How to control customer credit without losing the customer
Udhaar is not the problem — uncontrolled udhaar is. Credit keeps good customers loyal and moves volume in a Pakistani retail business. The shops that get hurt are the ones where the khata has no limits, no aging and no routine — just a running total and good intentions. This article is the policy side: who gets credit, how much, and what happens when they do not pay. For the day-to-day recording mechanics, see how to manage udhaar customer credit; for the accounting view, see accounts receivable for customer credit.
1. Write the policy before the customer asks
A credit decision made at the counter, under pressure, with the customer watching, is always yes. A policy made on a quiet evening can be "yes, up to a point" — or no. Decide three things once: who qualifies (regulars you know by name, not first-time visitors), the maximum total udhaar the shop will carry across all customers, and what happens at each stage of lateness. Written rules turn an awkward conversation into a standard answer.
2. Give every customer a limit — a real number
A limit is not a feeling about how trustworthy someone is; it is arithmetic. A practical starting rule is about two weeks of that customer's usual purchases. Someone who spends Rs 2,000–3,000 a week gets Rs 5,000–6,000 of headroom — not Rs 30,000. New credit customers start smaller still, around one week's spend, and the limit grows after two or three clean pay-downs.
Limit reviews run both ways: a customer whose balance sits at the ceiling for 60 days is telling you the limit is wrong. And limits work best when the counter enforces them automatically — udhaar tracking inside the POS warns the cashier the moment a new charge would cross a customer's limit, so the rule holds even when you are not at the till.
3. Age the khata: current, 30, 60, 90
A single total — Rs 400,000 outstanding — tells you nothing about risk. The same figure split by age tells you everything: Rs 220,000 current, Rs 90,000 in the 30-day bucket, Rs 55,000 at 60 days, Rs 35,000 past 90. Each bucket gets a different action:
- Current (under 30 days): normal business — no action beyond an occasional statement.
- 30 days: a WhatsApp reminder carrying the exact balance.
- 60 days: no new credit until a payment lands; a personal call or visit.
- 90+ days: a written instalment plan, active recovery — or a write-off decision so the books stop pretending.
An aging report on receivables turns the khata from one scary total into a to-do list sorted by urgency. A live customer credit ledger keeps every balance, reminder and partial payment in one place.
4. When to pause new credit
The hardest part is not deciding the rules — it is holding them at the counter. Three triggers make it mechanical: the balance hits the customer's limit; the oldest unpaid amount crosses your 30-day line; or a promised payment date is missed twice. Any trigger means cash only until the balance moves.
How to say it without losing the customer: blame the rule, not the person, and make the ask specific. "Aap ka balance limit par hai — pehle Rs 2,000 aa jayein, baqi Friday tak" keeps the door open while the rule stays firm. Customers respect a shop that runs its khata like a bank; they exploit one that runs it like a favour.
5. The collection routine that actually collects
Collections fail when they are random — a burst of calls when cash is tight, then silence for months. Pick one recovery day a week and work the aging list top-down: WhatsApp statements go out the evening before, calls and visits happen on recovery day. Every message carries a number and a date: "Your balance is Rs 8,450 — a payment this week would clear it."
Take partial payments — always. Rs 500 against a Rs 9,000 balance is not nothing: it restarts the habit of paying, keeps the relationship alive, and a customer paying small amounts is still a paying customer. Log every payment the moment it lands so the next statement is accurate — a wrong balance claim undoes all the politeness in the world.
6. Decide who at the counter can approve udhaar
If every staff member can put a sale on the khata, nobody owns the khata. Rules that work in practice: only the owner or manager approves credit above a set amount — say Rs 5,000; counter staff can charge to existing accounts that are inside their limit; and every credit sale carries a named customer. "Cash wala" entries are where udhaar goes to disappear.
This is also where limits stop being advice and become enforcement. When the system blocks a credit sale that would push a customer over the line, your staff member does not have to be the bad cop — the till is.
Frequently asked questions
Will credit limits push my customers to competitors?
Good customers respect clear limits — a shop with rules feels safer to deal with, not harsher. The customers who leave over a small limit are usually the ones whose balance you could not afford anyway.
What limit should a brand-new credit customer get?
Small — roughly one week of their usual spend, often Rs 3,000–5,000. Raise it after two or three cycles of on-time payment. Limits are earned by behaviour, not set by how much the customer asks for.
When should I write off old udhaar?
When a balance crosses 90 days with no payment and no response, make a decision: a written instalment plan, active recovery, or a write-off. Keeping it on the books at full value flatters your receivables and hides a real loss.