Managing Credit Sales Without Losing Your Shirt

Credit is a tool. Used well, it doubles sales. Used badly, it sinks the business.

When to offer credit

• Regular customers with ≥6 months of on-time cash purchases.
• B2B buyers (salons, mini-shops, kiosks) with verifiable trading.
• Corporate accounts with documented terms.

Don't extend credit to walk-ins. Ever.

The three-check rule

Before approving any new credit line:

1. ID verified: National ID photographed, on file.
2. Phone number confirmed: call the number while they're standing there.
3. Reference: another supplier who extends them credit. Phone-call confirmed.

Three checks. Every time. No exceptions.

Setting the limit

Start low. TZS 50,000 or one typical purchase, whichever is smaller. Raise it only after three on-time repayment cycles.

Collection discipline

• Day 0 invoice: SMS at the time of the sale.
• Day -7 reminder: 7 days before due.
• Day 0 reminder: on the due date.
• Day +3 call: human phone call.
• Day +7 stop credit: no new sales until cleared.
• Day +30 collection: escalate.

The SMS chain works 70% of the time. The call handles another 20%. The last 10% is where you earn your margin — or don't.

Metrics to watch

• Days Sales Outstanding (DSO): how long on average to collect. Aim for <45 days.
• Bad debt ratio: written-off credit as % of total credit sales. Keep <2%.
• Credit-to-cash sales ratio: don't let it exceed 40% — you need working capital.

A POS with a credit module that auto-sends reminders and locks new sales on overdue accounts will handle 90% of this for you.