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How Indian Business Payments Work (Hint: It’s Interesting!)

By on Mar 29, 2012 | 4 comments

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The Indian way of doing business is quite amazing and I learned it after dealing with several small and established businesses. Typically, you’d expect payments to work the ‘Mathematical Way’, that is, 1 + 1 = 2. You have one, you add one and you get two. There’s no error, no doubts, no questions, no ‘ifs & buts’. But that does not apply to the Indian way of doing business; especially with the payments.

Indian Way Of Business

Indian Way Of Business

I realized this new ‘way of doing business’ after dealing with companies & individuals based in India and in other countries as well. It turns out that the Indians don’t really trust the contract documents, no matter how many stamps it has. What’s more trusted is ‘mutual trust & faith’. Here’s a real life example :-

The client approaches me with a business deal and we mutually agree to sign the contracts over the phone. I prepare a contract detailing all the factors and stakeholders along with the schedule so that there’s no room for doubts. We clearly agree ‘on paper‘ that 100% of the payment needs to be done before the start of the engagement. Everything is set and everyone’s happy with the deal.

Then comes the payday and the client deposits only 50% of the promised amount in our bank account. I quickly email the client saying that we won’t accept 50% of the payments and as per the contract; they need to pay 100% payment in advance. To which, the client replies that ‘That’s the way our organization works’. I ask them why did they sign the contract in first place when they knew they won’t pay us 100% in advance. To which the client starts getting ‘friendly’ describing me how they are interested in doing business with us and how they are ‘not going anywhere’ and how ‘well established brand’ they are. They also promise that they’ll make the payments as soon as ‘funds are deposited in their account’ within next 20 days; but insist that I commit to & execute ‘my part’ of the agreement.

…I’m left with two options: Either return the money to them and lose them forever OR accept their ‘way of doing business’. Since the client is a established name; the engagement is worth more than money to us (we’re a startup!). So I decide and accept their way of doing business thinking that they will pay us within next 20 days.

But as you’d guess, there won’t be any payment in the next 20 days. After following them for the next 10 days; they promise to pay the remaining amount in the next 15 days; but ask for our ‘performance reports’ where we can’t make compromises. And on the 15th day, they deposit just 33% of the remaining amount; following the same explanation!

I look at the contract document and wonder what I do with it.



4 Comments

  1. commenter

    March 31, 2012

    Post a Reply

    yep that’s the way things work and my case is even worse as they didn’t shell out the amount even after the project was over and promise to clear it the next week whenever i approach them   i had to get into a fight orally to finally get “my money”

  2. Rishabh Ghosh

    March 31, 2012

    Post a Reply

    Why not take them to court over this? Even a simple lawsuit would make them answer you properly. It is because we Indians are too lenient that the people have developed this “chalta hai” attitude. I have my relatives living in USA and have heard from them how people are disciplined mainly owing to the fear of getting caught in some kind of a lawsuit due to their negligence of some sort.

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