On the same lines, the ageing for trade receivables will also be disclosed. Currently, companies are only required to disclose trade payables into two parts — payables to MSMEs
and payables to non-MSMEs.
There is no requirement to provide any ageing details.
On the matter of receivables, the only requirement is to divide it between up to six months and more than six months.
“This will allow the government to immediately track down serious corporate offenders and act strictly against defaulting companies in order to protect MSME
vendors,” said Nischal S Arora, partner regulatory at Nangia Andersen.
Amit Maheshwari, tax partner at AKM Global, said the MCA’s move will help stakeholders get an understanding on how quickly the company is converting its debtors into cash and cash equivalents.
“It would also help the stakeholders track whether the company is regular in making payment to its vendors,” he said. Besides, the stakeholders will get to figure out the debtors, which will most likely become bad and doubtful, Maheshwari said.
In terms of MSME
Development Act, 2006, any person who has purchased goods or procured services from the MSME
supplier is bound to make payments
within a maximum period of 45 days. Any delay beyond this makes the buyer liable to pay interest at three times the bank rate notified by the RBI.
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