Record every credit sale and every part-payment against the customer on the day it happens, so each customer has a running ledger and a clear balance. Decide a credit limit and a due date before you give credit, review the list of money to collect every week, and send a polite reminder with a statement as soon as a payment is late. For large business buyers, check the buyer before giving credit and act early if dues cross your limit.
Why udhaar goes wrong
Credit sales are normal in Indian retail and wholesale. The trouble starts when credit is written in a notebook, part-payments are noted on loose slips, and nobody adds up the total. The customer and the shop then remember different numbers, and the shop usually loses the argument.
Set the rules before you give credit
- Who gets credit. Regular customers you can reach, and business buyers you have checked.
- How much. A credit limit per customer. Stop further credit when the balance reaches it.
- For how long. A clear due date: 7, 15 or 30 days, or "by the 5th of next month".
- In writing. Put the credit terms on the bill for business buyers.
For a new business buyer asking for a large credit, look them up first. FundRaksha Trust lets you check a buyer by GSTIN before you give credit.
Record every credit sale and payment
- Make a bill for every credit sale, in the customer's name, and mark it as credit.
- Record each part-payment on the day it is received, with the mode: cash, UPI, cheque or bank transfer.
- Keep one ledger per customer showing bills, payments and the running balance.
- Do the same for suppliers, so you also know what you have to pay and when.
In FundRaksha Book you can sell or buy on credit, record part-payments, and see each party's ledger and balance in one click.
Review who owes you every week
Pick a fixed day. Open the list of money to collect, sort it by amount and by how old the dues are, and decide who gets a reminder. FundRaksha Book has reports for money to collect and money to pay, and they export to CSV, Excel or PDF.
| Age of the due | What to do |
|---|---|
| Not yet due | Nothing. Send the bill or statement so the amount is agreed |
| 1 to 15 days late | A polite reminder with the balance and the bill details |
| 15 to 45 days late | A phone call, a statement, and a firm date for payment. Pause further credit |
| More than 45 to 60 days late | A written demand. For business buyers, consider a legal notice |
Reminders that work
- Send the reminder with numbers: bill number, date, amount and balance. A vague "please clear dues" is easy to ignore.
- Attach the statement. Export the customer's ledger as a PDF and send it on WhatsApp or email.
- Ask for a date, not just a promise. Note the date and follow up on that day.
- Offer easy ways to pay: UPI, bank transfer, or part-payments on fixed dates.
- Keep reminders in writing. Messages where the customer accepts the dues are useful if the matter goes further.
Send statements regularly
A monthly statement to every credit customer does two jobs. It reminds them without sounding like a demand, and it gets the balance confirmed while both sides still remember the transactions. If the customer disputes an entry, you find out in the same month and not a year later.
When a customer does not pay
- Stop further credit and move the customer to cash.
- Send a written demand with the statement and a last date.
- Agree a payment plan in writing if the customer is willing but short of money.
- For business dues, send a legal notice through an advocate. Many buyers pay at this stage.
- If there is still no payment, consider the legal routes: a cheque bounce case if a cheque was dishonoured, a recovery suit, or MSME Samadhaan if you are an eligible Udyam-registered micro or small enterprise.
A suit to recover money must generally be filed within three years of the amount becoming due, so do not let old dues sit.
FundRaksha Legal handles recovery of unpaid business invoices through a dedicated advocate, with no upfront fee and a 30% success fee only on the amount actually recovered.
Keep the paperwork that proves the debt
- The bill or tax invoice for each sale
- Proof of delivery: a signed challan, receipt or transport document
- The ledger showing bills, payments received and the balance
- Messages or emails where the customer accepts the amount or promises to pay
Track udhaar in FundRaksha Book
FundRaksha Book keeps billing, stock and customer credit in one place, so a credit sale updates the bill, the stock and the customer's balance together. The first 300 invoices are free, then it is ₹999 a year. Start free.
Frequently asked questions
How do I keep track of udhaar in a small shop?
Make a bill in the customer's name for every credit sale, record every part-payment on the day you receive it, and keep one ledger per customer with a running balance. Billing software does this automatically as you bill.
How much credit should I give a customer?
Set a limit you can afford to lose and a due date, based on how long you have known the customer and how regularly they pay. Stop further credit when the limit is reached or a payment is late.
How can I check a business buyer before giving credit?
Verify the buyer's GSTIN and business details first. FundRaksha Trust lets you check a buyer by GSTIN before giving credit.
What can I do if a business customer refuses to pay?
Send a written demand and then a legal notice through an advocate. If that does not work, the routes are a cheque bounce case, a recovery suit or, for eligible micro and small enterprises, MSME Samadhaan. FundRaksha Legal handles this with no upfront fee.
How long do I have to recover an unpaid bill?
A suit to recover money must generally be filed within three years of the amount becoming due. Acting within a few months is far more effective.
This guide is general information for Indian businesses, not tax advice for your specific case. GST rules, limits and dates change; confirm the current position with your CA or on the GST portal (gst.gov.in) before acting.
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