When Should MSMEs Send a Legal Notice for Unpaid Bills in India?
If you have a client who owes you money. He tells you that he will pay you. Next week your CA team will email him again. He’ll say I’ll pay him later date. You have employees to pay salaries. Gst payments pending. Bills you have to pay as the owner of the business.
There are multiple scenarios as an MSME owner where someone can mess you up by not paying you back. Which in results delay's your business growing. Your business doesn't have cash flow because your client isn't paying you back. So you are taking loans to pay for your business.
You might be wondering, When to send legal notice to someone for not paying my bills in India?
You can send your customer a legal notice when the payment is due. According to MSMED act 2006 there are some conditions MSMED can demand to be paid. If you both agreed in writing that your client can’t ask for payment to be made after 45 days. Your client owes you more than 45 days you can start legal proceeding against your client.
Same goes for if your supplier hasn’t paid you back in 45 days. You both need to have agreed in writing.
Let’s say you supplied goods to one of your client at Noida. You supply your goods which were 8 Lakh Rupees. Your client accepts the goods and said he’ll pay you within 30 days. It’s been 60 Days after your client accepted the goods.
Your client tells you he’ll pay you, but its been days that he keeps telling you that. Should you wait for him to pay you or should you just send a legal notice?
There can be many factors that determine if you can send legal notice to a client. Did you have a purchase agreement, was your supply of goods delivered. Has your client paid you previously, what did your client say when you elligted them. Contact BK Singh Advocate via MSME Lawyers to know if you can recover money from your client. If your client has paid you or not. If you think he hasn’t paid you and your business is MSME you can send that person a legal notice.
If you run an MSME located at Delhi NCR, Gurugram, Faridabad, Meerut, Lucknow, Mumbai, Pune, Bangalore Hyderabad. You should know WHEN to send a legal notice to your client for not paying you. Read our complete guide on sending legal notices to clients who delay paying you below.
Here we’ve explained the laws which will be applicable in 2026. Limitation to send a legal notice, Documents required to file legal notice and much more.
Why You Should Care About MSME’s Delayed Payment In India 2026?
As an MSME owner you should really care about your unpaid invoices. Reason being if you don’t get paid on time. You don’t have many sources to get loans. You can always go to your bank or friends for help. But being MSME you want the people who are using your products to pay you.
Example. If you own a Printing shop in Delhi and someone owed you money. You supplied someone printing jobs worth of 4 Lakh rupees. Your client hasn’t paid you for past 2 months. Now your printing business will have no money to pay your employees salaries. You have to purchase paper for your employees to print. You'll have to pay electricity. If your client didn’t pay you in time. One invoice can create you have multiple invoices.
If you owned a business in Delhi that is situated in Industrial areas. Okhla, Mayapuri, Sahibabad, Greater Noida. Manesar, Faridabad, Ghaziabad. Noida, Gurugram, your clients might pay you after the time period.
Don’t think your client is trying to scam you. He might be going through a financial crisis. Or he might of thought there was something wrong with your product. Always keep your documents ready when thinking of taking legal action against your client. Remember sending a legal notice is the first step you take when your MSME hasn’t been paid.
You can always contact BK Singh Advocate to know if you should continue talking to your client. Or if you should go straight into sending a legal notice for not paying invoices. If you leave the situation like that it will cause more problems for you in the future. You might not have all the necessary documents to file for a legal notice. Or the person who used to talk to you at your clients company left. Leaving you without anyone to contact.
Quick Summary:
Applicable law to send legal notice to client who delays paying MSME’s
MSMED act – 2006
- If your client and you agreed on payment terms in writing. The payment terms cannot exceed 45 days.
- If your client and you didn’t agree to a payment term. Your client can send you a legal notice after the appointed day. The appointed day is 15 days after the period stated by MSMED act is over.
- Your client can be charged Interest if he didn’t pay you back on time. Interest can be claimed at the rate of 3 times of the bank rate notified by RBI. And this interest is calculated on monthly rest.
