ProblemStock
Lending goods to the shop next door
A dozen soaps here, a carton of milk there, nothing written down. Borrowing stock between neighbouring shops is useful, until neither side can total it.
Borrowing stock from the shop beside you is useful and should continue. What must change is the record: write every item that leaves, price it at your own selling rate, agree whether it comes back as goods or as money, and settle the whole thing on a fixed day every month.
The dozen soaps that never came back
A customer wants a brand you have run out of. The shop three doors down has it. You send your helper, he brings a dozen bars, you sell them, and you tell yourself you will replace them from your next delivery.
Two weeks later the same shopkeeper is short of milk cartons and takes four of yours. Then you take a bag of rice off him on a Sunday when the market is shut. Then he takes cooking oil. None of it is written anywhere, because writing it would feel like distrust between two men who have sat outside their shops together for years.
Six months on, neither of you can say who is ahead. You have a feeling it is you. He has the same feeling, about himself. Both of you are probably right about the last three exchanges and completely wrong about the first twelve.
This is not a small leak. In shops that do it often, the running imbalance sits somewhere between a day and a week of stock, permanently outside the shop, in a form neither man can count.
Why shops lend to each other at all
It is worth saying clearly that this practice is good, because the usual advice is to stop it, and stopping it costs more than it saves.
When a customer asks for something you do not have, you have three choices. Send him away, which sends him to the shop that had it. Make him wait for your next delivery, which he will not do for soap. Or borrow one unit and keep the sale. The third choice keeps the customer and costs you almost nothing, which is why every street does it.
It also works the other way. A neighbour who can get a carton from you at nine in the evening does not need to hold as much stock, and neither do you. Between two shops, the borrowing is quietly doing the job of a shared warehouse. That is real value, and it is the same argument that makes shopkeepers hold less of the slow items described in the stock that never sells.
So the goal is not to stop. The goal is to stop it from becoming an unmeasured balance between two friends.
The three leaks nobody notices
Each of these is small on the day and large over a year.
Three leaks that open when nothing is written
- Returned as a cheaper brand, and nobody mentions it
- Returned in twos and threes until nobody can total it
- Taken every week, returned slowly: that is credit
- One line at the counter: date, item, count, rate
- Said out loud as it goes: goods back, or money back
- A fixed settling day, whether it feels big or not
The first leak is the item that is returned in a different form. You lent twelve soaps of one brand; he returns twelve of another that costs Rs 8 less. Nobody mentions it, because mentioning it over Rs 96 feels absurd. Twenty exchanges later it is not Rs 96 any more.
The second is the return that never arrives because it was never counted. Both shops are busy, the goods came back in twos and threes across three weeks, and now the question "is it settled" has no answer that either man can support.
The third is the one that actually hurts: the borrowing that is really credit. When the shop next door takes goods every week and returns them slowly, you are not lending stock any more, you are financing his shop out of yours. That is a completely reasonable thing to do if you have decided to do it. It is a bad thing to discover.
Goods back, or money back: decide before it leaves
The single most useful habit is to name which of the two it is, at the counter, before the item goes.
These are not the same arrangement, and treating them as one is what makes the record impossible. Goods for goods is a swap, and it should be same item, same size, same brand, within a few days. Goods for money is a sale, and it should be priced at the moment it leaves.
Say it in one sentence as the item goes out. "Take the dozen, send me a dozen of the same by Thursday." Or: "Take them at my counter rate, Rs 85 each, and we will settle at the end of the month." Either sentence is friendly, both are normal in any bazaar, and both leave you with something you can write.
If you are pricing it, price at your selling rate rather than your buying rate, and understand what you are choosing. Your buying rate is generous and it is what most shopkeepers reach for. Your selling rate is what the goods would have earned on your own shelf, and that is the honest number when the other shop is going to sell them.
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Write it the moment it leaves the shop
The record does not need to be elaborate. It needs to exist before the goods are out of sight.
