One payment, three supplier bills: where does it go?

Never hand over money without naming the bill it pays. Say it out loud, get it written on the receipt, and clear the oldest bill in full before putting anything against the next one. A payment that names no bill sits in two different places in two different books, and only one of you will be happy about that.

The payment that lands on nothing

You owe the same supplier for three deliveries. Rs 12,400 from over two months back, Rs 9,800 from a few weeks after that, and Rs 15,300 from the load that came in a fortnight ago.

His man arrives on a collection round. You count out Rs 20,000, he writes "received Rs 20,000" on a slip, signs it, and leaves.

Nothing feels wrong. You have paid a large amount, he has given you paper, and both of you are satisfied.

Six weeks later his clerk phones and says the oldest bill is still outstanding. In his book your Rs 20,000 went against the newest delivery, because that is the one his salesman was chasing that month. In your head it went against the oldest one, because that is the one that was worrying you.

Neither of you is lying. The money simply never landed anywhere specific, so each side put it where it made sense to them.

Why "adjust it" is the most expensive phrase in your buying

Once a payment is unallocated, three separate things go wrong, and they compound.

The first is that no bill ever closes. Three half-paid bills stay on both lists, month after month, and neither side can say cleanly what is settled. Your buying account stops being a list of things you owe and becomes a fog with a number attached.

The second is that you lose the cost of each delivery. If you cannot tell what you paid against which load, you cannot tell what that load actually cost you by the time it was cleared, which quietly ruins your sense of margin on the goods that came in it.

The third is the one that costs money. When two books disagree, the disagreement is usually settled by whoever has the better paper, and a slip that says "received Rs 20,000" is not better paper. It proves you paid something. It does not prove what you paid for.

This is the buying side of the same problem customers create on the selling side, and it goes wrong for exactly the same reason it does in when a customer says he already paid you: a payment with nothing attached to it is a memory, and memories drift.

The rule: every payment names its bills

Say the bill numbers out loud while you are handing over the money. That is the whole habit, and it takes four seconds.

Say Rs 20,000 goes to a supplier holding three open bills

Bill 1, oldest, taken 70 days agoRs 12,400

Bill 2, taken 40 days agoRs 9,800

Bill 3, taken a fortnight agoRs 15,300

Bill 1 cleared in fullRs 12,400

Rest applied to bill 2Rs 7,600

What you still owe him, and on which billsRs 17,500 on bills 2 and 3

Made-up figures. The point is the last line: after every payment you should be able to name the balance AND the bills it sits on.

Notice what the last line gives you. After that payment you can say two things with confidence: how much you owe, and which bills it sits on. Most shopkeepers can only say the first, and the first alone is what allows an account to drift for a year.

If the amount you are paying is not a neat fit, that is normal and it does not matter. One bill closes completely, the remainder goes against the next one, and both facts get written. What you must never do is let a payment sit across three bills in unnamed pieces.

There is a second benefit that shows up months later. When every payment names a bill, you can look back at any single delivery and see what it finally cost you and how long it took to clear. That is the number that tells you whether a supplier's credit is genuinely cheap or whether his rate is quietly carrying the cost of the wait.

And do this even when you pay by transfer. A transfer is better proof than cash, but only of the amount. Send the bill numbers in a message immediately after, so the reference exists somewhere other than your memory.

Which bill should the money go against?

Oldest bill firstWhatever he decides later

Who choosesOldest bill firstYou, at the counter, out loudWhatever he decides laterHis clerk, weeks later, from memory

Bills you can closeOldest bill firstOne is finished and comes off the listWhatever he decides laterAll three stay half open forever

If a dispute startsOldest bill firstOne bill, one date, one receiptWhatever he decides laterTwo running totals that never match

Effect on your own recordOldest bill firstBuying cost per delivery stays readableWhatever he decides laterYou lose track of what each load cost

Oldest first, and why

The oldest bill is the one to clear, and the reason is not accounting. It is memory.

The oldest bill is the one both sides are least sure about. It has had the most partial payments against it, it is the furthest from anybody's clear recollection, and it is the one most likely to be quietly re-priced or forgotten. Closing it removes the weakest part of the account.

A closed bill also gives you something to point at. When you and a supplier's clerk sit down to reconcile, being able to say that bills 214 and 218 are finished and only 231 is open turns a long argument into a short check.

There is one exception worth knowing. If a particular bill is under dispute, because a rate was wrong or goods came back, leave that one alone and pay around it. Never let a payment be absorbed into a bill you are still arguing about, because that is how a disputed rate becomes an accepted one.