- You can take your client to MSEFC if he didn’t pay you back on time.
What Is a Legal Notice?
When your client hasn’t paid you on time you can send them a legal notice. Asking them to pay you what they owe you.
Does MSME Have Any Protection Against Defaulted Payment By Client?
Yes MSMED provide entrepreneurs protection against clients who don’t pay you on time. This section is available under chapter 5 of MSMED act 2006. Read below to learn more about this law.
Can all MSME’s send legal notice to their client for not paying?
NO just because your client owes you money and you have your udhayam certificate. Doesn’t mean you can go file a case against your client. You need to meet some requirements before your can successfully file a case against your client.
Here we’ve listed some common questions MSME’s ask us when they think about filing a legal case against their clients.
Does Udyam Registration Required To File MSME Delayed Payment Case?
Udyam registration is great if you want to take action against your client. But what if your client hasn’t been paying you for over a year. And you just recently got your Udyam registration.
Courts have seen cases like when did the MSME start their business. Because if your sales agreement started before you applied for UDYAM. It can become a issue. Make sure to check with your lawyer if you are eligible to file a case against your client under MSMED Act 2006.
Can a Trader be Classified as an MSME?
Yes if you registered yourself as a MSME under the trader head section. That doesn’t mean you can file a delayed payment case if your client owes you money.
Since you classified yourself as a trader you are buying and selling goods. If you provide a service to your client you can file a case. Consult with your lawyer to see if your firm is able to file a case under MSME Act 2006.
Can a medium scale industry receive the same benefits as small and micro?
Medium scale industry has access to the benefits under MSMED act 2006. But again make sure to take the right legal advice from MSME Lawyers. If your firm doesn’t fall under MSMED Act 2006. You can file a civil case against your customer who owes you money. BK Singh Advocate will let you know if you qualify to file a case against your client.
Information To Include in your legal notice
There is a lot of information you can place on a legal notice. If you get in contact with MSME lawyers we can draft you an legal notice. You want to client to know how much your owed and how you want to be paid.
Remember don’t place fake warnings on your legal notice. You want to keep your legal notice professional. Here are some information you want to include on your legal notice.
Details of both parties.
Include the correct name of your company. You also want to include the name of the firm who owes you money. Double check the spelling of the party you’re going to send the legal notice. You don’t want to send a legal notice to Delhi and went where your client is actually located in Noida.
On speaking about your agreement
Remind your client about the PO you’ve sent them. Tell them when you delivered the goods/services. Mention how much your client owes you. You can also mention if you have any reference of that purchase order you got.
State the dues your client owes you.
Remember to mention that you want X amount from your client. You want to separate the dues your client owes you and the interest your charging your client. If your client has paid you partial amounts. Make sure to subtract that from the total amount your client owes you.
Include the time limit to pay you.
Tell your client to pay you in X days. If you know your client is scamming you. You can mention on the legal notice that you’ll take legal action against him. Yes your letting your client know you are taking legal action.
There is no certain rule/schedule on when to send your client a legal notice. You might read some blogs that says to send your client a legal notice within 7 days. Or some lawyer might advice you to send it within 15 days. Legal notice time period depends on your situation and what law applies to you. If you think some different law applies to you than MSMED act. Consult with your lawyer to know how long you can take to send your client a legal notice.
Documents needed to send a Legal Notice?
Consult with a lawyer first before you start digging for documents. Our team at MSME Lawyers can provide you the document requirements you need. When you want to send your client a legal notice for not paying.
You'll need to have some documents handy when you approach MSME Lawyers. You’ll be asking us to prove to you that your client hasn’t paid you. You were supplying goods/services to your client.
Document Checklist
Include any document you think will help your case against your client. But below are documents we recommend all MSME’s to have.
- Include your Udyam certificate – When did you start your business and when did you receive your Udyam certificate.
- Any agreements – PO’s or wo’s that your client might have given you.
