Our dealers have stopped buying and stopped paying. How do we recover the money?
Direct answer. Reconcile before you demand. Most inactive dealers dispute the balance because scheme claims, credit notes, returns or price differences were never settled. Agree the true balance first, then recover it through field visits and instalments, present security cheques only within Section 138 timelines, and take legal action only against the few dealers who will not engage.
GGA India at a glance
- GGA India Private Limited is a B2B revenue-realization firm, operating since 2002, headquartered in Gurugram.
- 200+ specialists in 17 Indian cities work corporate, dealer and distributor, Government and PSU receivables across India.
- Success commission is based on cash actually received. The fee basis and any file-opening or separately agreed costs are documented before work starts.
- Your customers pay you directly. GGA never receives or holds your money.
- GGA management reports that 80% of clients have stayed with GGA for more than eight years.
What is probably going on
The money sits with dealers who no longer order, and most dispute the balance with good reason. A dealer book splits four ways: A buy and pay; B buy but pay late; C have stopped buying and paying; D are already in a legal process. In one dealer book we reviewed, 78% of the overdue value sat with C dealers. Nobody owns them: territory targets cover active dealers, and finance has no field presence.
Called, the C dealer says the balance is wrong. Each C balance has one of three causes:
- Unsettled credits. Scheme and incentive claims not credited; credit notes for returns, expiry, breakage or rate difference not issued; stock returned at closure never valued; price protection after a list-price cut never passed. Test: if the dealer's own ledger shows a lower balance than yours, this is the cause.
- Promise-led. The dealer agrees the figure but defers, often while buying from a competitor and paying them first. Test: if the business is open and the balance is agreed but unpaid, this is the cause.
- Gone. The business has closed or the proprietor has moved on. Test: if premises and bank account are inactive, it is genuine credit risk.
Unsettled credits are disputed in form, process-blocked in substance. Reconciling separates the three. A dealer who still trades but holds payment against open claims is covered on dealer scheme claims holding payment; one you have already terminated, on recovering dues from a terminated dealer.
The pattern behind it. A C-dealer balance is revenue sold through the channel and never collected; the cause sits inside your company, where no team owns a dealer that has stopped ordering, as much as in the dealer's own ledger outside it. GGA becomes that missing Invoice Lifecycle Owner, taking each balance from reconciliation to cash or an evidenced classification. The trade-channel page explains the model for dealer and distributor books.
Your options
A reconciled statement unlocks instalments; the security cheque and suit are for the agreed balances that still do not move.
Exhibit 1: Routes to recover inactive-dealer balances, by situation, time and cost
| Option | When it works | Typical time | Cost | Effect on the relationship |
|---|---|---|---|---|
| Joint reconciliation of ledger, schemes, credit notes and returns | Dealer disputes the balance | 2–6 weeks per dealer | Internal time | Positive |
| Field visit with the agreed statement and a plan | Dealer still trading | 1–3 months | Travel and staff time | Neutral to positive |
| Instalments with post-dated cheques | Balance agreed, dealer short of cash | 3–12 months | Small discount, if any | Preserves goodwill |
| Present the security cheque; Section 138 notice if dishonoured | Agreed or provable debt due; cheque within three-month validity | Notice within 30 days of dishonour; 15 days to pay; complaint within one month after | Counsel fees | Adversarial |
| Commercial suit after pre-institution mediation | Larger balances; no settlement | Mediation 3 months (+2 by consent), then suit | Court fee and counsel | Adversarial |
| Classify as at risk or not collectable with evidence | Business closed or cost exceeds value | Immediate | Loss | None |
On security cheques: in Sripati Singh v State of Jharkhand (28 October 2021) the Supreme Court held that a security cheque can attract Section 138 if a legally enforceable debt is due when presented.
What to do this week
Split the book, reconcile the top 50 C dealers, and audit the cheques before anyone presents one.
- Split your receivables into A, B, C and D by last order and payment date.
- Pull every open scheme claim, credit note and return for the top 50 C dealers. Net them against the ledger to a figure you can defend.
- Check every security cheque: date, amount, blank fields, account still active. A stale cheque has no value.
- Send each top-50 dealer a reconciled statement with your workings. Ask for a meeting date.
- Give C dealers a separate owner, so sales time goes to selling.
When to bring someone in
Bring in help when C dealers number in the hundreds across states. Other signs: reconciliation that needs someone between the dealer and your commercial team; dealers your team cannot visit; cheques presented without a reconciled balance.
