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The best thing about retail sales is immediately getting paid after making the sale. The customer pays in cash or uses a credit card and the transaction ends right there. Unfortunately, the process isn’t the same for everyone, some businesses are different.

Credit requests or demands usually put you in an odd position, especially if you own a small or medium-sized business. Selling on credit to a client who has a good history is a good decision, provided your current cash flow can support it. On the other hand, setting terms with a client who has bad credit can go otherwise.

Always remember, the only thing worse than losing a sale is making the sale and not getting paid for it.

 

Offering Credit can be a Sales Tool

Offering credit to commercial clients can be an important sales strategy. It can help you close a greater number of deals, especially if you can afford to be more generous than the rest of the market. If utilized cautiously, credit can help you grow much faster and take things to the next level.

However, credit can also become a double-edged sword as you undertake additional financial risks – sometimes unnecessary. Unpaid Invoices from clients drag your finances and if you give credit to the wrong client on a bulk sale, the damage may be beyond recovery. Therefore, offer credit very carefully.

 

Who should be offered credit?

Offer a net 30-day deadline only to companies that you think can afford to repay in time. Examining this creditworthiness may appear difficult, but it is often very productive. Commercial credit reports on companies are easily available. Unlike consumer credit reports, corporate credit reports don’t require special permission.

The information in these reports is helpful. They accumulate the payment histories of your clientele and offer a way to determine if your potential client is creditworthy. 

At times, making the right credit decision is like hitting the bullseye, especially when the information is distorted. Thus, it’s not possible to be right every time. Your objective should be to manage risk and make informed decisions rather than eliminating all risk.

 

What if you can’t afford to offer terms?

The challenge that small companies often come across is the fact that offering credit creates cash flow problems. Non-payments and delayed payments often result in lost revenues. If you don’t have reserves sufficient to cover your expenses while waiting for payment, you’ll eventually run into problems. These problems can affect your business when it’s growing and derail your finances.

One way to solve this problem is to become a sword and hover over your client’s head. Not all of them but only the spoiled ones. One easy way to get your money recovered is to use the Udhaar app. This app is a blessing for Small retailers who usually trade on credit and have their payments outstanding. With the Udhaar app, you can send auto-reminders and customized reminders with a deadline and details of the transaction to your creditors and get your money back 10 times faster.

 

One last word of advice

If you have never offered credit to clients, you should start now. Start slowly, give yourself time to understand how your cash flow works, and be prepared to deal with sudden cash shortages. Lastly, start building a reliable cash reserve to tap if clients start paying slower than expected. 

 

Kia aap koi business ya dukaan chala rahe hain? Jese kiryana store, medical store, sabzi ki dukaan, mobile ki dukaan, mechanic ki dukaan, stationary shop, ya kuch or? 

Agar han, to ap ko Udhaar ka masla zarur pesh ata hoga jab customers choti bari chezen Udhaar par le jate hain lekin kisi waja se lotana bhool jate hain. Continue reading

Apni dukaan ka lain dain or munafa barhane ka sab se acha tarika hai ke 1 digital credit management system ko khush-amdeed kahen. Dukaan ka Udhaar sar ka dard ban sakta hai jab ap bhool jaen kisne – kis din – kitna udhaar par saman lia tha. 

Khush-kismati se technology ne is problem ka hal bhe nikal lia or 1 shandar ap banai jis ka naam Udhaar rakha, takey jo dukaandar Udhaar par saman bechte hain, un ke nuqsaan ko kam se kam kia jae or Udhaar par business ko asaan bnaya jae.Continue reading

Ap ke karobar mai finance management software, inventory management software, or apke business ka saathi Udhaar app, kisi naimat se kam nahi. Tamam dukaandar, dukan ke malkaan or hara tarah ka karobar karne wale log Udhaar App se faida utha rahe hain.Continue reading

Trade on credit often motivates customers to pace up and increase the amount of their spending that otherwise may not be possible. Some businesses choose to offer credit and gain a competitive advantage in the industry. Maintaining a balance between increased sales and the risk of reduced cash flow is a significant part of risk management in your business.

