What is the 45-day rule for paying MSME vendors?

Under the MSMED Act a buyer must pay a micro or small enterprise within the agreed period, capped at 45 days, or within 15 days if there is no written agreement. From FY 2023-24, Section 43B(h) of the Income Tax Act disallows the expense in the year if payment is later than that, allowing it only in the year of actual payment. Ask vendors for their Udyam registration to know who is covered.

Which vendor should I pay first when cash is short?

Pay in this order: anyone whose delay creates a legal or tax cost (MSME suppliers near 45 days, statutory dues), then vendors who will stop supply of goods you cannot do without, then bills that earn a cash discount for early payment, then the rest by age. A payables ageing statement makes this ranking visible; a pile of bills does not.

What is days payable outstanding (DPO) and what should it be?

DPO is the average number of days you take to pay vendors: total payables divided by daily purchases. A DPO of 30 means you pay a month after buying. Higher is better for your cash flow but worse for vendor relations and, past 45 days, risky with MSMEs. Compare it with your receivable days: if customers pay in 60 and you pay vendors in 20, you are financing everyone.

Why does the bank want a creditors statement with the stock statement?

The bank lends against stock and debtors, but part of that stock has not been paid for; the unpaid vendors have a claim on it. So drawing power is computed as stock plus eligible debtors minus creditors, with margins applied. Submitting creditors on the same date as stock and debtors keeps the calculation consistent.

How are part payments and debit notes shown in the statement?

Each bill line shows the original amount, the payments recorded against it, any debit notes adjusted, and the resulting balance due. Only the balance is aged and totalled. A bill that has been fully paid or fully offset by a debit note drops off the statement, but remains in the vendor ledger.

Can I see payables for just one vendor?

Yes. Select the vendor to see only their open bills and ageing, which is the view to have open when their salesman calls. For the full history including paid bills, open the Vendor Ledger for that vendor.

Payables Statement

See every unpaid vendor bill with ageing buckets and days payable, so you know whom to pay first. Export as PDF. Free for Indian businesses.

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In short

A payables statement lists every unpaid vendor bill with how long it has been outstanding, so you know whom to pay first. VyaparKit's Payables Statement pulls all open purchase bills, nets off part payments and debit notes, ages them into 0 to 30, 31 to 60, 61 to 90 and over 90 days, and totals what you owe overall and per vendor, as a PDF you can review or give to your bank.

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Create a Payables Statement in under a minute

Sign in once with Google or email. Your business name, GSTIN, logo, bank details and saved vendors fill in automatically. Download a PDF or share a link on WhatsApp. 3 reports a month are free, forever.

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✓Beautiful PDF with your logo and details
✓GST calculated automatically where applicable
✓Saved customers, vendors and items, so no retyping
✓Share link with WhatsApp button and UPI QR
✓Converts to related documents in one click

About the payables statement tool

A payables statement (creditors ageing or accounts payable report) is the other half of the cash picture. Receivables tell you what is coming in; payables tell you what has to go out and when. For a small business the question every week is which vendors to pay from the money that arrived: the distributor who stops supply if you cross 30 days, the MSME supplier whose 45-day clock has legal consequences, or the landlord. Ageing buckets and per-vendor totals answer that in one look. Banks with a CC limit also ask for creditors alongside stock and debtors.

Kept by memory or in a notebook, payables are managed by whoever calls loudest. Old bills get forgotten until the vendor stops supply, part payments are not deducted so you think you owe more than you do, and debit notes for returns are never set off. VyaparKit computes the statement from your recorded purchase bills, vendor payments and debit notes, so every line shows the bill amount, what has been paid, the balance and its age, and vendors are ranked by what is due and how old it is.

The statement points you to action. Pay from it using Vendor Payment, which converts the chosen bill into a voucher with the vendor's UPI QR, and check any disputed balance in the Vendor Ledger. Together with the Outstanding Statement and Stock Valuation, it gives you the three numbers a banker or a CA asks for.

How to review payables and decide whom to pay

1
Record bills, payments and returns
Enter every vendor bill as a Purchase Bill, every payment through Vendor Payment, and every return as a Debit Note, so the open balances are real.
2
Open Payables Statement
Go to Payables, then Payables Statement. Choose all vendors for your weekly review, or one vendor to check before a call. Set the as-on date if you need the month-end position.
3
Sort by age and amount
Look at the 61-90 and 90+ buckets first; those are the vendors at risk of stopping supply or charging interest. Then the largest balances in 31-60.
4
Flag MSME vendors
Mark which vendors are registered MSMEs (ask for their Udyam number). Bills to them must be paid within 45 days (15 without a written agreement) to avoid disallowance under Section 43B(h) and interest under the MSMED Act.
5
Pay and record
From the statement, open Vendor Payment for the chosen bills, pay by scanning the voucher's UPI QR or NEFT, and record the reference. The statement updates immediately.

What a payables statement should show

As-on date, and your business details from the profile.
One line per open bill: vendor, vendor invoice number and date, bill amount, paid so far, debit notes adjusted, balance due and days outstanding.
Per-vendor subtotal and a grand total in figures and words.
Ageing buckets of 0-30, 31-60, 61-90 and 90+ days from the bill date, with totals in each.
Which vendors are MSMEs, because Section 43B(h) of the Income Tax Act disallows the expense in the year if an MSME is paid after 45 days (15 days without a written agreement), and Section 16 of the MSMED Act charges interest at three times the bank rate.
Advances paid to vendors as negative lines so the net payable is correct.
Agreed credit terms per vendor where they differ (7 days for FMCG distributors, 30 or 60 days for raw material suppliers).
For a bank submission, the same as-on date as the stock and debtors statements, since drawing power is stock plus debtors minus creditors, after margins.

Who uses the payables statement

Retailers juggling distributors

A supermarket in Mysuru reviews payables every Saturday, pays the distributors delivering on Monday first and keeps everyone under 30 days so supply never stops.

Manufacturers buying from MSMEs

A packaging unit in Faridabad tags its MSME suppliers and clears their bills before day 45 to avoid the expense being disallowed in its tax computation, as its CA insisted.

Traders with a CC limit

A tiles trader submits a monthly statement to the bank: stock at cost, debtors ageing and creditors ageing on the same date. The bank computes drawing power without asking for corrections.

Cash-flow planning

A small agency looks at payables due in the next 30 days against receivables due in the same window and decides whether to delay a hire or draw on the overdraft.