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Udhaar or qist: which one to offer on a big item
An open balance has no end date, and a debt with no end gets paid last. Where the line sits, what each does to your cash, and how to convert an old balance.
Plain udhaar suits small amounts and short waits. A qist plan suits a big item, because it fixes the dates and the amounts before the goods leave the shop. Under about a month of that customer's ordinary buying, keep it simple. Above that, write a plan, or you will be chasing it all year.
The same Rs 24,000 fridge, two ways
A customer you have known for six years wants a fridge. He has Rs 6,000 today and a steady job. You are going to say yes either way, so the only real question is which shape the yes takes.
Shape one. He pays Rs 6,000, takes the fridge, and the rest goes on his khata. He will pay it as it comes to him. Both of you feel generous, nothing is written except the balance, and neither of you has said a date out loud.
Shape two. He pays Rs 6,000, and you write down that the remaining Rs 18,000 comes back in six monthly amounts of Rs 3,000, on the tenth, starting next month. He signs nothing dramatic. He simply knows the dates, and so do you.
Eight months later the two shapes look completely different. In shape one, the balance is Rs 11,400, he has paid whatever was spare in whatever month it was spare, you have asked three times and felt uncomfortable each time, and neither of you can name a month when it will end. In shape two, it ended in the sixth month, and he came back in the seventh to ask about a washing machine.
That is the whole comparison. Same customer, same fridge, same goodwill. One had dates.
What each one actually is
They are not two products. They are two ways of writing the same debt, and the difference is entirely in what was agreed before the goods left.
Udhaar is an open balance. He owes an amount, he pays when he can, and the finish is whenever it happens to be. It costs nothing to set up, it fits how a bazaar has always worked, and its whole strength is that it is friction-free for a Rs 400 bag of rice.
A qist plan is that same balance with three things fixed at the start: a down payment, a number of instalments, and the dates. Nothing else changes. The goods still leave today, the trust is still the same trust, but the finish line exists before the journey does.
A qist plan may also carry a one-time markup: the plan price is set a bit above the cash price, decided by you, on the day the plan is made, because your money is tied up for six months instead of one week. That number is fixed once and it never grows afterwards. Nothing is ever added later for a payment that arrives late. No penalty, no charge for lateness, no interest of any kind, and if you are building your first plan the fair way to set that one-time number is covered in how to build a qist plan.
Side by side, honestly
One fridge, one customer, two ways of writing it
Read the row about the finish date first, because it is the one that decides everything else. An open balance has no end, and a debt with no end is the one that gets pushed behind every other payment in the customer's life. Not out of dishonesty. It is simply human: the bill with a date on it gets paid first, and yours is the one without a date.
Notice also what the table does not say. A qist plan does not make a customer more honest. It does not protect you from a man who was always going to disappear. And it is more work: three minutes of writing, a conversation about dates, and something to remind you when the tenth comes around. For a Rs 900 gas cylinder, all of that is a waste of everybody's evening.
What each one does to your own cash
Shopkeepers usually think about this from the customer's side. Turn it around, because the money is yours.
Say: the same Rs 24,000 fridge, eight months later
Example numbers, not a survey. Both customers paid what they could; only one of them was given dates to pay it on.
The important line is the last one: when your own money comes back. A fridge is not just Rs 24,000 of goods, it is Rs 24,000 of your buying power sitting in somebody's kitchen. Every month it stays there is a month you cannot use it to fill your shelves, and shelves that stay thin lose more money than any single customer ever will.
Two or three big open balances at once, and a shop that was doing fine starts feeling short of cash on the fifth of every month. Then you delay your own supplier, and the balance you owe upstream starts costing you the good rates you had earned. Nothing went wrong at the counter. The money just never came back on a schedule.
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Which customer suits which
The right answer changes with the person in front of you, and you already know most of what you need.
Signs this one needs a written plan, not an open balance
- The amount is bigger than his normal month at your shop
- It is one item, not a month of small purchases
- He is paid on a fixed date, so an instalment can follow it
- You would be uncomfortable asking him for it twice
- You cannot picture the month it would otherwise end
- You have known him under a year
- He asked for a plan himself
- Small daily items on an open khata
- Anything he clears inside the same week
A monthly-salaried man is the easiest qist customer alive, because his money arrives on a date and your instalment can sit two days after it. A daily wage earner is harder on a fixed monthly plan and often better on a small weekly amount, which is the same idea with a shorter step.
For a new customer, a big item on plain udhaar is the single most expensive mistake a small shop makes. If you do not know him well enough to write a plan with him, you do not know him well enough to hand over Rs 24,000 of goods on an open balance either, and the plan is the safer of the two by a distance. Take a larger down payment instead of refusing, and let the first two instalments tell you who he is. Deciding how much to give in the first place is the same judgement, just with more zeroes.