Write it before it is out of sight
- One page under the other shop's name, both directions on it
- Date, item, count, rate, and who took it
- "I am writing these so we do not have to remember."
- A running balance you can read in one look
- Returns entered the day they arrive, not later
Do not trust the two of you to remember
- A note on a scrap of paper beside the till
- "He knows, I know, we will sort it out."
- Writing what went out but never what came back
- Two separate lists in two shops that never meet
- Raising it only when the amount has grown large
One line: the date, the item, the count, the rate, and which shop. That is it. A page at the back of your register, or a khata in your app under the other shop's name, works equally well. What does not work is a mental note, and what works worst is a note on a scrap of paper near the till.
Treat the neighbouring shop exactly as you would treat any other account. It is a party you both give to and take from, which is the same shape as a customer who is also your supplier, and it wants the same treatment: one page, both directions on it, a running balance you can read in one look.
Tell him you are doing it, and tell him why, in a way that costs nothing: "I am writing these down so we do not have to remember." Nobody has ever taken offence at that sentence, because it is obviously about the goods and not about him. Most neighbours are relieved, because they were uncomfortable too and did not want to be the one to raise it.
Settle on a fixed day, not when it feels large
An unsettled balance between two shops does not stay still. It drifts, and it drifts in whichever direction the busier shop is pointing.
Say two shops exchange goods for six months, unwritten
Made-up figures, chosen to show the shape. Put your own count of exchanges and your own average value into these rows.
Pick a day. The first of the month, or the day one of you goes to the wholesale market. On that day the two pages are read out, the difference is paid in cash, and both records go back to zero. The whole thing takes five minutes when the pages exist, and it is impossible when they do not.
Settling regularly does something more valuable than balancing the numbers: it keeps the amount small. A balance that clears every month can never grow into a figure that either shop would find painful, which means the arrangement can survive a bad season for one of you. That is the same reason a shopkeeper does not let a supplier account run for a full quarter, as in buying stock on credit without choking your cash.
When to stop lending to a particular shop
Sometimes the honest answer is to wind it down, and there are three clear signals.
The balance only moves one way for three months running. That is not borrowing, it is a loan, and it should either be called a loan out loud with a repayment date or it should stop.
Returns keep arriving as a different brand, a smaller size, or a slightly damaged pack. One of those is an accident. A pattern of them is a decision somebody made without telling you.
Or your own shelf goes empty because of it. If a customer of yours has ever been turned away from something that is sitting on the shelf next door on your account, the arrangement has stopped serving your shop, and the fix is the same as for any other stock that has quietly left your control, described in when stock goes missing.
Ending it does not need a confrontation. "I am keeping my stock tight this season, so let us clear what is open and take it item by item from now on." Then settle, and start again with the record in place. Most of these arrangements are worth saving; almost none of them are worth saving in their unwritten form.
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Common questions
Is it not insulting to write down what a neighbour takes?
Say it as being about your own memory rather than about him: "I am writing it so we do not have to remember." In practice the shopkeeper who keeps a clean page is the one people are most comfortable dealing with, because there is never an argument at the end.
Should I charge my selling rate or my buying rate?
If goods come back as goods, no rate is needed. If it becomes money, use your selling rate, because that is what the item would have earned on your shelf. Using your buying rate is a favour, and a favour should be a decision, not a habit.
What if he returns a cheaper brand than the one he took?
Say it the first time, lightly, while the amount is tiny: "This one is a little cheaper, so send two extra." Raising it once at Rs 100 prevents a conversation at Rs 4,000.
How often should two shops settle?
Once a month, on a fixed day, whether the balance feels big or not. The value of a fixed day is that it stops the amount from ever getting large enough to be difficult.
He is always taking and rarely giving. What now?
Then it is credit, not borrowing. Either name it as a loan with a date, or move to item-by-item payment. Both are normal. Letting it continue unnamed is the only option that ends badly.
Should this go in the same record as my customers?
In its own page under the shop's name, in whatever record you already keep. It is a two-way account, so it wants a running balance rather than a list, and it should be read out loud on settling day.