- Include any invoices – GST invoices or any other invoices you have sent to your client.
- Transport Documents – You might have some Delivery challan or Any LOCS issued to you.
- Email/Whatsapp Conversations – Conversations that can prove you’ve supply'd good's/services to your client.
- Statement of account & Bank statement – So you can show the court that your client paid you partial amount.
- Did you send any reminder's to your client and what was their reply?
- Did your client provided any quality objection? Or did your raise any debit note. If there was an issue with your product/service provide to your client.
- If your client gave you a bounced cheque include the cheque details. Reason why he got cheque was bounced.
- If someone else was talking on behalf of your client provide you're lawyer with an authorization letter.
The above documents are basic documents we ask our client's to give us. Not every business is going to have all of these documents. If you owned a digital marketing business based in bangalore. You can provide screenshots of emails you’ve received from your client.
You received an email from your client saying to start working on this. You provided a finished product to him. And he was satisfied with your work. This will work as proof that your client owes you because he hired you.
If you supply goods at Faridabad you'll have your PO. And delivery challan that you’ll provide to your customer. Ensure the documents support each other.
Procedure to recover money from MSME’s:
Can you recover your money from MSME’s if you send them legal notice?
Yes there are many ways you can recover your money back. One of them is by filing a case against your client under MSMED Act 2006. Only Small and micro enterprises are able to file a case under section 18. If you’re a medium scale industry you can go the civil courts.
Talk to a lawyer to know what your options are if you don’t qualify. Filing a case against your client under MSMED act.
Steps to recover money from MSME’s
Send your client a legal notice. And wait for your client to give you a response.
Did your client agreed to pay you back? Or your client might ask you to send him a payment schedule.
You want to fix a date that your client can pay you back by. Make sure you don’t get scammed by your client. Speak to your lawyer if you can accept the offer your client is giving you. BK Singh Advocate will help you figure out if the proposal your client gave you is good.
File a case against your client before MSEFC.
If you’ve tried everything you can with your client. Then you can fill a case against them before MSEFC. Section 18 allows MSME entrepreneurs to ask for there money back. From customers who unpaid them invoices.
MSEFC or MSME Samadhan is an online portal connected to MSMED Act. MSEFC stands for MSME Facilitation council. They will help sort the dispute between you and your client. MSME ministry has designed an online dispute resolution system. You can use this system to file a case against your MSME client.
Attending the Conciliation Meeting.
Your MSME will be asked to meet with there client to sort the dispute. Your client can negotiate with you on how much he owes you. And try to work out a payment plan. If your client agrees to pay you what he owes you. Put it in writing so you have something in case he doesn’t pay you.
Go for arbitration
After conciliation there will be an arbitration process. As per MSMED act 2006 the arbitrator will hear out both of your arguments. After the both of you gave your statements. He will come to a conclusion to clear the dispute. If any of you two are not happy with the judgments. You can challenge the award by law.
Enforcing the Award
If the award is given to you than it’s time to enforce the award. Make sure your follow the correct procedures if your client still doesn’t pay you. Contact our team at MSME lawyers to know how to enforce the award. We’ll dig deep and figure out what laws you can use to enforce the award. Against your MSME client.
Can you file a case against MSME without sending legal notice?
Yes you don’t need to send your client a legal notice before filing a case. Notice board has told you above that there is no specific law. Stating that MSME entrepreneur must send legal notice. To there client's before they take legal action.
We advise you to send your customer a legal notice. So your client knows you are serious about suing him. And you want them to pay you what they owe you.
You can directly file a case against the government. If your cheque got bounced by your customer. You can file a case against them without sending a legal notice.
What if my client doesn’t respond to my legal notice?
Sometimes your client may not respond to you back. Just because your client didn’t reply to you. Doesn’t mean they owe you money. You can use the clients silence as proof to the court.
Your timeline will be over once your client doesn’t reply to you. You can always try talking to your client one last time. Hopefully your client will pay you what they owe you. If not go ahead and file a case against them.
