Selling to customers on credit and collecting the debts

In many Ghanaian neighbourhoods, a shop that never gives credit loses customers. The teacher who is paid at month end, the chop bar owner who restocks every morning, the trader who settles on Friday: they all buy more from the shop that trusts them.

But credit is also where shops quietly lose the most. A notebook goes missing, a name is spelt three ways, and by December nobody is sure who owes what. This guide shows how to give credit and still get paid.

Should a small shop sell on credit at all?

Yes, if it is controlled. Credit to regular customers you know can grow your sales and keep those customers loyal. Credit without limits, records and follow-up turns your stock into money you may never see.

Before you start, ask yourself whether your shop can afford to wait. Every cedi on credit is a cedi you cannot use to restock. If your supplier wants cash on delivery, your credit customers must pay you before your next delivery.

Who should you give credit to?

Give credit only to people you know and can find: regular customers, local businesses that buy from you every week, and staff of nearby workplaces paid on a known date. Avoid first-time customers, however convincing.

For each credit customer, keep:

• Full name and the name people call them.
• Phone number, and a second contact if possible.
• Where they live or work.
• Their limit and their payment day.

How much credit should you allow?

Set a limit each customer cannot go past, based on what they usually buy and how they have paid before. Start small and raise it when they pay on time.

These are example figures. Choose limits that your own cash flow can carry.

How do you record credit sales?

Record every credit sale at the till, against the customer's name, at the moment of sale. Never write it on a loose sheet to enter later, and never let a cashier "remember". The receipt should show the customer's name, what they took and the new balance, and the customer should get a copy.

When the customer pays something back, record it the same way, against their name, with the payment type: cash or MoMo with the transaction ID. Our guide to reconciling MoMo payments shows how to match those payments at the end of the day.

What is debt ageing and why does it matter?

Debt ageing sorts what customers owe by how long it has been owed: under 30 days, 30 to 60 days, 60 to 90 days, and over 90 days. It matters because the older a debt, the harder it is to collect, so you chase the oldest first.

• Under 30 daysGH₵2,400.00
• 30 to 60 daysGH₵1,100.00
• 60 to 90 daysGH₵650.00
• Over 90 daysGH₵900.00

Source: Example figures

In this example the shop is owed GH₵5,050. The GH₵2,400 under 30 days is normal trade. The GH₵900 over 90 days is the problem: talk to those customers this week, in person if you can.

How do you collect debts politely and get paid?

Collect by being regular and clear, not by being harsh. Customers pay the shop that reminds them on time with exact figures, and put off the one that asks vaguely when they walk past.

1. 1Send each customer a statement on the agreed day
2. 2Remind anyone not paid within three days
3. 3Call or visit anyone past 30 days
4. 4Pause new credit for anyone past due
5. 5Agree a payment plan for old debts
6. 6Review limits each month

What a good reminder says

A good reminder is short, friendly and exact. For example:

"Good morning Auntie Ama. This is Kofi's Mini-Mart. Your balance is GH₵280.00 as at 30 September. You can pay at the shop or by MoMo to 024 000 0000. Thank you for shopping with us."

Send it by SMS or WhatsApp on the day you agreed. Do not shame anyone in public or post names on the wall: you lose the customer and often the money too.

Part payments

Accept part payments, and record each one. A customer who pays GH₵50 a week on a GH₵400 debt is still paying. Agree the plan, write it down, and hold new credit until the balance is under their limit.

When should you stop giving credit?

Stop new credit when a customer is past their payment day, over their limit, or has broken a payment plan. Say it calmly at the counter: "We can serve you for cash today, and open the credit again once the balance is cleared." Keep serving them for cash or MoMo; most will come back to clear the debt.

Keep credit separate from leakage

Credit is also a place where stock goes missing. A cashier can record a sale as credit to a friend who never pays. Read stop stock and cash leakage in your mini-mart for the controls that stop this, and check each week that every credit sale has a real customer behind it.

How MPOS handles customer credit

In MPOS you can take payment on credit at the till against a named customer, or split a sale between cash, MoMo and credit. Each customer has a credit balance, a statement and debt ageing, and you can send debt reminders by SMS or WhatsApp. Every sale is recorded against the person who made it, and the dashboard shows how much of the day's sales went on credit.

To set up your own credit customers, start a free trial. For the rest of the setup, read the complete guide to running a shop in Ghana, and for wholesale buyers on credit, retail and wholesale prices and margins.