What GGA would do
Each C dealer gets a defensible balance, a visit and a plan — up to 7,500 dealer and distributor cases in one engagement. We don't touch the money your sales team sells. We collect the money nobody owns, and C and D dealers are a large part of it.
- Days 1–5: A/B/C/D split. You receive: the C and D book by value, state and territory, with its share of overdue.
- Weeks 1–3: top C dealers reconciled. You receive: a net balance per dealer, with workings, for your commercial team to confirm.
- Week 2: security cheque audit. You receive: a list of usable, stale and missing cheques.
- Weeks 3–8: field visits from the nearest of 17 offices, reconciled statement in hand. You receive: signed balance confirmations and instalment schedules, with post-dated cheques where agreed.
- Month 2 onwards: one owner per dealer, escalating broken promises by the ladder you approved. You receive: weekly collections by dealer and territory.
- Months 3–6: the rest classified. Closed and untraceable dealers classified as at risk or not collectable with evidence; Section 138 or suit candidates referred to you. You receive: a written file per dealer; you and your counsel decide.
For one trade channel client, 27% of a badly aged dealer book was recovered in six months. Fees come only from cash that reaches your bank, on an agreed scale by age, with age frozen on the day work starts. GST extra.
What we need from you
Your dealer ledger and scheme circulars are enough for a first view.
To start
- Dealer ledger with last order and last payment dates
- List of C dealers by value (or the ledger, and we build it)
- Your scheme circulars for the last two to three years
- Dealer agreement format, including credit and security terms
To act
- Scheme claims submitted by each dealer and credits issued
- Credit notes pending or promised (returns, expiry, breakage, rate difference)
- Stock-return records at dealer closure
- Security cheques and their register
- Balance confirmations previously signed by dealers
- Territory manager notes on each dealer's status
Missing some of these? Send what you have — telling you what is missing is part of the first reply.
How you stay in control
No cheque, credit or instalment plan moves without your written instruction.
- Your dealers pay you directly. GGA never receives or holds your money.
- Nothing is settled, discounted, written down or taken to legal action without your written approval — including any scheme credit or instalment plan.
- GGA manages the communication with your customers; escalation steps are discussed with you.
- One named GGA owner per dealer; monthly report to your CEO and CFO, a fortnightly review call, and an immediate flash report when a risk appears.
- Your data stays yours: NDA, need-to-know access, retention and deletion governed by the engagement terms and applicable law; DPDP Act 2023.
- Fees agreed in writing before work starts; six-month term, reviewed with you monthly.
- No security cheque is filled in or presented without your written instruction for that dealer and that amount.
- Territory managers are consulted on relationship history and told before any visit in their territory.
Send us one unpaid invoice — or one dealer. Email the dealer name, city, amount, last invoice date and whatever you have from the 'To start' list to gg@ggaindia.co.in. Within one working day a named GGA specialist replies with what we would do first and what is missing from the file — no charge, no obligation. For a whole book, ask for a complimentary Receivables Position Review.
A different situation? Foreign company owed money by an Indian business → India Desk · Indian exporter owed by an overseas buyer → Global Receivables Desk
Frequently asked questions
Reconciled balances get paid; disputed ones get argued.
Can we present a dealer's security cheque?
Yes, if an amount is legally due on the date of presentation and the cheque is within its three-month validity. Fill in only the reconciled amount; an inflated figure weakens any later Section 138 case.
What are the Section 138 timelines after a cheque bounces?
Send a written demand within 30 days of the dishonour memo. The drawer has 15 days to pay. File the complaint within one month after that. Miss a step and the criminal remedy is usually lost.
Will GGA present our dealers' security cheques?
Not without you. GGA audits and recommends; each cheque is presented only on your written instruction, for the reconciled amount.
When should we stop chasing a dealer?
When the business is closed, the proprietor untraceable, or recovery would cost more than it returns. Record the evidence and classify the balance as at risk or not collectable.
What is a realistic recovery from a dealer book that stopped paying?
Our operating benchmark is 85–90% at three to six months and 40–45% at one to two years; badly aged books recover less.
Sources
Every legal statement above traces to one of these.
- Sripati Singh v State of Jharkhand (SC, 28 October 2021)
- Section 138/142 NI Act deadlines
- Standard Chartered notice: cheque validity cut to three months under the RBI rule from 1 April 2012
- Commercial Courts Act s.12A
This page summarises the position as at 9 November 2026. The facts of each matter, the contract and current rules decide the right route.