Most unpaid invoices were a risk visible before the work started

• What is being delivered, specifically, and what is not included
• The price, and what causes it to change
• When payment is due, in days or on a stated date, and how it will be paid
• What happens if payment is late, such as interest or a pause in supply
• Who can approve changes to the work, and how they are recorded
• A written order, purchase order or accepted quotation, not only a phone call

Hypothetical example: a small workshop agrees a large job with a new customer on a phone call and a handshake. A more cautious version asks for a written order, a one-third advance and staged payments. Both are made-up scenarios, used only to show how exposure differs.

• An advance or deposit before work begins
• Part-payments at milestones for longer jobs
• A credit limit for each customer, kept small for new ones
• Basic checks on a new business customer: who they are, where they operate, how they have paid others where you can find out
• Not delivering the next order while the last invoice is overdue, if your terms say so

• Invoices that show the parties, what was supplied, the amount and the due date, as your CA advises for tax purposes
• Delivery challans, signed receipts or written acceptance
• Emails and messages in which the customer confirms the work, the quantity or the price
• A running statement of account for each regular customer
• Keeping everything in one place, organised by customer

• A reminder before the due date, one on the due date, and one soon after
• Putting every follow-up in writing, and keeping the replies
• Finding out why: a genuine dispute, a cash problem or neglect all call for different responses
• Agreeing a revised payment plan in writing, rather than by phone
• Knowing when to move from reminders to a formal step

• Section 138 of the Negotiable Instruments Act, 1881 deals with the dishonour of a cheque for insufficiency of funds or similar reasons
• The cheque must be presented within its validity, which is three months from its date or its stated validity, whichever is earlier
• A written demand notice has to be sent to the person who issued the cheque within 30 days of receiving information from the bank that it was returned unpaid
• That person then has 15 days from receiving the notice to pay
• If they do not, a complaint is generally to be filed within one month after that period ends
• Why a lawyer should be called as soon as a cheque bounces, not weeks later

The law and its time limits should be confirmed with a lawyer for your own cheque; delay can lose the remedy.

• Under the Micro, Small and Medium Enterprises Development Act, 2006, a buyer is required to pay a micro or small supplier within the agreed time, and in any case within 45 days of acceptance of the goods or services
• If payment is late, the Act provides for compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India
• It applies where the supplier is a micro or small enterprise, and registration of the supplier on the Udyam portal is how that status is generally shown
• Why a small supplier should check its own Udyam registration, and why a buyer should know the rule

How this applies to a particular invoice depends on the facts. Check the current position with a professional.

• Negotiation and a written settlement
• A legal notice sent through a lawyer
• Mediation. For commercial disputes, the Commercial Courts Act, 2015 generally expects pre-institution mediation before a suit, except where urgent interim relief is sought
• Limitation: for many ordinary claims for money the period to sue is three years, but it depends on the claim and when it begins to run, so do not wait
• Weighing the cost, time and relationship against the amount
• Why a lawyer should advise on which route fits your case