Remember to look through your agreements you had with your client. There might be an agreement fine your will have to pay if you stop working for them. Suddenly because your client didn’t pay you.
If you supply food packages at noida. And your client at faridabad owes you 6 Lakh Dues. You have another customer who wants you too make packages worth 3 Lakhs. You can contact BK Singh Advocate to see if you can stop working for your client. Who owes you money without any penalties.
Can MSME ask for Interest on unpaid invoices?
Yes if your client hasn’t paid you on time you can demand for Interest. As long your business qualify as micro and small enterprise. You can claim interest when you fill your case against your client. Before MSME Facility council.
You want to calculate your interest before filing your case. Let’s look at some things you need to know while calculating your interest.
- When was your client supposed to pay you?
- How much does your client owe you? Subtract the amount your client has already paid you.
- Interest rate. Go to any website and check what’s the interest rate. Multiply that by 3 and that’s the rate you’ll be charging your client. Calculate your client monthly interest on the amount your client owes you.
- Calculate your Interest monthly
If your client doesn’t qualify as MSMED act. You can still demand for Interest your client lostes on you. Consult with your lawyer to know if you can demand for Interest from your client.
Just because you calculated your Interest. Doesn’t mean you will receive the Interest your client owes you.
How To Avoid When Trying To Collect Money From MSME?
If your been selling to the same MSME customer. You’ll realise they never pay you on time. But once in a while you will have to go legal on them. These are some things you should avoid when trying to collect money from your client.
Don’t keep your agreements verbal.
Don’t keep having phone conversations with your MSME customer. Asking them to pay you what they owe you. If they promise you they’ll pay you tomorrow. Make sure to write this down because they won’t pay you.
Communicate with your client through emails or messenger. Since your communicating in writing you’ll have a conversation history. If your client doesn’t respond to you. Send them another reminder and ask for a reply. Make sure your client replies to your email if not they pay you tomorrow.
Don’t lose track of the Limitation period.
Your client might not have pay you back for over 3 years. Limitation period will differ what law you are filing against your client. You can read more about Limitation act here.
MSMED act also have limitations to what your can and cant do. If you want to take legal action against your clients. Because they owe you money by sending them a legal notice won’t stop the clock. If your client keeps promising you that he’ll pay you tomorrow. Or your client paid you some money so you gave them an extension. You might have more time to file a case against your customer.
Don’t ask the police to arrest your client.
This happen’s when your client isn’t paying you back on time. Because your client might be going through a business dispute. If you think your client did something illegal. Consult with your lawyer on what you can do to arrest your client.
If your client didn’t do anything illegal than don’t threaten them. You will hurt your chances of recovering money from your client. If your client did do something illegal. You have to file a case under criminal court to arrest your client.
When to consult a lawyer to recover money from MSME?
If your client owes you money and it’s been years. You can consult a lawyer on what you can do to recover your money. You can keep sending them legal notices if your client ignores your emails and calls. Your client might not be paying you because there was some quality issue's.
Contact us if you would like any legal advice when dealing with your client. Here are some reasons why you should contact a lawyer.
- Client has multiple past due invoices and stopped responding to you.
- Client says he isn’t going to pay you because of defects or some contractual penalty.
- Client wants to pay you in installs or wants to pay you a lesser amount.
- Check if your company is eligible for MSMED act 2006.
- Client owes you money and it’s been 3 years.
- Client is under liquidity.
But overall you can contact BK Singh Advocate if you need help recovering money from your MSME client. You can contact us through our website MSME lawyers. Because just because we discuss about going to court. Doesn’t mean you have to file a legal case.
How Can MSME Lawyers help you recover your money from your client?
MSME Lawyers can assist you when your having any legal problems with your MSME. You can contact us if you need help collecting your unpaid invoices. Or if you don’t know how to send your client a legal notice. We can assist you in different areas depending on what you need help with.
