Rating of Buyers by MSMEs On Timely Payments & Meeting Commitments To Be A Game Changer

New Delhi, Aug 16 (KNN) To hold big companies accountable for delaying payments of small business a rating agency needs to be formed to give score to the big firms who treat MSMEs poorly, said T.K. Arun, Former Editor, the Economic Times (ET).

Addressing a seminar on Reducing the Cost of Litigation for MSMEs organised by FISME recently, he mentioned agencies are required to be built to hold the companies accountable for non-payment.

The senior journalist spoke about how the GST was taken as a curse by everyone, but it turned out to be for the betterment of trade.

Expressing his views at great length in ET’s edit page on Wednesday, he said that rating would impact the big company’s reputation, credit-rating score and ESG rating.

He is of the opinion that the rating agency should also rate GoI and state governments for revealed, as opposed to claimed, ease of doing business, depending on how fairly government departments and state-owned enterprises transact with small companies.

Outlining the struggles MSMEs face in accessing bank loans, he pointed out that MSMEs get hardly 15% of their finance from banks and rely on expensive credit from NBFCs and informal sources.

Delivering the special address on the occasion last week in Delhi, he emphasized that the ESD component enforces penalties on organizations based on their inability to compensate vendors.

He proposed that arbitration presents a more effective method for resolving such issues. Additionally, he pointed out the contradiction between the Government's pro-business stance and its inadequate treatment of vendors.

Arun concluded his address by underscoring the potential of leveraging existing resources to bridge the gap between the government and vendors.

Morever In his edit, Arun suggested that the solution for delayed payments is a combination of institutional accountability, technology and the threat of reputational damage for errant Megcorps.  (KNN Bureau)