Walk into any kirana store and ask how they pay their distributors. The answer is almost always some version of "next time the salesman comes." Credit is not an exception in general trade — it is how the channel works. A distributor who refuses credit loses the outlet to one who doesn't.
That makes credit the distributor's single biggest risk. Not a bad debt here and there, but the slow build-up of old bills that nobody is quite tracking: ₹4,000 at one store, ₹11,500 at another, a cheque that bounced in July. Multiply by 600 outlets and the business is quietly financing its customers.
How credit gets out of control
It rarely happens because a distributor is careless. It happens because the information arrives too late and in pieces:
- The ledger lives in the office, but collections happen in the field. The salesman does not know what the outlet really owes.
- Payments are recorded against the customer, not the bill, so nobody can tell which invoices are old.
- Collections sit with the salesman for a day or a week before reaching the office.
- Credit days are verbal. "Give him 15 days" becomes 45 without anyone deciding it should.
- There is no routine. Old outstanding is chased when cash is short, not every week.
A worked example
A distributor serves 420 outlets on six beats, each visited once a week. Average weekly billing per outlet is ₹6,000. Agreed credit is 14 days.
If customers pay exactly on terms, outstanding should sit at about two weeks of billing: 420 × ₹6,000 × 2 = ₹50.4 lakh.
Now suppose a quarter of outlets drift to 30 days and a tenth to 60 days:
| Outlets | Share | Days outstanding | Outstanding |
|---|---|---|---|
| 273 | 65% | 14 | ₹35.5 lakh |
| 105 | 25% | 30 | ₹27.0 lakh |
| 42 | 10% | 60 | ₹21.6 lakh |
| 420 | ₹84.1 lakh |
Nothing dramatic happened — no single big default — yet the distributor now has ₹33.7 lakh more locked in the market than planned. At a 12% cost of money, that is about ₹4 lakh a year in interest alone, before any bill goes bad.
The system that keeps credit in check
1. Credit terms per customer, written down
Set credit days (and, if you use them, credit limits) per customer or per outlet type. The salesman should see the terms, not remember them.
2. Outstanding visible at the counter
When the salesman opens the outlet in the app, he should see what is owed and how old it is — before taking the next order. That is when the conversation about payment is easiest.
3. Every collection recorded at the moment it is received
Amount, mode (cash, UPI, cheque), and which bills it settles. A collection recorded later, from memory, is where money disappears.
4. Same-day reconciliation
Each evening, cash handed in and UPI received should match what was recorded in the field. See van sales reconciliation for the same discipline applied to stock.
5. A weekly ageing review
Every week, look at the ageing: who has bills beyond terms, and which beat they are on. Put the oldest 20 outlets on that week's collection plan.
Common mistakes
- Collecting against the oldest bill by default when the customer meant to pay a specific one — and then arguing about it for months.
- Taking a fresh order from an outlet that is far over terms without anyone deciding to.
- Treating cheques as cash before they clear.
- Measuring salesmen on billing alone, so collection is someone else's problem.
How Zaqnet handles retailer credit
- Collections are recorded in GroundLink at the outlet — cash, UPI or cheque — against the customer and the bills they settle, online or offline.
- The office sees the same records in ControlRoom, with each customer's outstanding and payments.
- Day-end closure brings the day's collections together with sales and deliveries, so gaps are found the same evening — see day-end closure.
- AutoSync forwards supported records to TallyPrime or BUSY, so accounts work from the same numbers.
Credit in general trade is not a risk you can remove. It is a risk you can see — or not.
For a deeper look at the collection process itself, read collections management for distributors.