The credit book that pays itself back: managing customer credit in a small shop
How to sell on credit without losing money — limits, ageing, oldest-first repayments and the one report every shop owner should read weekly. Works on paper or automatically in Shopman.
If your customers are your neighbours, you sell on credit. You always have. Refusing is bad for business and worse for relationships, and most of the time people pay.
The problem is "most of the time". Ask an owner how much is owed to the shop right now and the honest answer is usually "let me get the book" — followed by a number that is larger than they thought, from more people than they remembered, some of it older than they would like to admit.
This is the method for selling on credit and still getting paid. It is not complicated; it just has to be done the same way every time.
1. Credit is a decision, not a default
Every customer who buys on credit should have been given credit — a name, a phone number, and a limit. "Regular, seems fine" is not a limit.
Start small: a limit that would sting if lost but not hurt. Raise it after three clean repayments. A new face gets no credit until there is a history.
Write the limit down where whoever is at the counter can see it before they say yes. The limit is useless if only the owner knows it.
2. Record the sale and the promise
A credit sale needs everything a cash sale does — items, prices, date — plus two things: who, and when they said they would pay. "End of the month" is fine. "Sometime" is not; write the first of next month and treat it as agreed.
Partial payment at the till ("I'll give you half now") is still a credit sale for the other half. Record both parts.
3. Age the debt — the report that changes behaviour
Once a week, sort what is owed by how long it has been owed:
| Age | What it means | What you do |
|---|---|---|
| 0–30 days | Normal | Nothing. This is trade. |
| 31–60 days | Slipping | A friendly reminder at the next visit, or a message. Most debts are settled here — people forget, they are not avoiding you. |
| 61–90 days | A problem | A direct conversation. No new credit until it is cleared. |
| 90+ days | Probably lost | Decide: a payment plan, or write it off and stop extending credit to this customer. Either is better than pretending. |
The totals in each band tell you more than the grand total ever could. A shop with most of its credit under 30 days is healthy, however big the number. A shop with a third of it over 90 is financing its customers at its own expense.
4. Repayments clear the oldest debt first
When a customer hands over money against their account, which sale does it pay off? If the answer is "whichever the cashier picks", the ageing report is fiction — the 90-day debt stays 90 days old while last week's sale gets marked paid.
The rule is oldest first (FIFO). A repayment of 50 against debts of 30 (from March) and 40 (from May) clears March entirely and leaves 20 of May. The customer's balance is the same either way; the age of what remains is not, and age is what you manage.
Write every repayment down with its date and the method — cash, mobile money, transfer. When there is a dispute, and there will be, the record settles it.
5. Know the number every Monday
The whole system comes down to one habit: on Monday, look at the ageing report. Five minutes. Total owed, the four bands, the three biggest names in the 61+ columns. Then do the three conversations.
Doing it on paper or in a spreadsheet
A notebook works — one page per customer, sales on the left, repayments on the right — until you need the ageing view, which means totalling every page by date. In a spreadsheet: one sheet of credit sales, one of repayments, and a pivot by customer and month. Both fail the same way: the cashier sells on credit at 6pm, the owner updates the file at 9pm, and the limit was checked against Tuesday's balance.
What this looks like in Shopman
Shopman's customer module is this method, enforced by the till:
- Every customer has a credit limit, and the till refuses a credit sale that would exceed it — politely, with the balance shown — so the decision is made once, not at every counter.
- Credit sales and partial payments are ordinary sales with an outstanding balance, recorded against the customer the moment they happen.
- Repayments are applied oldest-first, automatically. A cashier takes the money, picks the payment method, and the system clears the oldest invoices and records exactly which ones.
- Debtors ageing is a report — 0–30, 31–60, 61–90, 90+ — by customer, with the totals at the top. On the Professional plan you can export it to PDF or Excel for the accountant.
- Every credit transaction is in the customer's history, with who recorded it, so the dispute at the counter takes thirty seconds.
- Loyalty points sit alongside, if you want to reward the customers who pay on time.
Credit management is on every plan, including the free one.
Start free — no card, 14 days of the full plan
Frequently asked
How much credit should a small shop extend in total? A common rule: no more than two weeks of sales outstanding at any time, and no single customer above a day's takings. Adjust to your margin — a pharmacy at 25% margin can carry less than a wholesaler at 8% on a much larger turnover.
Should I charge interest on overdue accounts? Most small shops don't — it sours the relationship for little return. Cut off further credit instead; that gets paid faster than interest does.
How do I handle a customer who owes money and wants more credit? The answer is in the ageing: if everything they owe is under 30 days and within limit, yes. If anything is over 60, no — and say why. Customers respect a rule more than a mood.