Imagine running a large business with an extensive network of vendors, many of whom are Micro, Small, and Medium Enterprises (MSMEs). Keeping track of who qualifies as an MSME is crucial—not just to meet regulatory compliance on MSME payments, but also to benefit from the incentives tied to engaging these enterprises. Now imagine the chaos when this critical information is outdated or incomplete. Delays in verifying MSME status could lead to non-compliance risks, especially with the stricter regulations which mandate timely payments to MSMEs1 and impose penalties on corporates for delayed settlements¹.
This was the exact problem an agro-chemical company faced. The company found it challenging to identify which vendors qualified as MSMEs, creating roadblocks in compliance and reporting. Let’s dive into their journey and discover how they turned a daunting compliance task into a streamlined process with the help of MSME Verification Service by Vayana.
The Challenge:
- Outdated Data: Many MSME vendors had not updated their Udyam Aadhaar details, leaving the company with incomplete information
- Uncontactable or Non-Responsive Vendors: The company attempted to contact vendors to confirm their MSME status. However, outdated contact information in the vendor master led to a low response rate, making verification efforts inefficient and incomplete despite the significant costs incurred in the process
- Manual Processes: Their team spent significant time verifying vendor details manually, which was both inefficient and error-prone
- Compliance Risks: Without accurate MSME identification, the company risked falling short of regulatory requirements and missing out on MSME-related incentives
The process of verifying MSME status traditionally involves chasing vendors for updated Udyam Aadhaar details. This is time-consuming and prone to inaccuracies. A better approach is to leverage automation and centralized data sources to simplify and streamline verification.
The Solution: Simplifying MSME verification with automation via Atlas
MSME Verification API dynamically fetches the status of MSME registration. This service extends the capabilities of the PAN-based verification tool by providing real-time updates from government databases, ensuring businesses always work with the latest information
- PAN-based verification: Directly verifies MSME status using a vendor’s PAN, bypassing the need for outdated Udyam Aadhaar details
- Automation at scale: Handles verification for large vendor bases efficiently and accurately
- Regulatory compliance: Simplifies compliance reporting, reducing the risk of penalties and ensuring alignment with government mandates
With this service, businesses can focus on building stronger relationships with their MSME vendors while ensuring compliance and operational efficiency. When integrated into vendor management systems, this API complements the PAN-based service by covering dynamic verification needs, creating a holistic MSME compliance solution.
Impact on Agri chemical company?
PAN-based verification eliminated the need to chase vendors for Udyam Aadhaar updates, ensuring data accuracy and compliance without hassle. By automating what was once a time-consuming process, the company not only saved resources but also strengthened relationships with its counterparties. More importantly, compliance reporting became effortless, minimizing regulatory risks and ensuring that the company could fully leverage MSME-linked incentives. With this scalable solution in place, the business is now future-ready, confidently managing its vendor ecosystem while focusing on growth and innovation in the agrichemical industry.
Take Control of MSME Compliance with Vayana. With Atlas—Vayana’s API Marketplace, you can access a suite of compliance solutions, including MSME verification, GST compliance, and more, all in one place.
- As per the MSMED Act (Amended, effective April 1, 2024), corporates delaying payments to MSMEs beyond the stipulated timeline may face financial penalties and loss of tax benefits. ↩︎