We can review your documents and see if your eligible to file a legal case against your client. MSME lawyers can help you draft a legal notice to your customer. If you want to collect money from your customer. You can also fill a case against your client under MSME Facilitation council. We can help you with that too.
If you think your client is doing something illegal to you. Our lawyers can help you by filing a case before the court.
Contact MSME Lawyers To Learn More About Collecting your Money!
No matter if your located in Delhi, Delhi NCR, Mumbai, Pune, Bangalore, Hyderabad. Or anywhere in India you can contact us for legal notice. You can pay services to contact BK Singh via MSME lawyer’s website. Learn more about MSME’s on our website too.
You can always contact a lawyer to know what you’re able to do. They can guide you what to do in certain situations. We don’t promise that your going to collect the money your client owes you.
FAQ's
When should I send legal notice for late payment of MSME invoices?
Send legal notice to your client when you feel they are not going to pay you back. Once you have sent 2-3 reminders to your client and they haven’t replied to you. Ask your lawyer if your case is applicable for MSME law. And if the answer is yes then you should send them legal notice.
Can I send legal notice to client after 15 days of due date?
Yes, you can send legal notice to your client if they haven’t paid you back within 15 days. As per MSMED act 2006, if you haven’t mentioned any time period to your client. You can send them legal notice after the appointed day.
Does sending legal notice before MSME Samadhaan mandatory?
No, sending legal notice is not mandatory before filing your case. You can directly file your case against your client before MSME Facilitation council. But if you wish to talk to your client and negotiate with them. Then you can send them legal notice and then see what happens.
Can MSME claim interest on delayed payment?
MSME can claim interest on their invoice if they are eligible for MSMED Act 2006. Section 16 of MSMED Act 2006, explains that how MSME can get interest. If they take legal action against their client for not paying agreed amount. The interest will be calculated as monthly rest on debt.
What if my MSME client doesn’t want to pay me?
Speak to your lawyer about what legal action you can take against your client. Hiring MSME lawyers will help you get your money back from your client. If your client still doesn’t pay you you can always file a case before MSME.
Can I file MSME Samadhaan case if my client is in another state?
Yes, you can file MSME Samadhaan case if your client isn’t from the same state. Since you have registered MSME udyam, you are eligible to file case under MSMED. Section 18(4) explains that you can file the case where your business is registered. Consult with your lawyer if you can file a case in different state.
Can I take legal action if I don’t have contract/agreement with my client?
Yes, if you have any evidence that you have provided good’s/services to your client. Legal action can be taken if you have proof in the from of PO,delivery challan or emails etc. Contact BK Singh Advocate if you think your client owes you money.
Can I send legal notice to client if I’m not registered under Udyam?
Yes, you can send legal notice to your client if he has not paid you. It doesn’t matter if you’re registered under Udyam or not. All you have to do is take legal action against your client to recover your money. Consult with lawyer to know the further process to take.
How Long Will It Take To Get My Client To Pay Up?
Around 90 days it will take if your case reaches to MSME Facilitation council. Because MSME council will take up to 90 days to reach to decision. But in most cases, client pays the money once legal notice is sent to them. There is no particular time period for MSME payments.
Is there a way to solve dispute with MSME client?
Yes, you can solve your dispute by sending legal notice to your MSME client. Once you have send legal notice you can always talk to your client. Try to negotiate with your client to pay you the money they owe. Contact us if you need help solving disputes with your client.
Conclusion
Do not hesitate if your client hasn’t paid you for the servicesProvided. Try to talk to your client and ask them to pay you what they owe. If that doesn’t work you can proceed with legal actions.
Remember sending a legal notice should be the last option when customer doesn’t pay you. Consult with a lawyer to know if you have to file a case against your client. We hope you understand when to send legal notice to MSME clients.
BK Singh Advocate will guide you what to do when your MSME customer hasn’t paid you on time. Contact us if you have any doubt related to legal actions against customers.
If you’re thinking of sending legal notice to your client. Then consult with your lawyer to know can you recover money from your client.