Considering the nature of your business and number of transactions, you may choose not to offer credit to new customers. Before offering a credit facility, understand the following.

 

What sort of risk comes along with offering credit

 

• Reduction in cash flow

Waiting for customers to pay reduces your ability to order new sets of inventory from suppliers. Many businesses also consider debt financing to reduce this risk.

 

• Reduction in profit margin 

Providing credit sales often reduces your profit margin and the worst part is, the cost of this only appears in your financial statement. So, you better study the pricing of your products and services before they backfire.

 

• Large debts

Several outstanding debts can pose a risk to your business. This particularly happens if you are exposed to various single transactions.

 

Perform A Credit Check

A credit check is one of the strategies you can use to fix the risk of bad debt. Before you sell goods on credit, have them complete some sort of contract and sign a credit application form to denote consensus.

 

What to collect from individuals:

• a confirmation that they have read and understood the terms and conditions and have agreed to abide by them
• Identification of customers and their contact details
• Permission to conduct a credit check when necessary

 

What to collect from corporate clients:

• comprehensive information of all owners, directors or partners
• 3 trade credit references, at least
• Confirmation of the applicant to ensure they have read and understood the terms and conditions and have agreed to abide by them.

 

Another way to perform a credit check easily is to automate the process. Preferably for small businesses that sell to individual customers every minute. 

A credit management application to note down every transaction as soon as it takes place and sends a message to the customer mentioning the details of the transaction and the deadline to pay their dues.

Udhaar App is a simple, easy, and reliable business application for personal and commercial use that manages your daily business khata efficiently and offers features such as free SMS reminders, daily, weekly, and monthly account statements, notes, and whatnot.

 

Keep a track of debtors

You can either use Udhaar App if you want to be things as simple or you can use a good filing system to keep track of customers. This will assist you to follow up outstanding payments and keep balanced cash flow.

This article will cover some of the best ideas for you to steal and implement in your business for faster growth. They are all practical ideas from the most successful businesses along with some action steps you can imitate and run with right away, without any research, test, or otherwise delay implementing. Moreover, there’s no need to spend money to see them into action.

 Pick the easy ones that are most effective for your business, and don’t hesitate to contact us if you face any problem or have difficulty implementing them because this is the time when we all have to work together.

Continue reading

To ask for payment professionally, businesses, whether small or large, should always forward their payment requests using polite tone but in a straightforward language. Give the client the benefit of doubt and make sure they received the invoice in question. Small businesses should follow up periodically by email to ask for payment and if the client still does not clear the outstanding dues, the next step should be to speak to the customer by phone before considering cutting off future relations with the client or filing a lawsuit.

Continue reading

A while ago, two budding developers designed an exceptional problem solver for the age-old hassle and named it Udhaar app. To date, Udhaar app has acquired thousands of daily users and monetary transactions are recorded in millions of rupees. 

The store owners turned down the old and traditional paper clutters, and handwritten records because certainly, the loss was insufferable for the ones counting on the funds from several unknown customers who bought goods on credit along with a promise to pay the outstanding amount in a couple of days. Unfortunately, those customers didn’t show up only until the store owner himself suffered the debt. 

This unforeseen situation has put the small business owners out on the frontline thinking about a way out. This is when businesses realize that they need a digital solution. Paper registers and journals are the sorts of notes that you prepare and never look back to them. However, records on your mobile phone will be much more accessible and secure. 

The problem at hand marked the day for the Udhaar app. And since day one of the app launch, the popularity never stopped growing. People believed that they can trust Udhaar app with all their valuable information because the return had been improved dramatically. The security they found was mind-blowing and reliability spoke for itself. 

