MoneyInstallments
When a customer wants to finish his qist early
He has the money and wants to clear the whole plan today. What to keep, what to hand back, and how to keep the arithmetic honest on both sides.
A ten-month plan closed in the fourth month
- M1Plan made. Cash price, plan price and the early-close line all written down.Rs 4,800Paid
- M2Installment paid on the agreed date.Rs 4,800Paid
- M3Installment paid on the agreed date.Rs 4,800Paid
- M4He arrives with the cash and asks to finish the whole thing today.Rs 24,000Paid
- M5Six installments that never happen, and the share of the extra that goes back.Rs 4,800Returned
Decide the early-settlement rule when you make the plan, not when he asks. Say the plan price out loud, say what a full early payment would cost instead, and write both numbers on the paper. Then the day he arrives with the cash there is nothing left to argue about.
The good news that starts a bad conversation
He comes in on a Tuesday looking pleased. Something has gone right for him, and he says he wants to finish the whole thing today.
Then the conversation goes wrong, because neither of you has ever discussed this. He expects to pay what the item was worth in cash, because he is paying in cash. You expect the plan total, because that is what the plan says. The gap between those two numbers is sitting on the counter and somebody has to lose it.
You give in, because he is standing there with money and you do not want a scene. Or you hold firm, he pays, and he leaves feeling that he was charged extra for doing the right thing. Neither ending is good, and both were completely avoidable at the moment the plan was written.
Why the gap exists at all
The number that causes the argument is the markup you added when the plan was made, and it is worth being precise about what it is for.
An installment price is higher than a cash price because you handed over goods and got your money back slowly. Your money sat inside his fridge or his motorcycle for months instead of sitting in your stock, and the difference between the two prices is what you charged, once, at the start, for accepting that. It is not tied to time passing and it does not grow if he is late. It was fixed on the day the plan was made, and there is a full treatment of setting it in building a qist plan that stays fair.
That matters here for one reason. If the extra was a one-time charge for the whole arrangement, then a customer who ends the arrangement early has genuinely used less of what he paid for. He does not have a legal claim on it. He has a fair point, and pretending he does not is how a happy customer walks out unhappy.
Three honest rules, and what each one says about your shop
There is no single right answer. There are three defensible ones, and the only real mistake is not choosing before the situation arrives.
Three defensible rules for an early settlement
Most small shops end up on the middle rule, and it is the one that reads best from the customer's side. It keeps a clear share of what you charged, because your money genuinely was tied up for the months that passed, and it hands back a share of what he has not used. Both halves are easy to say in one sentence, and a rule you can say in one sentence is a rule nobody argues with.
Whichever you choose, choose it once and use it for everybody. A shop that gives a discount to whoever pushes hardest teaches its customers to push.
What the middle rule looks like in numbers
The arithmetic is small enough to do at the counter, and doing it in front of him is half the value.
Say a ten-month plan is settled after four months
Notice that the customer is not being handed the whole markup back. He is being handed back the part that belongs to the months that never happened. That is the sentence to say out loud, because it is both true and easy to accept: you kept what covered the time your money was actually out, and you returned what covered the time it will not be.
Say the final figure once, clearly, and then stop talking. The number does the work. Adding reasons after the number makes an honest calculation sound like an apology.
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Write it into the plan on the first day
Everything above is easy in advance and awkward afterwards, so move it to the front.
When the plan is made, the paper he signs should carry three numbers, not one: the cash price, the plan price with its schedule, and one line saying what an early full settlement would cost at a couple of points along the way. It takes an extra minute and it removes the entire argument permanently.
It also does something useful for you at the moment of sale. A customer who can see that finishing early costs less has a reason to finish early, and a plan that closes in half the time frees your money for the next sale. Several shops find that this line alone shortens their average plan, which is worth far more than the small amount handed back.
Keep the record straight as you do it. When the plan closes early, the closing payment should be recorded as what it is, with the returned portion shown as its own line rather than quietly adjusted into the amount. A settlement that cannot be read back later is exactly the kind of entry that becomes an argument about a payment already made months afterwards. In Wasoolo the plan is closed with the final payment and the adjustment recorded separately, so the page shows what actually happened.
