Small and medium enterprises (SMEs) can enhance their profits by 15 percent if they receive payments on time from their large corporate customers, says a study published on Thursday.

The study was conducted by a premier credit ratings organization CRISIL. The study on 5000 small and medium enterprises (SMEs) reveals this data.

CRISIL estimates that timely payments from large customers will help SMEs reduce interest costs, and improve profitability by around 15 percent, and have a positive impact on the long-term health and sustainability of India's SME sector.

SMEs with large corporate customers have receivables of 90 to 120 days of sales on their balance sheets, as against 45 days stipulated by the Micro, Small, and Medium Enterprises Development (MSMED) Act.

The study reveals that high receivables are endemic across industry sectors and geographies in the SME space. The smaller the SME, the weaker its receivables position tends to be.

Small enterprises constitute a sizeable portion of India's SME space and are most susceptible to liquidity pressures; it is, therefore, critical that the small entities receive payments on a timely basis from customers.

With the support and guidance of the Ministry of MSME, and the National Small Industries Corporation (NSIC), CRISIL has successfully established the unique concept of performance and credit ratings for the SME sector in India.

As on September 30, 2010, CRISIL had more than 14,500 SME ratings outstanding. CRISIL's SME ratings are affordable and tailor-made services designed for SMEs.

Ramraj Pai, Director, CRISIL Ratings, said, "SMEs need to understand the costs and impact of delayed receivables, and factor this into the selling price. Further, industry associations and trading bodies need to increase awareness among SMEs about the provisions of, and the redressal mechanisms under, the MSMED Act."