Udhaar - giving goods on credit with the expectation of later payment - is deeply embedded in Pakistani trade culture. For LPG retailers, it is both a necessary service and a major financial risk. The businesses that manage udhaar well grow faster. The ones that don't eventually collapse under uncollectable debt.
The Real Cost of Untracked Udhaar
Most retailers think their udhaar problem is a collections problem. In reality, it's a tracking problem. When you don't know with certainty who owes you how much - and for how long - you cannot collect effectively. Disputed balances, forgotten debts, and 'I already paid you' arguments are all symptoms of poor record-keeping.
3 Types of Udhaar You Need to Track Separately
- Regular customer credit: Customers who buy on credit as a routine, backed by a relationship.
- Cylinder deposits: Customers who have taken cylinders but haven't returned them or paid the deposit.
- One-time credit: Usually emergency credit to walk-ins - the highest-risk category.
Building an Effective Collections Process
Collections is a process, not a conversation. You need a repeatable system that runs without relying on your memory.
- Set clear credit limits per customer before giving credit, not after.
- Send a WhatsApp reminder when balance crosses two-thirds of their limit.
- Make the balance visible to the customer at every sale - no surprises at collection time.
- Designate one person responsible for collections each week.
- Review the full outstanding list every Monday morning.
When to Cut Off Credit
The hardest part of managing udhaar is knowing when to stop. A good rule: if a customer's balance is older than 45 days and they haven't made a partial payment, pause their credit until they clear at least 50% of the outstanding amount. Communicate this policy upfront to all credit customers - it's not personal, it's business.
Key insight
The customers who argue most when you enforce credit limits are usually the ones who are most likely to default. Your best customers will respect clear policies.
Using Software to Automate the Hard Parts
A digital udhaar system can do most of this work for you: auto-alerts when a customer nears their credit limit, instant balance visibility for counter staff, and monthly statements you can share directly via WhatsApp. The goal is to make managing credit effortless so you can focus on growing your customer base rather than chasing debt.