1. Decide who gets credit
Credit is a benefit, not a right. Reserve it for customers you know who have already bought and paid reliably. For a new customer, you can first offer layaway or a partial payment.
2. Set rules before handing over the product
Agree on them with the customer at the time of sale, not once there is a delay.
- Maximum credit amount per person
- Exact payment date
- No new credit while a balance is pending
- Which products are excluded from credit
- Whether you accept partial payments and how often
3. Record every debt the same day
Write down the name, date, products, amount, and agreed payment date. It can be a notebook, a spreadsheet, or an app, but it must always be current. Send the customer a message with the details so you both have a record.
4. Limit how much money you have outstanding
Set a total cap on receivables, for example a small share of your monthly sales. If you reach that cap, extend no more credit until you collect. This protects the cash you need to buy stock.
5. Collect on time and kindly
Send a reminder a day before: 'Hi, just a reminder that your balance of 250 is due tomorrow. Does a bank transfer work for you?'. Collecting punctually isn't rude; letting weeks go by makes the conversation harder.
6. Have a plan for late payments
If someone can't pay in full, propose installments with specific dates and suspend credit until they settle. Also accept that some debts won't be recovered: that's why the per-customer limit should be an amount your business can absorb.
Selling on credit works when there is trust and also a record. With clear limits, current notes, and timely reminders, you can keep that closeness with customers without putting your cash flow at risk.