How to Manage Credit Customers (Udhaar) and Get Paid on Time

Selling on credit is how a great deal of business gets done, especially in wholesale and trade. In Pakistan it has its own word, udhaar, and its own tool: the khata, a notebook of who took what and who still owes. Credit wins customers and keeps them coming back. It's also where cash quietly goes missing, because a sale isn't really finished until the money arrives.

This guide covers the habits that keep credit under control: what to agree before you sell, how to record credit sales and payments so balances are always right, how to spot trouble early, and how to follow up without losing the customer.

1. Agree the terms before the first credit sale

Most payment problems start with an assumption. You thought the customer would pay at the end of the month; they thought they had until the next big order. Agree three things up front, and write them down:

• How long they have to pay: for example, 15 or 30 days from the invoice.
• How much credit you're comfortable giving: a maximum balance you won't go past without a payment.
• How they'll pay: cash, cheque or bank transfer, and to which account.

For a new customer, start small and raise the limit once they've paid on time a few times. Credit is easier to extend than to take back.

2. Record every credit sale as an invoice

The khata works until two people write in it, or a page goes missing, or a customer remembers the total differently. The fix is to make every credit sale a numbered invoice, with the items, prices, tax and total, and to give the customer a copy. An invoice is evidence both of you can point to; a line in a notebook is not.

Keep cash sales and credit sales clearly separate. A sale paid in full at the counter is finished. A credit sale opens a balance that needs to be followed until it's closed.

3. Match every payment to the invoices it pays

When a customer pays, record which invoices the money is for, not just that Rs 50,000 arrived. This matters more than it sounds. If you only track a running total, you can't answer the questions that actually matter in a dispute: which invoice is still open, which one is two months old, and whether that payment was meant to cover the old invoice or the new one.

Partial payments are normal. Record them against the invoice and leave the rest open. A customer who paid Rs 30,000 of a Rs 50,000 invoice owes Rs 20,000 on that invoice, not a vague Rs 20,000 "somewhere".

4. Look at who is overdue, every week

The single most useful report for credit control is the aged receivables report. It lists what each customer owes, split by how old the invoices are: current, 1–30 days overdue, 31–60, 61–90 and over 90.

Read it once a week. The pattern tells you more than the total:

• Mostly current: healthy. Customers are buying and paying.
• Growing 31–60 and 61–90 columns: customers are slowing down. Find out why before it gets worse.
• Anything over 90 days: these balances are increasingly unlikely to be paid in full. Act now, and stop extending credit to that customer until the old balance is cleared.

Also watch customers who keep buying while their oldest invoices stay open. Each new sale feels like good business, but it's adding to a balance you may never collect.

5. Follow up early, and politely

The best time to chase a payment is a few days after it's due, not two months later. Early reminders are easy to make friendly: most late payments are forgotten, not refused. A simple sequence works well:

1. A few days after the due date: a friendly reminder with the invoice number and amount.
2. Two weeks overdue: a call, and a statement showing every open invoice and payment, so there's no argument about the balance.
3. Thirty days overdue: pause further credit until the account is brought up to date, and agree a payment plan if they need one.

A clear statement settles most disputes on its own. When the customer can see each invoice, each payment and what's left, the conversation moves from "how much do I owe?" to "when can I pay?".

6. Know your numbers

Two numbers tell you whether credit is helping or hurting your business:

• Total receivables: how much customers owe you right now. Compare it month to month. If it grows faster than sales, customers are paying more slowly.
• The share that's overdue: if more than a quarter of what you're owed is past due, credit control needs attention.

Money owed to you is money you can't spend on stock, rent or salaries. Keeping receivables under control is often the cheapest way to improve cash flow, cheaper than any loan.

How ERP Nexl helps you manage credit customers

ERP Nexl is built around the habits above:

• Credit sales are recorded as sales invoices, with items, prices and tax, and every invoice updates stock and the customer's balance.
• Receipts are recorded against the specific invoices they pay, in full or in part, so you always know which invoices are still open.
• Every customer has a running balance, so you can see who owes what without flipping through a khata.
• With the accounting module, you also get the aged receivables report and printable party statements to send with your reminders.
• Payments into the bank are recorded against the right bank account, so bank and customer balances agree.

It doesn't send reminders for you; the follow-up is still a phone call or a message from you. But you'll always know exactly who to call, about which invoices, and for how much.

Summary

1. Agree payment terms and a credit limit before the first credit sale.
2. Make every credit sale a numbered invoice and give the customer a copy.
3. Match each payment to the invoices it pays, including partial payments.
4. Review aged receivables every week and act on anything over 60 days.
5. Remind early, send a statement, and pause credit for long-overdue accounts.
6. Watch total receivables and the overdue share every month.

Moving udhaar out of a notebook is one of the quickest wins for any business that sells on credit. You can try ERP Nexl free for a month, with no card needed.