How much total udhaar can your shop carry?

Your shop can safely carry roughly a quarter of its own working money as open udhaar, and no more than one month of credit selling. Work out both numbers, take the smaller one, write it on a card, and check your total against it before you open a new khata.

The number no shopkeeper knows about his own shop

Ask a dukandar what his limit is for a new customer and he will answer in three seconds. Rs 5,000. Rs 10,000. Whatever the shop and the street support.

Ask him what the whole shop's open udhaar adds up to today, and the answer changes shape. It becomes a range, or a guess, or the honest version: "quite a lot". Most shops have a careful rule for each page and no rule at all for the sum of the pages.

That gap is where credit trouble actually lives. No single customer sank the shop. Forty reasonable decisions, each one defensible on its own evening, added up to a number the shop could not carry, and it showed up not as a bad debt but as a Tuesday when the delivery came and the money was not there.

The per-customer limit answers "is this man safe?". The shop limit answers a completely different question: "can my shop afford to be owed this much at once?" Both questions matter, and only one of them usually gets asked.

Why a limit per customer is not enough

Two shops can follow identical customer rules and end in opposite places, because a limit per page says nothing about how many pages there are.

Think of it as a tap and a bucket. Every new khata opens the tap a little wider. The bucket is your working money, and it does not grow just because your customer list did. A shop that gave forty customers a careful Rs 4,000 limit each has quietly promised Rs 160,000 of goods it may not own.

The second thing a page limit cannot see is timing. Twenty customers who pay every Friday and twenty who pay whenever they feel like it can hold exactly the same balance and put you in completely different trouble. What strains a shop is not the amount owed, it is the amount owed multiplied by the days it stays out.

And a page limit cannot see your own supplier account either. If a good part of your stock is itself on credit, as in buying stock on credit, then your udhaar is being funded by somebody else's patience, and there are two clocks running instead of one.

Working out your ceiling from your own money

You need three numbers, and you already have all three. Sit down once with a page.

Say you want the ceiling for an ordinary neighbourhood shop

Stock on the shelves, at what you paid for itRs 420,000

Money in the galla and the bankRs 55,000

Udhaar already out with customersRs 78,000

Owed to suppliers: their money, not yoursRs 150,000

Your own money working in the shopRs 403,000

Test one: a quarter of your own moneyRs 100,750

Credit selling in a normal monthRs 90,000

Test two: one month of it, at 26 days to collectRs 90,000

Your ceiling is the smaller of the twoRs 90,000

Made-up figures, chosen to show the shape. Put your own stock, galla, supplier balance and credit selling into these rows and the ceiling falls out by itself.

Start with what is working in your shop: the stock at what you paid for it, the money in the galla and the bank, and the udhaar already out. That total is the shop, in rupees.

Then take out the part that is not yours. Whatever you owe suppliers is their money temporarily sitting in your shelves. What is left is your own money in the business, and it is the only pot that can absorb a loss without a phone call to somebody else.

A quarter of that is a sound outer ceiling for open udhaar. The reasoning is plain: you still need most of your money in stock, because stock is what earns; and a shop that keeps more than a quarter of itself out on other people's promises has no room left for a bad month.

Now the second test. Add up a normal month of credit selling and multiply by how long the average customer really takes. Notice the word really. If your customers pay in about twenty-six days, then a month of credit selling is permanently outside your shop even when nobody is late, and that is the balance your shop must be built to carry.

Take the smaller of the two numbers. That is your ceiling. It is a boring number and it will change slowly, which is exactly what you want in a rule.

If the two numbers are far apart, the gap itself is telling you something. A collection figure much larger than the capital figure means your shop is selling more on credit than it can fund out of its own pocket, and it is living on how patient your suppliers happen to be. A capital figure much larger than the collection figure means you have room you are not using, and the honest question there is whether a little more credit, given carefully, would win you customers you are currently sending down the street.

Three tests your ceiling has to pass

A number that fails any one of these is a wish, not a limit.

Three tests a ceiling has to pass before you trust it

• If all of it went bad this month, could you still pay for stock?
• Is it survivable in your thinnest month, not your best one?
• Can you sleep with that number outstanding?
• Does any single customer hold more than a tenth of it?
• Did you count supplier credit as your own money?
• Is the number something you have to recalculate to use?

The first test is the delivery test. If every rupee of your ceiling went bad in the same month, could your next stock delivery still be paid for? If not, the number is too high, whatever the arithmetic said, because the thing that kills small shops is not the loss itself but being unable to buy afterwards.

The second is the season test. Your shop has a heavy month and a thin one. The ceiling has to be survivable in the thin one, because that is exactly when customers ask for more time and your own bills do not.

The third is the sleep test, and it is not a joke. If the total makes you check the register at night, it is above your real ceiling regardless of what any calculation says. A shopkeeper's own nerve is part of his working capital, and running it down costs the shop more than the money does.