 

The Turning Point

Udhaar app is certainly not only for the forgetfulness of the people but it’s much more than that. Udhaar app gained popularity all because of the underlying features. Let’s go through them and understand the functionality.

 

Top-Class Management

Regular audits regarding the debts of your business are mandatory, but doing it manually is stressful and time-consuming without the use of technology. Your business could face trouble if payments are delayed or customers have defaulted and you could eventually go bankrupt. Oscar Udhaar, helps you keep track of your customers’ payment schedules and receive payment on time.   

 

The Invincible Errors

Without an advanced credit management app, your business has to manually review data and identify errors. In addition to this taking an unnecessary amount of time and energy, the risks associated with human error and data theft are significant. Thanks to Oscar Udhaar, hiring additional employees to analyze data is no longer needed and the risk of human error also diminishes. When you upgrade to an automated application, you are ensured that all data is entered into the system accurately and can be extracted on demand within minutes.

 

Safety and Security 

Protecting your customer’s data is a serious concern that requires your full attention. Your customers trust you with their phone numbers, business records, and other important information. Any mishap with this data and your customers get affected by identity theft or financial fraud. Moreover, the organization may have to face a public relations controversy and be exposed to lawsuits. Fortunately, Oscar Udhaar keeps all your customer information in the high-security cloud base and saves the information as soon as entries are made. It is a paperless process that can save your business good amounts of money otherwise spent on consultation.

 

The moment you start selling on credit, your sales become a mix of cash and credit. Some customers would prefer to pay cash while others would like to buy on credit. Selling on credit is a significant yet unavoidable part of every business. whether it be a small or large business, some factors will always push you into selling on credit/Udhaar. 

There could be multiple reasons why it becomes necessary to sell on credit. For instance, you may want to build a relationship with the customers, you may want to work on customer loyalty or retention or it may be a result of a competitive environment.

When you see your competitors offering credit purchase, it becomes even more difficult to decide whether to offer credit or not. Well, certainly you are left with no choice because of the possible threat of losing customers to rivals. 

Selling on credit is a habit – good or bad, that’s for you to decide – you get stuck with the moment you make the first credit transaction. Therefore, before you finalize your decision to sell on credit, you must dig deep into your decision and your future outcomes. 

 

You may have to check loyalty or trustworthiness of the customers you are dealing with and for that the basic requirement is the background check on their credit history. It’s easier for big brands since they already have the data required. On the other hand, small businesses may rely on their gut feeling or past experiences. 

 

Are Credit Purchases Right for Your Business?

Here are some pros and cons to help you decide.

 

Pros of Offering Udhaar

Gain More Customers

With more than one payment option, more customers will be able to buy from you. And, many customers prefer credit. You invite a whole new market of customers by allowing Udhaar. Offering an easy payment solution encourages customers to return to your business.

 

Get People Talking

Introducing something that benefits customers will always spread a positive word. If you decide to accept credit payments, spread the word and don’t be shy. Let your current and prospective customers know about your new plans.

 

Encourage Bulk Purchases

You are more likely to sell expensive products if you accept credit purchases. Selling large items becomes much easier if you allow customers to pay you later. 

 

Portrays Business Stability

Providing convenient payment options to customers makes your business appear more legitimate and established. Unlike a new, unproven business that is not financially stable to offer credit. 

 

Stand Up Against Competition

Selling on credit to customers gives you the competitive edge you need, not all businesses are capable to do that. Offer credit to give your customers and give a signal to your competitors that you’re growing.

 

Cons of Offering Udhaar

Missing Payments

The biggest risk  comes from giving credit to people who don’t return the favor. There are many customers who will pay on time, but there are also some who will always be late. 

 

Diligent With Records

Your accounting will play a significant role when offering credit to customers. You’ll need to create seperate accounts for each customer who buys from you. And, you need to track the numbers well, how long each customer takes to repay, how often they purchase on credit, and more.

