Table of Contents
Introduction
How to handle delayed payments for MSME-Healthcare sector has been a big question for small businesses in India
If you run a clinic, pharmacy, diagnostic lab, or supply medical equipment to hospitals, you’ve probably faced this common problem: payments don’t come on time.
Hospitals delay vendor payments for weeks. Customers take services but don’t settle bills immediately. Insurance reimbursements get stuck for months.
This cash delay directly hits your day-to-day operations. It becomes hard to pay your suppliers, manage salaries, or buy new stock.
If you’re a healthcare business owner in a Tier 2, Tier 3, or even Tier 4 city, this article is for you.
We will show you:
•Why payment delays happen
•What systems and tools you can use to stay afloat
•How to build financial discipline to manage this better
Quick Summary
In this post, you’ll learn:
•Why hospitals and customers delay payments
•How delayed payments affect your business cash flow
•5 ways to manage and reduce the impact
•Simple tools you can start using today
Understanding the Problem
Why Hospitals Delay Payments
Hospitals, especially government or large private institutions, have layered approval processes.
Even if your services or goods are delivered on time, payments are processed after:
•Internal verification
•Approval from multiple departments
•Budget clearances
This takes anywhere from 30 to 90 days or more.
Also, hospitals usually have payment cycles; some pay monthly, others quarterly.
Why Customers Delay Payments
In outpatient clinics, labs, or pharmacies, customers may delay payments due to:
•Lack of cash at the time of service
•Pending insurance reimbursements
•Habit of taking services first and paying later
In both B2B and B2C setups, delayed payments create cash flow gaps, meaning you spend today but get paid weeks later.
How Delayed Payments Affect Your Business
Even if your business shows a good monthly income, your cash on hand might be low.
Here’s what usually happens:
•You buy stock or pay salaries with the hope that receivables will come soon
•Receivables get delayed
•You start depending on personal savings or high-interest credit
•You miss supplier payments or rent
•Your credibility takes a hit
This cycle becomes dangerous for micro and small businesses with low reserves. You may lose staff, miss discounts from suppliers, or stop growing due to lack of liquidity.
Step-by-Step: How to Handle Delayed Payments
1. Create a Payment Terms Agreement
If you are supplying products or services to hospitals or institutions, always have a payment terms agreement in writing.
•Define payment timelines (e.g., 30 or 45 days)
•Mention late payment penalties (even if soft)
•Send invoices immediately after delivery
Use simple invoice formats that clearly mention:
•Date of delivery
•Amount due
•Payment due date
•Bank or UPI details for transfer
This professional step helps you track payments and follow up properly.
2. Digitize Invoicing and Tracking
Using Excel sheets, Google Sheets, or a simple invoicing app, track every payment due.
•Maintain a column for invoice date, amount, client name, due date, and payment received
•Add color codes: Green for paid, Yellow for due, Red for delayed
•Set reminders to follow up weekly
Free tools like Zoho Invoice, Vyapar, or even WhatsApp Business can help.
Why this works:
Most delays happen because follow-ups are irregular. A digital system ensures you never miss a follow-up.
3. Offer Early Payment Incentives
To customers or small hospitals, offer a small discount for early payments.
Example:
•If your diagnostic lab charges ₹1000 for a test, offer ₹950 if paid immediately
•For pharmacy bulk buyers, offer 2% off if paid within 7 days
This improves your cash inflow without much loss. People respond better to incentives than reminders.
4. Use BNPL or Vendor Financing
When you don’t get paid on time but still have to buy supplies, Buy Now, Pay Later (BNPL) options can help.
Some fintech companies now offer:
•15 to 30 days interest-free credit on purchases
•Small credit limits based on your monthly transactions
•Instant approval via mobile apps
You can use this credit to:
•Buy stock
•Pay staff
•Keep your business running while waiting for payments
Important:
Use only as much credit as you can repay after receiving your delayed payments. Don’t over-borrow.
5. Follow a Weekly Cash Flow Review
Every week, sit down for 30 minutes and do the following:
•Check how much money came in
•Check how much is still due
•List your expenses for the next 7 days
•See if you need to cut costs or use credit
This discipline helps you survive even when payments are delayed. It avoids last-minute panic.
You can use our free cash flow sheet template to track this easily.
Do’s and Don’ts
Do:
•Set clear payment terms with all clients
•Send invoices and reminders on time
•Keep digital records of dues
•Use small-ticket credit when needed
•Review cash flow weekly
Don’t:
•Keep giving long credit periods to everyone
•Depend only on one big client for revenue
•Mix business and personal money without tracking
•Over-purchase stock, thinking you’ll sell it quickly
•Avoid follow-up,s thinking it will spoil relationships
FAQs
Q: How long should I wait before following up for a payment?
You should follow up 2–3 days before the due date, and again the day after. After a 7-day delay, send a formal reminder with an invoice copy.
Q: What if a hospital keeps delaying beyond 60–90 days?
Send a final notice. If there’s no response, stop supplies and escalate to their finance department. Consider a legal notice only if the amount is large and justified.
Q: Can I take legal action for delayed payments?
Yes, if you have a written agreement, invoice proof, and delivery confirmation. But try to resolve it with reminders and negotiations first.
Q: How do I handle friendly customers who delay payments?
Be polite but firm. Send a message like: “Sir, we’re a small clinic and depend on timely payments. Please help us by clearing this bill.”
Q: Should I borrow to run the clinic during delays?
Only borrow what you can repay within 30–45 days. Use low-cost credit tools. Avoid high-interest personal loans.