Whatever number passes all three, write it on a card and keep it where you keep the khata. A limit you have to recalculate is a limit you will not use.

What happens on the day you reach it

The rule only becomes useful when you know exactly what you will do at the ceiling, decided in advance, on a calm afternoon.

The day your total reaches the ceiling

1. 1New khatas pause; existing customers are not cut offThe shop closes to new credit, not to credit.
2. 2Money in makes room for money out, rupee for rupeeEvery recovery immediately buys back a yes.
3. 3Spend the week collecting, not selling on creditThe two oldest balances beat the ten newest.
4. 4Say it as the shop's rule, never as a judgement"The shop is at its limit until the month clears."
5. 5Keep serving the same customers for cashA pause on credit is not a pause on the relationship.
6. 6Recheck the arithmetic at the end of the seasonThe ceiling moves when your own money moves.

The core move is simple: at the ceiling, the shop is not closed to credit, it is closed to new credit. Money coming in makes room for money going out. That single sentence turns your ceiling into something that manages itself, because every recovery you make immediately buys back the ability to say yes.

It also changes how you spend your attention. When you are near the ceiling, the most profitable hour of your week is not spent selling, it is spent collecting, and the two oldest balances are worth more attention than the ten newest. That is the ordinary business of the udhaar that has been sitting for a year, and a ceiling is what finally makes it urgent.

For customers, the sentence is about the shop and never about them. "The shop is at its credit limit until the month clears, so this one is cash." Nobody argues with a shop-level rule the way they argue with a personal one, which is the same reason a written policy protects a shopkeeper at the counter.

Keeping the number where you can see it

A ceiling that lives in a notebook you total once a season is not a ceiling.

✓A number you can see today

• The ceiling written on a card kept with the khata
• The running total of what customers owe, updated weekly
• A second line: how much of it is older than a month
• Both numbers readable at the moment somebody asks
• A seasonal review beside your customer limits

✕A number you work out later

• Totalling the register once a season and hoping
• "It is around a lakh, give or take."
• Judging the total by how the galla feels
• Finding out on the day a delivery cannot be paid
• Raising the ceiling because the list of customers grew

You need the current total of what is owed to you, today, without adding anything up. If your khata is on paper, that means carrying a running total forward on the front page every week, which takes a few minutes and is worth every one of them.

If your khata is in an app, this is already done. In Wasoolo the total of what customers owe you sits on the home screen, so the comparison against your ceiling is a glance rather than an evening's arithmetic. Whatever you use, the requirement is the same: the number must be available at the moment somebody asks you for credit, not two weeks later.

Add one more line beside it: how much of that total is older than a month. Two shops with the same balance are in different health if one balance is mostly recent selling and the other is mostly a season old. The old part is the part that has already told you something.

When the ceiling should move

Move it up when your own money in the shop has genuinely grown, and only then. Growth in your customer list, or a good season, or a promising new line are not reasons on their own; they are reasons to check the arithmetic again, which is a different thing.

Move it down when your collection is slowing, when your own supplier account has grown, or when a large single balance has appeared. That third one is worth a rule of its own: no single customer should hold more than about a tenth of the whole ceiling, because a shop that would be badly hurt by one page has not spread its risk at all.

Review it once a season, in the same half hour you already spend reviewing customer limits. That is also the right moment to ask the larger question behind all of this, the one in cash only or udhaar: how much of your selling should be on credit at all, given what it costs you to fund it and what it earns you in loyalty.

And keep the ceiling honest by keeping the per-customer limits honest too. A shop rule and a page rule do different jobs, and the page rule, described in how much udhaar to give and to whom, is what keeps any single evening from spending a quarter of the ceiling by itself. Together they cover the shop from both ends: one stops the wrong customer, the other stops the right customers from adding up.

Common questions

A quarter of my own money sounds low. Is that not too strict?

It is a starting point, not a law. Shops with fast, reliable collection can carry more; shops selling to seasonal earners should carry less. What matters is that you choose a number deliberately instead of discovering it after the fact.

Should supplier credit count as my money?

No, and that is the important part. Goods you have not yet paid for are somebody else's money sitting on your shelves. Counting them as yours is how a shop ends up owing two people at once with nothing coming in.

What if my total is already far above the ceiling?

Then stop opening new khatas and let recovery bring it down. Do not call in old balances harshly; that damages more than it collects. A ceiling reached slowly is best left slowly, with new credit paused rather than old credit demanded.

How do I know the real average days to collect?

Take a normal month of credit selling, and see how much of it was actually paid within thirty days. If most of it was not, your true collection period is longer than you think and your ceiling is lower than you think.

Should the ceiling include what my suppliers owe me?

No. Keep it to what customers owe you. Money owed to you by a supplier, in credit notes or returns, is a separate account and it usually settles differently.

Does a shop really need two limits?

Yes, and they do different jobs. The customer limit judges one person. The shop limit judges your own capacity, and it is the only one that can see forty reasonable decisions adding up to an unreasonable total.