Selling on credit without losing money

Selling on credit works when three things are written down at the moment they happen: what was taken, what was paid, and who owes what as a result. The shops that lose money on credit are not the ones that give it; they are the ones that keep the record in someone's head, in a book that goes missing, or as a balance that gets "adjusted". This post is a system for giving credit that keeps the customer, keeps the stock count honest, and keeps the money coming back.

Why credit is normal, and why it hurts

In most Ugandan trading centres, credit is how regular customers shop. The bar takes a crate on Friday and pays on Monday. The restaurant takes flour weekly and settles at month end. The neighbour takes sugar today and pays when the money comes. Refusing all credit costs you those customers. Giving it without a system costs you the money.

The damage is rarely one big default. It is a hundred small ones: the balance that was "about forty" and became thirty, the payment taken by a cashier and not written, the sale that was never recorded because the customer was trusted. Each is a leak, and leaks do not show on any report because nothing was recorded to report.

Rule 1: Decide who gets credit before they ask

Write a short list of who is allowed credit, and keep it to customers with a history. A new face asking for credit is asking for a gift. For each name, set a limit: a week's worth of their usual buying is a sensible start. The limit is not a target. It is the point at which the answer becomes "settle first".

Put the list where the cashier can see it. The cashier should never have to decide at the counter, with the customer watching, whether this person is allowed.

Rule 2: Record the sale like any other sale

A credit sale is a sale. The goods leave, the stock goes down, the receipt prints, and the sale is in the day's record with the cashier's name on it. The only difference is that the payment line reads "on account" instead of cash.

This matters for two reasons. The stock count stays true, because the goods really did leave. And the customer gets a receipt showing exactly what they took, which is the paper that ends the argument three weeks later.

Do not record credit sales as cash and "remember" they were not paid. That inflates the takings, and the drawer will not balance at closing, which is covered in How to count the cash drawer at closing.

Rule 3: Record every payment against the name, at the counter

When the customer pays, in full or in part, the payment is recorded against their name the moment the money is taken, by whoever takes it. Not at the end of the day. Not by the owner from memory. A part payment is entered as a part payment, and the remaining balance is worked out by the system from the records, not typed in.

This is the rule most shops break. A cashier takes twenty thousand from a regular, puts it in the drawer, and tells the owner in the evening. Or does not. A balance nobody can reconstruct from receipts and payment records is a balance you will eventually write off.

Rule 4: The balance is calculated, never edited

A customer's balance should always equal the total of what they took minus the total of what they paid. Nothing else. If the balance can be typed over, it will be, and the moment it is, every earlier record loses its meaning.

When a customer disputes a figure, you show the list: these sales on these dates, these payments on these dates, this is the difference. Most disputes end there, because the list is right and the memory is not.

Rule 5: Agree the date, and remind before it

Credit without a date is a donation with extra steps. When the goods go, say the date: "Monday", "the fifth", "month end". Write it on the receipt. Send a reminder a day before. A customer reminded before the date pays on it; a customer chased after the date pays late and feels harassed.

Rule 6: When the date passes, stop the credit, not the relationship

The customer who is late does not lose the shop. They lose further credit until they settle. Keep selling to them for cash. Keep greeting them. Show them the statement when they ask what they owe. The relationship survives; the exposure stops growing. A shop that keeps extending credit to someone already behind is choosing to lose more.

What to look at each month

Figure	What it tells you
Total owed to the shop	Your working capital that is out on loan. If it is growing faster than sales, the rules are slipping.
Owed for more than 30 days	The debts that are going bad. Each name here needs a conversation.
Largest single balance	Your biggest risk. Is it within the limit you set?
Credit sales as a share of all sales	If a quarter of your sales are on credit, a quarter of your stock is being financed by you.

Deposits work the same way in reverse

A customer who pays ahead for an order, or leaves a deposit on a large item, is credit running the other way. The same rules apply: record the deposit against the name when it is received, record the goods against it when they go, and let the balance be calculated. A deposit taken into the drawer and remembered is another leak.

How Sellio handles this

Sellio records a credit sale as an open sale: the goods leave and the stock comes down at that moment, the receipt prints, and the money is not counted as takings until it is settled. Each customer has a balance that is worked out from their sales and payments, never typed in. Payments can be taken in parts, at any till, by any cashier with their own PIN, and each is on the record with who took it. A customer's page shows what is still open and every payment made against it. Open sales stay visible until they are settled, and a mistaken one is cancelled through the same manager-PIN void as any other sale, so nothing quietly disappears. Credit needs the connection, because a balance must be summed in one place; cash sales carry on offline as usual. To try the system with a few regular customers, start a free trial. If stock is where your records first went wrong, start with Stock management for a small shop.