For many distributors, the real profit is not made when stock is sold but when the money finally comes back. Udhaar is part of how trade works in Pakistan, and refusing all credit is rarely an option. What you can control is how clearly you record it, how quickly you notice problems and how consistently you follow up.
Start with a ledger every shop can trust
Recovery becomes difficult the moment a shop owner says "your figure is wrong". If your ledger is not clean, every recovery visit turns into a debate. A trustworthy shop ledger has a few simple qualities.
- Every invoice, payment, return and adjustment is posted with a date and reference number.
- Opening balances are agreed and signed off by the shop owner when you start a new system.
- Payments are posted the same day they are received, not when someone finds time.
- Returns and scheme credits are recorded against the original invoice where possible.
- The running balance can be printed or shared with the shop at any time.
When a shop owner can see a clear statement with every entry, disputes become specific and solvable. "Invoice 2314 had two cartons returned" is easy to fix. "Your balance looks too high" is not.
Understand aging, not just totals
Total outstanding tells you how much money is out in the market. Aging tells you how much of it is in danger. An aging report splits each shop's balance by how old the unpaid invoices are, usually in buckets such as 0 to 15 days, 16 to 30 days, 31 to 60 days and over 60 days.
Two shops can each owe Rs 200,000. One may owe it all from last week's delivery, which is normal trade. The other may owe it from three months ago, which is a serious warning. Without aging, both look the same.
How to read the aging report
- Fresh balances: normal, but watch shops whose fresh balance keeps growing every week.
- Medium balances: need a polite reminder and a payment date commitment.
- Old balances: need a visit from a senior person and a hold on new credit.
- Very old balances: need a written settlement plan or a decision to stop supply.
Set credit limits and stick to them
A credit limit is not an insult to the customer. It is a rule that protects both sides. Set a limit for each shop based on its buying pattern and payment history, and set a maximum number of days it can stay unpaid.
The key is enforcement. If a salesman can override limits freely, the limit means nothing. Ideally, the system should warn at booking time and require a manager's approval to go above the limit. Over time, shops learn that paying old bills is the way to get new stock.
A weekly recovery routine that works
Recovery is not a one-time campaign. It works best as a fixed, boring routine that happens every week whether things look good or bad.
- Every Monday, print or review the aging report by route and by salesman.
- Mark the top shops with the oldest balances and set a recovery target for each salesman.
- Share a clear statement with each of these shops before or during the visit.
- Record every promise to pay with a date and amount, and follow up on that date.
- Post all recoveries the same day and issue a receipt for every payment, even partial ones.
- On Saturday, compare recovery against target and discuss shops that missed their promise.
- Put shops with repeated broken promises on cash-only supply until the balance improves.
Separate selling from collecting where possible
Salesmen are naturally focused on booking orders. Some will avoid pushing a good customer for payment because they fear losing the next order. In larger distributions, it helps to have a dedicated recovery person, or at least to give salesmen a clear recovery target alongside their sales target.
Whoever collects, cash handling must be tight. Every payment should be receipted, every receipt book or digital receipt should be numbered, and cash should be deposited or handed over the same day.
Mistakes that make recovery harder
- Allowing verbal adjustments that never reach the ledger.
- Giving fresh credit to a shop that has not cleared invoices older than your agreed terms.
- Letting one salesman handle a shop's sales, cash and ledger corrections with no oversight.
- Waiting until month end to look at outstanding balances.
- Writing off old balances quietly instead of recording a clear decision and reason.
Software helps most when it gives you shop ledgers, aging buckets and recovery targets in one place. A distribution system with a dedicated recovery and receivables module can show each salesman exactly which shops to chase this week.
If your udhaar is growing faster than your sales, it may be time to put a proper recovery routine in place. Talk to Brainnine Solutions for a free demo of ledgers, aging and recovery tracking built for distributors.
Frequently asked questions
What is a reasonable credit period for shops?
It depends on your product and market, but most distributors set a fixed number of days per shop and review it based on payment history. The important part is that the period is agreed and enforced.
Should I stop supplying a shop that owes old balances?
Moving the shop to cash-only supply until old invoices are cleared is often better than stopping completely. It protects you while keeping the relationship alive.
How do I handle disputed invoices?
Record the dispute against the specific invoice, check delivery and return records, and settle it quickly with a documented adjustment. Do not let one disputed invoice hold up the rest of the balance.