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Selling on credit without losing your money
Credit keeps good customers coming back, but unpaid debts can quietly empty your shop. Here is how to decide who gets credit, set clear terms and collect what you are owed.
"Give me today, I will pay on Friday." Every trader has heard it. Sometimes Friday comes and the money comes with it. Sometimes Friday becomes next month, and then the customer starts buying from someone else so they do not have to pass your shop.
Selling on credit is part of doing business in many communities. It builds loyalty and helps customers through slow weeks. But every credit sale is a small loan from your stock money. Handled carelessly, it can leave a busy shop with empty shelves. Handled well, it can grow your sales safely. Here is how.
Decide who gets credit
Credit should be earned, not given to whoever asks first. Before you say yes, think about:
- How long you have known them. A customer who has paid cash for months is a safer start than someone you met last week.
- How they earn. A chop bar owner who buys fish from your cold store every morning has daily sales to pay from. Someone with no regular income is a bigger risk.
- Their history with you. Did they pay the last credit on time? People who paid well before usually pay well again.
It is fine to start small. Offer a little credit, see how it is repaid, then increase it slowly.
Agree the terms before goods leave
Most credit problems start with something vague, like "pay me when you can". Before the goods leave your shop, agree three things clearly:
- The amount. Write it down together, item by item.
- The date. A real day, such as "Friday 14th", not "next week".
- How they will pay. Cash, Mobile Money to your business number, or instalments of a fixed amount.
Give the customer a copy, whether it is a written invoice, a printed receipt or a message on their phone. People take a debt more seriously when they can see it in writing, and it prevents arguments later about how much was owed.
Tip: set a credit limit for each customer, such as GH₵ 500. When they reach it, new goods are cash only until the balance comes down. Say the rule out loud at the start, so it never feels personal.
Record every credit sale
Memory is not a record. When you sell to twenty customers on credit, you will forget amounts, mix up names and miss dates. Keep one list with:
- The customer's name and phone number.
- The date of each sale and what was bought.
- The amount owed and the agreed payment date.
- Each payment received, with its date.
A notebook works if you update it every day. In Snnel, a credit sale becomes an invoice that stays on the customer's account until it is paid, and each invoice carries a QR code the customer can scan to check it is genuine. If you are setting up your records for the first time, see the five records that matter for small shops.
Remind early and politely
Many customers do not refuse to pay. They simply forget, or other bills reach them first. A friendly reminder before the due date often solves the problem.
- One day before: "Good morning Auntie, just a reminder that GH₵ 450 for the fish is due tomorrow. Thank you."
- On the day: a short call or message to agree the time of payment.
- A few days after: a firmer message, still polite, asking for a new date.
Keep your tone respectful. Shouting or shaming a customer in front of others may get you paid once, but you will probably lose them for good. Snnel can send payment reminder SMS for you, either when you choose or automatically, so no one is missed when the shop is busy.
Watch how old your debts are
The longer a debt sits, the harder it is to collect. Once a week, look at who owes you and for how long. Here is an example list for a small cold store:
| Customer | Amount owed | Status | Action |
|---|---|---|---|
| Chop bar on the main road | GH₵ 450 | Not yet due | Reminder the day before |
| Restaurant near the station | GH₵ 1,200 | 10 days late | Call and agree a new date |
| Kiosk at the junction | GH₵ 300 | 35 days late | Stop new credit, visit in person |
| Caterer from church | GH₵ 800 | 70 days late | Agree weekly instalments |
| Total | GH₵ 2,750 |
GH₵ 2,750 is stock money the cold store cannot spend. Seeing it in one place helps you act on the oldest debts first, before they become money you never see again.
Good to know: a credit sale still counts as a sale in your profit, even before it is paid. That is why a business can look profitable on paper and still run out of cash. Our guide on cash flow and profit explains this in detail.
When a customer stops paying
Sometimes a customer simply goes quiet. Before you give up on the money:
- Stop new credit straight away. Do not add to a debt that is not moving.
- Talk privately. Find out what has happened. A customer who lost a contract or had a family emergency may still pay, just more slowly.
- Offer a plan. Small weekly instalments, such as GH₵ 100 every Friday, are easier to keep than one big payment. Record each one.
- Get help for large amounts. If a big debt will not move, ask a lawyer or a trusted business association about the formal options. Keep your invoices and records, because you will need them.
Some debts will never be paid. When that happens, accept the loss, record it, and learn from it. Who got credit, how much, and what warning signs did you miss?
Know your own limit
Finally, set a limit for the whole business, not just for each customer. Decide the most you can have out on credit at any time and still restock, pay rent and pay staff. If the total goes above it, new credit stops until some of it comes back. You also owe suppliers, so plan your collections around the days your own bills are due.
Key takeaways
- Give credit to customers with a track record and a regular income, and start small.
- Agree the amount, the date and the payment method before goods leave, and give the customer a written copy.
- Keep every credit sale and payment in one record, and look at it weekly.
- Remind customers politely before the due date, and chase the oldest debts first.
- Set a limit per customer and a total limit for the business.
Credit, used carefully, is a way to keep good customers close. Just make sure your stock money comes home.