Unpaid invoices can strain your business and disrupt cash flow. If a client has not paid despite reminders, the law offers remedies to help recover the outstanding amount.

If your business is an MSME, you may approach the Micro and Small Enterprises Facilitation Council (MSEFC). The Council first attempts conciliation. If no settlement is reached, the matter proceeds to arbitration, where an independent arbitrator makes a binding decision. The buyer may also be liable to pay interest on delayed payments at three times the RBI bank rate. Claims should generally be brought within three years.

If your claim is rupees three lakhs or more, you may consider proceedings before a Commercial Court. You must first attempt Pre-Institution Mediation (PIM), a confidential process where an independent mediator helps parties explore settlement. If settled, the terms are recorded in writing. If not, you may proceed with a Commercial Suit.

PIM can help resolve payment disputes early, without the time and expense of litigation. Commercial Courts are designed to handle business disputes efficiently, though timelines depend on complexity. The limitation period to file a suit is generally three years.

Where a company owes rupees one crore or more, insolvency proceedings before the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code may be available. This remedy is generally used for substantial operational debt. The limitation period is three years from default.

Before formal proceedings, consider whether a well-drafted legal notice may prompt early resolution. Preserve invoices, contracts, purchase orders, delivery records, emails, and payment acknowledgements, as these are often crucial in recovery proceedings.

The best remedy depends on the amount involved, the debtor’s status, contractual terms, and available documents. Reviewing your options early can help avoid limitation issues and strengthen recovery.