The Psychology of Delayed Payments

Most corporates believe they negotiate the best pricing.

Very few realise they are paying a hidden premium — not for quality, not for logistics — but for uncertainty.

Liquidity risk is silently priced into supply chains.

Let me explain with a simple real-world scenario.

Two Vendors. Same Product. Same Cost Structure.

Imagine two MSME vendors supplying identical components to two different large corporates.

1. Both have ₹5 crore annual turnover
2. Both operate at similar margins
3. Both have similar production capacity

The only difference?

Vendor A gets paid in 15 days. Vendor B gets paid in 90 days.

That’s it.

Now let’s see what actually happens beneath the surface.

What 90 Days Does to an MSME

For a small or mid-sized business, 90 days is not “working capital strategy.”

It’s survival stress.

Here’s what Vendor B faces:

1. Salaries still go out monthly
2. Raw material suppliers demand faster payment
3. Electricity, rent, logistics — no one waits 90 days
4. GST is payable even before receivables come in

So how does Vendor B survive?

They borrow.

Sometimes from banks. Sometimes from NBFCs. Sometimes informally at 18–24% annualized cost.

That cost doesn’t disappear.

It quietly enters pricing.