What the receipt must say

The receipt is where all of this either survives or evaporates.

What the receipt has to say

✓Write this

• Rs 20,000 received, against bill 214 in full and bill 231 in part.
• Balance remaining after this payment: Rs 17,500.
• Date, and the name of the person who took the money.
• Cash or transfer, and the reference if it was a transfer.

✕Never accept this

• Received Rs 20,000, thank you.
• Part payment on account.
• A signature on your own copy and nothing else.
• We will adjust it in the next bill.

Four extra words on the slip is the whole difference. "Against bill 214 and part of 231" turns a proof of payment into a proof of what was settled.

Ask for the balance to be written on it too. A running balance in the supplier's own handwriting, signed and dated, is the single most useful piece of paper you will ever collect from him, because it is his own admission of where the account stood on a stated day.

If his man cannot write it, write it yourself on your copy and have him sign that. Nobody refuses, and if somebody does refuse, you have learned something important about how that account is being kept.

When the two books disagree

It will happen anyway, sooner or later, and the way you handle the first disagreement sets the tone for years.

Ask for his statement of your account before you argue anything. Not a figure over the phone, the list: every bill, every payment, every date. Most suppliers can produce this, and the request itself is normal.

Read it before you react. In a surprising number of cases the statement itself shows the problem: a payment entered twice, a bill entered under a similar shop's name, a credit note that was promised and never posted. None of those need an argument, only a phone call.

Then sit with your own record beside it and work forwards from the oldest entry, not backwards from the total. Errors are almost always a single missing or duplicated line, and working forwards finds it in minutes while working backwards produces an hour of arithmetic and no answer.

When you find the gap, deal with it on the day, quietly, and with paper. Suppliers respect a shopkeeper who arrives with dates and bill numbers, and they price accordingly, which is one of the quieter reasons the buying relationship is worth managing carefully. If one supplier's account can never be reconciled cleanly, that is a real mark against him when you weigh up one supplier or several.

The ten-minute check that prevents all of it

Once a month, take your list of open bills and compare it with his. That is the entire routine.

Three columns are enough: bill number, amount, and what is still open on it. If your list and his list agree, you are done in five minutes. If they do not, you have found the problem while both sides can still remember the delivery.

Doing this also changes how you buy. A shopkeeper who knows exactly what is open with each supplier can time the next order properly instead of guessing, which is the discipline behind buying stock on credit without choking your cash, and it is the same habit that keeps the shop's own daily count honest in why your cash box never matches your khata.

Keeping supplier bills and payments in one place is exactly the kind of thing a phone does better than a diary. Wasoolo holds each supplier as an account with its own bills and payments, so a payment is recorded against the bill it clears and the remaining balance updates itself. What that removes is not the paperwork, it is the phone call six weeks later.

Common questions

My supplier insists on applying payments to the newest bill. Can I object?

You can, and you should say so at the moment of payment rather than afterwards. Tell him plainly which bill your money is for and ask for it to be written that way on the receipt. Most will agree, because it costs them nothing, and one who refuses is telling you he wants the oldest bill to stay open, which is worth knowing.

I pay him a fixed amount every week and we never mention bills at all. Is that a problem?

It works until the day it does not, and then there is no way to reconstruct a year of payments. Keep the weekly habit and add one line to it: which bills that payment closed. It takes seconds and it means any future disagreement is about one payment rather than about a whole year.

What if the bill numbers are unreadable or the bills have no numbers?

Use the delivery date instead, which every bill has and both sides remember. "Against the load of the 14th" is exactly as good as a bill number for this purpose. Write the date on your copy and ask him to write it on his.

He gives me a running balance but never itemises it. Should I accept that?

Accept it as a starting point and ask for the list once, politely. A running balance with no items behind it cannot be checked, and a number that cannot be checked always drifts in the direction of whoever wrote it. One itemised statement lets you set a base you both agree on, and after that a running balance is fine.

I paid in cash with nobody else present and now he denies part of it. What can I do?

Look for anything that puts the amount and the day together: a note in your own record made the same day, a withdrawal, a message you sent afterwards. Then propose splitting the difference once, and change the practice permanently to a written receipt or a transfer. A single unwitnessed cash payment is nearly impossible to prove, which is the whole argument for never making another one.

Should I stop taking goods until an old bill is fully settled?

Not usually, because stopping deliveries hurts your sales more than the old bill hurts your cash. Instead, close the oldest bill deliberately with your next payment and tell him you are doing it. A supplier who can see you clearing bills in order rarely tightens your credit, and a shopkeeper who pays randomly is the one who gets asked for cash on delivery.