Paying a supplier who is in another city

Pay against a named bill, never against a running total. Send the money by a route that leaves a record, then send a message with the amount, the date, the reference and which delivery it settles, and ask for one word back. Write it as sent in your book, and as paid only after he confirms.

The goods and the money travel in opposite directions

Your stock comes down the road on somebody else's truck. Your money goes back up the same road by a completely different route, at a different speed, through people neither of you can see.

That is the whole difficulty in one sentence. With the shop across the bazaar, payment and proof happen at the same moment: you hand over notes, he counts them, you both saw it. With a supplier three hundred kilometres away, the payment happens on your side on a Tuesday and becomes real on his side on a Thursday, and everything that goes wrong lives in that gap.

Nobody has to be dishonest for it to go wrong. A transfer bounces back. A number is entered short by one digit. His man collects and forgets to hand it over the same day. Money arrives with no instructions and gets applied to the wrong bill. Every one of those has an innocent explanation, and every one of them costs you the same as a dishonest one.

The four routes, and what each one proves

Shopkeepers usually choose the route by what it costs. Choose it by what it proves instead.

How the money travels, and what each route leaves behind

What it costs youWhat proof it leaves

Bank transferWhat it costs youA small charge, and both sides need accountsWhat proof it leavesThe strongest: dated, named, and on both banks' records

Mobile walletWhat it costs youA fee, and usually a ceiling on the amountWhat proof it leavesGood, if the receiving number really is his

A transfer counter in the bazaarWhat it costs youA fee, and a trip, and their hoursWhat proof it leavesA slip with a number, only as good as you keep it

Cash with the driver or a relativeWhat it costs youNothing, until the day something goes wrongWhat proof it leavesNothing at all, unless somebody signs for it

Payment to his man at your shopWhat it costs youConvenient, and the easiest one to disputeWhat proof it leavesOnly his signed receipt on your own page

A bank transfer is the strongest thing available to a small shop. It is dated, it is named on both sides, and neither of you has to be believed for it to be true. The charge on it is real, and it is always smaller than one afternoon spent arguing about a payment nobody can find.

A mobile wallet is nearly as good, with one condition: the receiving number must genuinely be his, confirmed by him, in a message you keep. Numbers get changed, and a man's helper's number is not the same as the man's. Confirm it once, in writing, and use only that.

The bazaar transfer counter leaves you a slip with a number, and that slip is only as strong as your habit of keeping it. Photograph it the moment it is in your hand. Paper slips live in shirt pockets and shirts get washed.

Cash sent with a driver or a relative is the route that costs nothing and proves nothing. It has its place, and it is the one route that needs its own rules, which are further down.

Pay against a bill, never against a total

This is the single most expensive habit in buying from far away, and it looks completely harmless.

Say three deliveries are open and you send Rs 50,000

Bill 1, oldest, part paid alreadyRs 18,400

Bill 2, the delivery with three short cartonsRs 26,900

Bill 3, newest, goods still on your shelfRs 31,000

You send, naming no bill at allRs 50,000

What he applies it to, quite reasonablyBills 1 and 2 in full

So the short-carton claim is now on a closed billRs 7,200

The claim you can no longer make, for want of one lineRs 7,200

Made-up figures, chosen to show the shape. Nobody cheated anybody here; the money simply arrived without instructions.

Read what happened in that box. Nobody cheated anybody. You sent Rs 50,000 without saying what it was for, and he applied it the way any sensible person would, oldest bill first. The problem is that the second bill was the one with three short cartons on it, and you had been meaning to raise that. Now it is settled and closed, and reopening a settled bill is a much harder conversation than never closing it.

So name the bill. One line: "Rs 50,000 against your bill of the fourth, balance on that bill now Rs 8,400." It takes ten seconds and it decides where your money lands instead of leaving that decision to somebody else.

Keep a running balance for him the way you keep one for a customer, with each delivery adding and each payment attached to what it settles. A column per supplier in a register does this. If your records are in an app, the supplier sits as a party with his own deliveries and payments, so in Wasoolo a payment attaches to a delivery instead of floating loose, and the balance you quote on the phone is the same balance he is looking at.

The message that goes with every payment

The transfer itself is half the job. The message is the other half, and it is free.

The message that goes with every payment you send

• The amount, in figures, exactly as sent
• The date you sent it
• The route and its reference number
• Which bill or delivery it settles, by date
• What is left open on that bill after it
• A request for one word of confirmation back
• The same message saved on your own side
• A photo of the counter slip, when there is one

Send it in the same minute you send the money, not that evening. The delay is where things get lost: he receives an unexplained amount, assumes it is from another buyer, and by the time you mention it two weeks later he has already put it somewhere.

Ask for one word back. "Received" from him is worth more than any slip in your own drawer, because it is the other side agreeing, and the other side agreeing is what ends every argument before it starts. Most suppliers reply within the hour once they learn you always ask.

Keep your own copy of every one of those messages, in one place. A shop that can scroll back through a year of payment messages, each naming its bill, does not have supplier disputes. It has occasional questions with immediate answers.

