How-to guides
How to Manage Udhar: Credit Limits, Reminders and Getting Paid
Udhar keeps regular customers loyal, and it quietly eats the cash a shop needs to restock. Most shops do not lose money on udhar because customers refuse to pay; they lose it because nobody knows exactly who owes what, since when, and when they promised to pay. A simple system fixes most of that.
Key takeaways
- Give credit only with a limit and a payment day for each customer.
- Record every credit sale as a bill in your books, not just a line in a notebook.
- Send statements on a fixed day each month, before you need the money.
- GST is due on a credit sale when you invoice it, whether or not the customer has paid.
Decide the rules before the first request
- Who gets credit: regular customers you know, institutions such as messes, hostels and offices, and no one on the first visit
- How much: a limit for each customer, such as one week's or one month's usual purchases
- When they pay: a fixed day, like the 5th of the month, or within a set number of days
- What happens when they cross the limit: cash only until the balance comes down
- Who can approve credit beyond the limit: only the owner
Rules that apply to credit sales
| Rule | What it means for udhar |
|---|---|
| GST time of supply | Tax on a credit sale is due with the return for the period you invoice it, not when the customer pays |
| Credit notes for returns | Goods returned against an udhar bill are adjusted with a credit note, which reduces both the balance and the GST |
| 180-day rule for your own purchases | When you buy on credit, you must pay the supplier within 180 days of the invoice or reverse the input credit claimed, re-claiming it when you pay |
| Bad debts | Writing off an unrecoverable balance is an accounting entry; ask a chartered accountant about the tax treatment before doing it |
Checked on 11 November 2026 against the CGST Act, 2017 (sections 12, 16(2) and 34) and CGST Rules, rule 37.
Record it properly
A notebook records what a customer took; it does not tell you the total udhar in the shop, how much is over 60 days old, or whether the same customer is being given credit by two staff members. Record each credit sale as a bill against the customer's name, and each payment against the bills it settles. The customer's ledger then shows bills, payments and the balance, and an ageing report shows how old the money is.
Sri Lakshmi Stores, the kirana in our accounting examples, sells ₹8 lakh a year on credit to messes, hostels and regular families. On 31 March its customers owed ₹1,20,000, of which ₹6,000 was over 90 days old. Without those two figures, a shop owner only knows that "some people owe some money".
Reminders that keep the customer
- 1Send a statement on a fixed day every month to every credit customer, whether they are late or not. It feels like routine, not chasing.
- 2Keep the message short: the balance, the oldest unpaid bill, and a UPI link or QR to pay.
- 3Follow up personally only for balances past the agreed day.
- 4When a customer crosses the limit, say so at the counter before billing, not after.
- 5Record every promise to pay with a date, and check it on that date.
The numbers to watch
| Number | How to work it out | Healthy sign |
|---|---|---|
| Total udhar outstanding | Sum of all customer balances | Stable or falling relative to sales |
| Over-60-day share | Balances older than 60 days ÷ total udhar | Small and not growing |
| Debtor days | Udhar ÷ yearly credit sales × 365 | Close to the payment days you agreed |
| Credit sales share | Credit sales ÷ total sales | Under control and intentional |
| Customers over limit | Count of customers with balance above their limit | Zero, or each one approved |
Common mistakes
- No limit, so credit grows until the customer cannot pay
- Reminding only when the shop is short of cash, which feels like an emergency to the customer
- Recording payments without linking them to bills, so disputes cannot be settled
- Giving discounts to settle old balances without a credit note, so books and GST do not match
- Forgetting that your own supplier credit has a 180-day GST clock
Where TripleBill fits
TripleBill keeps a ledger for every customer with bills, payments and running balance, a credit limit per customer, receivable ageing, and a payment reminders list with ready messages for WhatsApp, email or copy; you press Send, nothing goes automatically. Credit and udhar tracking is on Starter and above; sending invoices on WhatsApp from the app is on Pro.
Frequently asked questions
How much udhar should a shop give?
Set a limit per customer based on their usual purchases and payment record, and keep total udhar at a level your working capital can carry.
Is GST payable on udhar sales before the customer pays?
Yes. GST is due for the period in which you issue the invoice, regardless of payment.
How do I remind customers without offending them?
Send statements to everyone on a fixed day every month. Routine reminders feel normal; sudden ones feel personal.
Should I charge interest on late udhar?
Only if agreed in advance. Most shops do better with limits and regular statements.
How do I write off udhar that will never be paid?
Pass an entry debiting bad debts and crediting the customer, after real efforts to recover. Ask your accountant about GST and tax treatment.
What is the 180-day rule?
If you claim input credit on a purchase, you must pay the supplier within 180 days of the invoice date or reverse the credit until you pay.
About the author
Written by the TripleBill team, the people who build the billing and accounting software this site is about. We check competitor prices on their own websites on the date shown above, and we say so when our product is the weaker choice. This article is general information, not tax advice.
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Related pages
Know who owes what, and since when.
Customer ledgers, credit limits and ageing in one place.