The Invisible Working Capital Crisis in Indian Supply Chains

India does not suffer from a lack of business activity. Orders are flowing. Factories are running. Services are being delivered.

What India suffers from is something far quieter—and far more damaging:

Delayed movement of cash.

Across Indian supply chains, money moves slowly even when goods and services move fast. This invisible gap between delivery and payment has quietly become one of the biggest threats to business stability—especially for MSMEs.

Why Payment Cycles in India Stretch to 60–180 Days

In many Indian industries, long payment cycles are treated as “normal”.

It is common to hear:

1. “Our payment cycle is 90 days”
2. “Some customers take 120 days”
3. “Government or PSU payments take even longer”

This happens because:

1. Large buyers use their size to negotiate longer credit terms
2. MSMEs hesitate to push back for fear of losing business
3. Manual invoicing and follow-ups delay collections
4. Disputes and approvals stretch timelines further

Over time, delayed payments stop being exceptions. They become the system.

How MSMEs End Up Financing Large Corporates—Unintentionally

Here is the uncomfortable truth:

When MSMEs deliver goods or services and wait months to get paid, they are effectively funding large companies.

Without interest. Without security. Without choice.

To survive, MSMEs then:

1. Borrow at high interest rates
2. Dip into personal savings
3. Delay salaries or vendor payments