When early really means a discount request
Some customers are not settling. They are opening a negotiation, and it helps to know which one is standing in front of you before you start doing arithmetic.
The real settlement has a shape. He has the full amount with him, he wants to hand it over now, and he asks what the total is. The negotiation has a different shape: he asks what you would take, he does not put money on the counter, and the amount he suggests moves when you answer.
Handle both the same way, which is to state your rule first. "If you clear the whole thing today, the total is this." One number, calmly, before any bargaining starts. A rule stated first is a position; the same number offered after he names his is a starting bid, and from there it only goes one direction.
If he keeps pushing beyond the rule, the honest answer is that the rule is the same for everybody and you cannot move it for one person without moving it for all of them. That sentence ends almost every version of this conversation, because it is obviously true and it is not personal.
What you should never do is quietly accept less and record the plan as fully paid. Whatever you actually settle for is what goes on the page, with a line saying why. A plan closed at a figure that does not match its own record is the kind of thing that looks fine for a year and then cannot be explained to a partner, a family member or the customer himself.
And if you do choose to give somebody a better deal than your rule, say plainly that it is a one-time thing for a stated reason. An exception that is named stays an exception. An exception that is silent becomes the new rule the moment anybody hears about it.
The half-way version: he wants to pay a big chunk
More common than a full settlement is the customer who has some money and wants to reduce the plan without ending it. This one has a trap in it.
Ask him which he wants: smaller installments over the same period, or the same installments over a shorter period. Most customers have not thought about it and will say whichever you say first. The second option is almost always better for both of you, because it ends the arrangement sooner and leaves his monthly figure at a level he has already proved he can manage.
Do not treat a large lump as an advance against the next few installments and leave the schedule alone, because that is how a plan quietly loses its shape. Two months later nobody remembers whether those installments were paid or covered, and the plan drifts into the state where both sides are working from different totals. Rewrite the schedule properly instead, which is the same discipline that keeps a plan readable after a missed installment.
And apply your early-settlement rule to the chunk in the same proportion, or do not apply it at all and say so. What you must not do is apply it sometimes.
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Common questions
Am I losing money by giving part of the markup back?
You are giving up part of a charge you made for a period that is not going to happen, and you are getting your capital back early to put into stock that earns again. In most shops the returned portion is smaller than what the money earns in the months it is back on the shelf. What genuinely loses money is refusing, then having the customer stop the plan in an argument and pay slowly out of resentment.
What if he wants to settle early and I have already spent the profit?
The profit was never earned in advance; it arrives as the installments do. If an early settlement is uncomfortable, that is a signal about how tightly your shop's cash is running rather than about this customer. The safest response is to take the settlement, because a large payment today is worth more to a stretched shop than a schedule of small ones, and then look separately at why the cushion was thin.
Can I refuse an early settlement completely?
You can, but there is rarely a good reason to. The money is in front of you, the risk of the plan ends, and refusing it makes the shop look as though it wants the arrangement more than it wants the sale. If you do refuse, say why in plain words and expect the customer to remember it. Most shops that refuse once find the customer never takes a plan with them again.
What should I do about a guarantor when the plan closes early?
Tell him the same day, in whatever way he first agreed to stand. A guarantor who is never told the plan finished carries an obligation in his head for months and feels foolish when he finds out by accident. A short message saying the plan is complete and he is free of it costs you nothing and is remembered warmly, which matters the next time you need somebody to stand for a customer.
He paid in full early but the item is faulty. Does the settlement change anything?
No, and it should not. The plan was about how the money is paid, and the goods carry whatever promise they always carried. Handle the fault exactly as you would for a cash buyer, because the moment a customer feels that paying early cost him his warranty, the story travels much further than any single sale is worth.
How do I explain the returned amount so it does not sound made up?
Say the method rather than the result. "You have paid for four of the ten months, so I am keeping the share for those and returning the rest." Anybody can follow that sentence, and it stays true whichever numbers you put in it. A figure with no method behind it always sounds negotiable, and the moment it sounds negotiable somebody starts negotiating.