The gap between sent and received

Treat these as two different events, in two different colours, on two different days.

The gap between sent and received, handled properly

1. 1Write it in your book as sent, not as paidTwo different things. A payment becomes paid on the day he says it arrived.
2. 2Send the message with the reference immediatelyNot that evening. The gap between sending and telling him is where money goes missing.
3. 3Ask for one word back, and wait for it"Received" from him is worth more than any slip you are holding on your side.
4. 4If nothing comes back by the next day, callNot to accuse. Transfers do fail, and the day it fails is the easiest day to fix it.
5. 5Mark it paid in your book only after he confirmsThen your book and his book say the same thing, which is the entire point of doing this.
6. 6Once a month, read both lists against each otherHis open bills against your sent payments. Ten minutes, and it catches the one that slipped.

Marking a payment as paid the moment you send it is the small error that produces the big surprise. If the transfer fails, your book now says you have paid something you have not, and you will find out when he calls about an overdue bill and you tell him confidently that it went out on the ninth.

Once a month, read his open bills against your sent payments, side by side. Ten minutes. It is the same monthly discipline that keeps mobile account sales from drifting away from the cash count, and it catches the one payment that slipped in a way nothing else will.

Do it on a fixed day, and do it before you place the next order rather than after. A distant supplier will happily load a van for a shop whose balance he is unsure of, because the goods are moving either way. You are the only person with a reason to know the true figure before another delivery is added on top of it, and that figure is also what tells you whether you should be buying in bulk or in smaller lots from him at all.

Cash with a driver, and when it is worth it

There are real reasons to send cash by hand. He has no account. The amount is small. A relative is travelling anyway. The transfer counter is shut and the goods are coming tomorrow morning.

If you do it, do it with rules. Count it in front of the person carrying it and have him write the amount and the date on a slip in his own hand. Send a message to the supplier the moment the man leaves, naming who is carrying it and how much. And ask the supplier for confirmation the same day it should arrive, not a week later.

Never send it with somebody who is not answerable to either of you. A driver from the supplier's own transport is answerable to the supplier. A man at the bus stand going that way is answerable to nobody, and if it goes missing there is no honest way to decide whose loss it is.

Set a ceiling and keep to it. Whatever amount would genuinely hurt your shop to lose, that amount never travels in a pocket. Below it, hand cash is a reasonable convenience. Above it, pay the fee.

And write the ceiling down somewhere your helper can see it, because the day you are not at the counter is exactly the day a driver will ask for a bigger amount than usual and get it. A number on a card refuses on your behalf. A helper trying to guess what you would have wanted will hand it over, and he will be right to think you might have.

Building trust you cannot build face to face

A supplier you meet every week is judged by a hundred small things. A supplier three hundred kilometres away is judged by how the money behaves, and so are you.

That works in your favour and it costs nothing. A shop that always names the bill, always sends the message, always confirms receipt and never argues about a rate it did not raise at the time becomes easy to deal with. Easy buyers get better rates, get the scarce item when it is short, and get carried for an extra week when they need it, which is exactly the credit worth having in buying stock on credit.

Ask for the same in return, once and politely. A bill with every delivery, a rate confirmed before it changes, and a monthly statement of what he thinks you owe. A supplier who cannot produce a statement of your account is telling you something about his own records, and that is worth knowing before your balance with him grows.

Go and see him once a year if you can. One visit does more for a distant relationship than fifty phone calls, and it turns a name on a bill into a person who will pick up when something has gone wrong. Which supplier deserves that visit is part of the larger question of one supplier or several, and the answer usually becomes obvious once the payments are being tracked properly.

Common questions

My supplier prefers cash and does not want transfers. What do I do?

Ask for the reason once. If it is a genuine banking difficulty, agree a route that still leaves proof, such as a transfer counter with a slip and a signed receipt. If he simply wants no record, that is a fact about him worth weighing carefully.

I sent the money and he says it never arrived. What now?

Send him the reference and the date, and check it on your own side the same day. Most of these are genuine failures or delays, and they are almost always fixable while they are fresh. Do not send a second payment until the first is traced.

Should I pay in advance to a supplier I have never met?

Start with a small order, paid on a route that leaves proof, and grow it slowly. A first large advance to a name you have only spoken to on the phone is the most common way a shop loses a big amount in one day.

His man collects payment from my shop. Is that safe?

Only with a receipt signed by that man on your own page, every single time, and a message to the supplier the same day. Without both, a collection at your counter is the easiest payment in the world to dispute.

How do I know which bill still has money open on it?

Keep one column per supplier, with each delivery adding and each payment named against a delivery. Then the open bills are simply the ones that have not been fully covered, and neither side has to remember anything.

Is it worth paying transfer fees on small amounts?

Usually yes, if the amount is large enough that losing it would matter. Compare the fee with one disputed payment and it stops looking like a cost. For genuinely tiny amounts, send them with the next larger payment and name both bills.