corporates analyzed by Ind-Ra, the payables by top 10 large corporates to SMEs, as a share of their total payables, had jumped to 1.24 per cent in FY21 from 0.35 percent in FY18, and 0.1 percent in FY12.

The rise in payables was sharpest among the top 51-100 corporates to 2.76 percent in FY21 from 0.12 per cent in FY15. “Although the quantum of payables to SMEs is less significant as opposed to the total payables for large entities, it is onerous for SMEs,” Ind-Ra said in its study.

The increase in receivables was largely due to the higher commodity prices, particularly key inputs such as steel, cement and crude derivatives, along with delayed payments from their large customers. 

Additionally, credit terms from their key suppliers have not been extended, according to the analysis. (KNN Bureau)