Credit is normal. The notebook is the problem.
A regular customer takes goods today and pays on Friday. A wholesale buyer pays half in cash and half with a cheque dated for next month. A mother leaves a deposit on a school bag and collects it on Saturday. None of this is unusual; it is how trade works here.
What goes wrong is the record. A page in a book, a line in a spreadsheet, a figure the owner remembers. When the customer says "I paid you last week", it is one memory against another.
Every credit bill belongs on the customer's own account
The fix starts with one rule: a bill that is not fully paid is never a loose note. It goes on a named customer's account, dated, with the bill number. A walk-in with no name cannot owe the shop money, so the name goes on the bill first.
From then on, the customer's balance is not something anybody adds up. It is simply every bill minus every payment, in date order.
A statement both sides can read
The end of most arguments is a statement of account: every bill and every payment, in order, with a running balance and a reference on each line that the customer can find in their own book. Printed, or sent to their phone.
Two things make it trusted rather than argued with. It shows nothing that is the shop's own business, such as costs or other customers. And when a customer pays, the receipt says which bills the money went against, so nobody has to remember.
A post-dated cheque is not money yet
This is where most shops' books quietly go wrong. A cheque dated the first of next month is not in the drawer and it is not in the bank. If it is counted as cash today, the day's count is wrong. If it is forgotten, it is never banked on the right morning.
- Record the cheque number, the bank and the date written on it. The number is the only thing that identifies it later.
- Keep it separately, as "cheques on hand", until the day it can be banked.
- On that morning, the list of cheques to bank should be the first thing you see.
- If it comes back unpaid, the amount goes straight back onto the customer's account, with any bank charge beside it.
The same applies in reverse. A cheque the shop writes to a supplier has not left the bank until it is presented, so the bank balance should not drop on the day you write it, and it must not be forgotten on the day it clears.
Deposits and advances: held, then used
Money a customer puts down before taking the goods is not a sale yet. It belongs to them until the goods go out. Kept as an advance on their account, it comes off their next bill by itself, and it can never be "forgotten" by the next person at the counter.
Paying a supplier ahead of a delivery works the same way: the money sits against their name, and the delivery uses it up when it arrives.
The five-minute weekly check
- Who owes what, oldest first. Chase the old amounts, not the big ones.
- Cheques to bank this week, and any that are overdue for banking.
- Advances held for customers, and whether the goods have gone out.
- Any customer over the credit you are comfortable giving them.
- Anything owed from before you started keeping proper books, entered once and dated correctly so the balance is right from then on.
Software cannot make a customer pay. It can make sure nobody argues about how much, and that no cheque sits in a drawer past its date. See how a modern shop system handles this in the desktop applications page, or ask us about your own credit book.