BarkahSuiteAsk any distributor or trader where their cash is, and the honest answer is usually "in the market". Selling on credit (udhaar) is how business works in Pakistan and the Gulf — but without control, profitable sales turn into money you never see. Credit control is not about refusing customers. It is about knowing, every day, who owes what, how late it is, and who to call first.
Why receivables quietly drain a growing business
A business can show a healthy profit and still run out of cash. Every rupee a customer holds past its due date is a rupee you are financing — often with your own running finance, at your bank's markup. The usual causes are familiar:
- Credit terms agreed verbally by a salesman and never written down.
- No limit on how much one customer can owe, so a few large accounts keep growing.
- Balances kept in a register or spreadsheet that is updated days after payments come in.
- Customers disputing balances because nobody can quickly show them a clean statement.
- Follow-up that happens only at month-end — by which time the oldest dues are older still.
Step 1 — Give every customer a credit limit and credit days
Two numbers define a credit relationship: how much a customer may owe (the credit limit) and for how long (credit days, e.g. Net 30). Write both against the customer, not in a salesman's memory.
- Base the limit on real buying. Roughly one credit period of normal purchases, plus a small margin. A customer buying 300,000 a month on 30 days needs a limit near 300,000–350,000, not 1,000,000.
- Start new customers small. Advance or cash for the first few orders, then a modest limit, raised after a track record of on-time payment.
- Group customers into tiers. Key accounts, regular retailers and walk-in buyers deserve different terms — and different attention.
- Review limits quarterly. Raise them for good payers; cut them for slow ones before the problem grows.
Step 2 — Read the ageing report, not just the total
"Total receivable: 4.2 million" tells you very little. An ageing report splits each customer's balance by how overdue it is, and that is what tells you where the risk is.
| Bucket | What it means | Action |
|---|---|---|
| Not yet due | Healthy credit | No action — a friendly reminder near the due date |
| 1–30 days overdue | Normal slippage | Send a statement, polite call |
| 31–60 days | Warning sign | Call the owner, agree a payment date, slow new supplies |
| 61–90 days | At risk | Hold further credit until a payment is received |
| 90+ days | Likely bad debt | Senior follow-up, payment plan, consider legal or provision |
Watch two numbers alongside it: overdue amount per customer, and limit utilisation — how much of the credit limit is already used. A customer at 95% of their limit with nothing overdue is a growth account; a customer at 60% with money in the 61–90 bucket is a risk.
Step 3 — Run a weekly recovery routine
Recovery works when it is a habit, not an event. A simple weekly rhythm:
- Same day every week (Monday works well), open the overdue list sorted by amount and age.
- Send statements to every customer with an overdue balance — a clear statement settles most disputes before they start.
- Call the top ten largest and oldest balances. Agree a specific date and amount, and note it.
- Give salesmen and recovery staff their own list by route or area, so collections happen on the same visit as the next order.
- Record receipts the same day so the next week's list is accurate — and nobody gets called for money they already paid.
Step 4 — Make the statement impossible to argue with
Many "late payments" are really disputes: a missing return, a discount not given, a payment not recorded. A good customer statement shows the opening balance, every invoice, receipt and return in date order, a running balance, and the open invoices with their age. When the customer and you are looking at the same clean statement, the conversation moves from "is this right?" to "when will you pay?".
Credit control KPIs worth tracking
| KPI | Why it matters |
|---|---|
| Days Sales Outstanding (DSO) | How many days of sales are sitting with customers. Falling DSO = faster cash. |
| % of receivables over 60 days | The share of your money that is genuinely at risk. |
| Customers over their limit | Where salesmen are stretching credit beyond policy. |
| Collections vs. sales this month | If collections trail sales month after month, the gap is your cash problem. |
Why spreadsheets struggle with credit control
Credit control needs live data: today's invoices, today's receipts, today's returns. In a spreadsheet, the balance is only as fresh as the last time someone updated it — so recovery staff chase the wrong customers, statements are wrong, and the owner can't see risk until it has already become a bad debt. When sales, deliveries, receipts and accounts live in one system, the balance is right the moment a transaction is saved.
Credit control with BarkahSuite
In BarkahSuite, each customer in the Party Master carries a credit limit and credit days, and those credit days flow into the payment terms of sales orders and the due dates of invoices automatically. The Credit Control screen shows every active customer's outstanding balance, overdue amount, limit utilisation and a High / Medium / Low risk flag, so you can adjust limits in one place. The Party Ledger gives a customer statement with balance brought forward, running balance, open invoices and an ageing split — ready to export to PDF or Excel and send. Because everything syncs live across users, the recovery team, sales team and accounts always see the same balance. You can try it free for 30 days with your own customers and invoices. See BarkahSuite for distributors →
Frequently asked questions
How do I decide a customer's credit limit?
Start from what the customer actually buys in one credit period. If they buy about 300,000 a month on 30 days, a limit of roughly 300,000 to 350,000 is sensible. Raise it only after a few months of on-time payment.
What is a receivables ageing report?
It splits what each customer owes by how late it is — not yet due, 1–30 days overdue, 31–60, 61–90 and over 90 days. The older the bucket, the harder the money is to recover, so it tells you whom to chase first.
How often should we follow up on overdue payments?
Weekly. Pick a fixed day, review the overdue list, send statements and call the largest and oldest balances first. Recovery that waits for month-end is recovery that slips.
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