There is also the customer who asks for a plan on a small amount because it feels more comfortable to him. Say yes. It costs you three minutes and he is telling you exactly how he prefers to pay.
The mistakes that turn a plan sour
A qist plan goes wrong in four ways, and all four are avoidable.
A down payment that is too small. The down payment is not a formality, it is the customer's own money in the item. Around a fifth to a quarter is normal. Below that, the item feels borrowed rather than bought, and a borrowed thing is easy to walk away from.
Instalments the customer cannot survive. Six easy amounts he actually pays beat four large ones he misses twice. Ask what he can manage every month without a bad week, then set it slightly below his answer.
Dates that do not match his pay day. This one costs nothing to fix and fixes most of the misses. If he is paid on the first, do not collect on the twenty-eighth. Put the date two or three days after money reaches him.
A plan nobody wrote down. Agreed out loud in a busy shop and remembered by two people is not a plan, it is two different plans. Write the amounts and the dates where both of you can see them, and give him his copy. Wasoolo is free to download and keeps the schedule with the customer so the next date is on the screen instead of in your memory.
One more, less a mistake than a habit: never let a missed instalment be met with silence for six weeks. Ask in the same week, in an ordinary voice, and ask for a smaller amount if that is what it takes. A plan that gets a small correction in week one almost always finishes. A plan nobody mentioned until month three usually does not.
Turning a running udhaar into a plan
Most shops read this and think of somebody who already owes them a large open amount. That balance can be converted, and it is the single most useful thing in this article.
Turning an old open balance into a plan that ends
- 1Agree the number firstRead the balance out and let him say yes to it before anything else.
- 2Ask what he can manage every monthThen set it slightly below his answer. A step he can always take beats a step he takes twice.
- 3Put the date after his pay dayTwo or three days after money reaches him, never before.
- 4Add nothing on top for convertingYou are changing the shape of the balance, not its size.
- 5Write it twiceYour record and his copy, with the same amounts and the same dates.
- 6Treat the first instalment as the testOn time means the rest is coming. Missed means ask this week, not next month.
The conversation is shorter than you expect, because you are not asking for more money. You are offering an end date, and an end date is a relief to somebody who has been carrying an amount he has quietly stopped believing he can clear.
Do not add anything on top when you convert. The amount is the amount. You are changing its shape, not its size, and a customer who feels charged for the privilege of agreeing to a schedule will not agree to it. If recovering an old balance is the aim, the schedule is the tool, and the goodwill is what makes the schedule work.
Then treat the first instalment as the real test. If it arrives on the day, you have converted a dead balance into a paying one and you will get the rest. If it does not, you have learned something in three weeks that the open balance was going to take two more years to teach you.
Common questions
At what amount should I stop giving plain udhaar and write a qist plan instead?
A workable line is about one month of that customer's ordinary buying. Somebody who spends Rs 3,000 a month at your shop can carry Rs 3,000 open without either of you thinking about it. The same person owing Rs 20,000 open has no realistic way to picture the end, and neither do you. The number is not sacred, the principle is: when the balance is bigger than his normal month, give it dates.
Can I charge more on a qist price than on the cash price?
You can set a one-time amount above the cash price when the plan is made, decided by you and told to the customer before he agrees, because your money is tied up for months instead of days. It is fixed on day one and it never grows afterwards. Nothing is ever added later for a payment that arrives late, and the customer should hear the plan price and the cash price side by side so the choice is his.
What if he misses an instalment?
Ask in the same week, in a normal voice, and find out which kind of miss it is. A bad month means take a smaller amount now and move the rest to the end. A pattern of misses means the instalment was set too high, so rewrite the plan with more, smaller steps. Nothing is added on top for the delay; the fix is always the schedule, not a charge.
Should I take something as security for a big item?
A guarantor is usually more useful than an object, because a respected name in the same street does more for repayment than a document nobody wants to act on. Ask the guarantor in person, in front of the customer, so all three of you heard the same sentence. Holding somebody's original identity papers is a bad idea and it damages the relationship you are trying to protect.
A customer wants the fridge but refuses a written plan. What does that tell me?
Usually one of two things: he has been embarrassed by a written amount before, or he does not intend to be tied to dates. Try the smallest version first, a single line he can see, with the dates read out loud. If he still refuses, that is your answer about the size of what you should hand over today, and a bigger down payment with a shorter plan is the honest middle.
Is it worth doing all this for one or two big items a month?
Yes, because one or two big items a month is exactly where a small shop's cash actually goes. Twenty small udhaar balances move by themselves; two big open ones do not, and they are usually most of the money you are missing. Ten minutes of writing per big item is the cheapest thing in this entire article.