Customer credit (udhaar): how to give it without losing money

Why udhaar goes wrong

Credit itself is not the problem. The trouble starts when nobody knows exactly how much each customer owes, since when, and for which bills. Then balances are argued over, forgotten, or written off "for the sake of the relationship".

1. One account (ledger) for every credit customer

Every credit customer needs their own account: each bill on credit adds to it, each payment takes away from it, and the balance is always visible. A notebook can do this, but it is easy to miss an entry or lose the page. With software, the credit sale itself writes to the customer's account - nothing to copy by hand.

2. Set a credit limit for each customer

Decide how much credit each customer can have - for example Rs 5,000 for a household, more for a clinic or a regular business. When a new bill would cross the limit, the counter should know before the goods leave the shop. A limit is easier to explain than a refusal: "your limit is full, please clear the old bill first".

3. Record partial payments properly

Customers often pay part of the balance. Write down every payment with the date and how it was paid (cash, JazzCash, EasyPaisa, bank or cheque). A cheque is not money until it clears - keep its date and mark it when it is cashed.

4. Send a statement every month

At the start of each month, send each credit customer a short statement: opening balance, bills, payments and what is due now. A printed slip or a WhatsApp message is enough. Customers who see a clear statement pay faster - and there is nothing to argue about.

5. Watch how old each balance is

A balance that is ten days old is normal. One that is ninety days old is a warning. Sort your credit customers by how long their oldest unpaid bill has been waiting:

• under 30 days: normal, no action;
• 30 to 60 days: a polite reminder;
• over 60 days: stop new credit until it is cleared.

6. Make one person responsible

Decide who may give credit and who follows up. If every salesman can give udhaar to anyone, nobody feels responsible for collecting it. Give credit rights to the owner or the manager only, or to staff within a fixed limit.

A 10-minute weekly routine

1. Look at the list of customers who owe you, oldest first.
2. Message those over 30 days.
3. Check that last week's payments and cheques are recorded.
4. Lower the limit for anyone who keeps paying late.

How Alpha helps

In Alpha a sale can be paid, partly paid or on credit; the balance goes into the customer's ledger by itself. You can set a credit limit per customer (warn, or block, as you choose), record payments by cash, card, JazzCash, EasyPaisa, bank or cheque (with cheque dates), look at each customer's account for any period and export it, and see who owes you on the Dashboard. See all features and the prices.