 

Slow cash flow

You don’t have quick access to cash when you sell on credit. Instead, you have more products going out than money coming in. A stagnant cash flow will impact your ability to pay bills, especially when customers repay late.

 

A Simple Solution

All the cons you studied can be overcome and tamed with the help of a simple mobile application for credit management. For example, Udhaar App.

Udhaar app is a simple, free, and reliable platform to manage all your credit problems. Nothing to worry about if you have already started selling on credit. It’s very easy to use. Once you create a customer account and add an entry, Udhaar app will send an automated text to your customer informing them of outstanding balance. You can use it in different languages, prepare customer reports for week, day or months, send them reminders and what not.

 

Should you offer credit to customers?

Overall, the final decision about offering credit to customers should be yours. Remember, you don’t have to sell on credit to everyone. Many stores keep credit checks using the Udhaar/Khata app and only offer credit to customers who have proven they can make payments on time.

  

Purchase on credit is a common practice in Pakistan. No matter the size of your business, people always have that bunch of clients who are used to paying late. Whether it’s a customer who constantly crosses the deadline or that one-timer who completely gets away with it, dealing with these customers can be pretty stressful.

Though it’s not a recommended practice for any business to sell goods on credit, however, sometimes owners get lucky and those one-timers become life-timers. Moreover, there are several examples of businesses that solely run from trade on credit. 

 

Reasons Why Customers Pay Late

 

Low Priority

• You probably won’t like it, but you may not be your customers’ first priority. Same as you do with your business, your customers value their debts according to how significant they are to their work. If your product/service ranks low, you’ll get paid last.

 

• Sometimes there’s a simple explanation for pushing deadlines – like a dysfunctional finance department. Despite your repeated reminders to collect payments, they simply don’t have any knowledge, when it’s due, or where it’s supposed to go.

 

Lack of Urgency

• Extreme leniency with a customer can drive a lack of urgency. Sometimes, they might take you for granted and feel like they can get away with it. They know that the consequences are minor and would rather settle other debts that have negative outcomes.

 

 Tough Times

• This is one of the troublesome moments when you realize you can’t do a lot to force them into paying. Your customer is going through a difficult time where sales have reached the bottom and they don’t have resources to pay you. 

 

Here’s How You Deal With It

Understanding the reason behind late payments is only the first step towards achieving a resolution. Once you recognize where customers are coming from, you’ll be able to make better choices for your business.

 

State Your Terms Up Front

Consistent on-time payments start with setting clear conditions on the front end. Before you start any project, the client should exactly know the cost, when the payment is due, and what happens in case of a breach.

By clearly mentioning the terms and getting the customers to agree to them, you minimize the chances of excuses. After all, it’s much difficult for a client to feign ignorance when there was a clear conversation about the issue.

 

Personalize the Follow Up

 Any type of follow up is better than no follow-up, but be careful when sending automated emails or phone calls to clients. While they prove to be a decent reminder to the customers, they don’t do much in terms of provoking urgency. By personalizing the follow-ups, you make sure they know that there’s a face behind the late invoice and encourage them to step up and make the run for it.

 

A Little Help From Technology

You can go take the harder way or you can think about it and work smart. There is a possibility that you keep on sending automated emails and phone calls to your customers and they still don’t respond. Maybe these emails are the reason this matter loses its urgency or becomes less important to clients. 

The easiest solution for me is a mobile application that keeps records of all your transactions and sends auto-reminders to customers to pay their debts. These aren’t just auto-reminders, you can customize your message with a little bit of love and simplicity and send it to your clients without any hassle. You won’t even know it and would get your payback even before the deadline. One such app is the Udhaar app.

Udhaar app is an online ledger (like an online khata or journal) to record your outstanding debt, and send auto-reminders to customers to fasten Udhaar collection. It’s your business’ personal Khatabook that holds every little information about your transactions. Udhaar is an easy, safe, and reliable app with amazing features like reporting, multi-language support, data backup, offline mode, and many, many more.