MoneyShop money
A big payment just landed. Where should it go?
A big recovery is not profit and not new money. It was spent into your shelf months ago. Here is the order it should go in, and how little is really left.
A big recovery, in the order it should go
- 1Anything with a date on itThe supplier bill, the rent, the helper's salary. A promise with a day attached beats everything else.
- 2Stock that is genuinely shortWhat customers asked for and did not get. Not what a supplier is pushing.
- 3The cushion you dipped intoPut the floor back to where it was before the balance grew.
- 4Only then, the thing you wantedThe rack, the fridge, the new line. If the money gets this far, it is yours to spend.
A big recovery is not new money, and it is not profit. It is money your shop was owed and had already spent into the goods on your shelf. Pay everything with a date on it first, fill only the stock that is truly short, put the cushion back, and only then buy what you wanted.
Tuesday, eleven in the morning, and Rs 90,000 in the drawer
Rafiq runs a general store at a busy corner. The Qureshi brothers, five households buying on one khata (khata, the customer's page in your ledger), have owed him for four months. On Tuesday at eleven the eldest walks in with a cloth bag, because the crop money has come in, and counts Rs 90,000 onto the counter beside the sugar scale.
Rafiq writes it down. Then he does what almost everyone does. He looks at the drawer.
By half past eleven he has phoned the biscuit distributor and doubled the order. By one o'clock the cold-drinks man has been told yes to the new flavour. By evening he has agreed to a carton of a shampoo he has never stocked, because the rep said the margin was good. Nothing about the shop changed between Monday and Tuesday except the number in the drawer, and that number changed how he bought for the whole week.
Every shopkeeper has a plan for a thin galla (galla, the cash drawer). Hardly anyone has a plan for a fat one. A fat one is more dangerous, because a thin drawer says no for you, and a full drawer says yes to everything.
That money is not new, and it is not profit
Over four months the Qureshi households took flour, oil, tea, soap and sugar off Rafiq's shelf. He paid his suppliers for those goods as the bills fell due, out of the drawer, week after week. So for four months the shop carried Rs 90,000 of somebody else's groceries on its own back, and the drawer was thinner every week for it.
On Tuesday that money came home. It did not arrive. It came home.
It was already counted, sitting in the open balances of the ledger as money owed to the shop. It was already earned: work out your real profit properly and it belongs to the months the goods were sold, not to Tuesday. And it was already spent: the flour and tea it paid for went out of the door long ago, and the bills for them were settled from cash that should have been the shop's cushion.
So the Rs 90,000 is a refund of money the shop lent out. Treating it as a bonus means spending the same rupee twice, once when the goods were bought for the Qureshis and again on the shampoo carton.
The feeling of windfall comes from one thing only: it arrived in one piece. The same Rs 90,000 collected at Rs 750 a day over four months would never have felt like anything. It is the same money.
Anything with a date beats anything without one
The order matters more than the split. Here it is, and why.
First, everything that already has a date on it. The supplier bill due Friday. The rent. The helper's salary on the first. These are not choices. They are promises with a day attached. A recovery that clears every dated obligation buys you something no discount can: a week in which nobody is waiting for you.
A supplier will offer you the opposite deal within the hour. Buy big today, take 3% off. Say 3% off a Rs 40,000 order is Rs 1,200. Meanwhile the Rs 32,000 due on Friday is still due, and if the money has gone on the new order you meet Friday with a phone call and a promise. That call costs more than Rs 1,200. It costs the terms that took years to earn, and terms are the whole reason you can buy stock on credit at all. Pay the dated bill. Take the discount some other month, from money that is genuinely spare.
Second, the stock that is genuinely short. Not the stock a supplier is pushing. The stock your customers asked for and did not get. If the sugar ran out twice in ten days, that is short. If the rep says the shampoo "moves well in other shops", that is not short. That is a pitch.
Third, the cushion you dipped into. Every shop that gives udhaar (udhaar, the credit you extend) has a floor it does not go below, and every shop breaks that floor in the weeks a big balance is outstanding. Put the floor back. That is not saving. It is repair.
Fourth, and only fourth, the thing you have been wanting. The new rack, the bigger fridge, the second line. If the money reaches this step, spend it there. Most of the time it does not reach this step, and knowing that in advance is worth more than the fridge.
The trap: buying stock because the money is there
This is where the most money is lost, and it never feels like a loss.
A full drawer makes you generous with your own shelf. You order twelve cartons where you used to order six, because you can. A month later the money is on the shelf, in goods that sell at exactly the speed they always did. The supplier bill you should have paid on the Tuesday is still owed, plus a new one for the twelve cartons. It was turned into slow stock, and slow stock is a drawer you cannot open.
Before any big buy, run the test.
The test before any big buy
- Would I order this size if the recovery had not come in?
- Did customers ask for this and not get it, more than once?
- Will it sell before the bill for it falls due?
- Is every bill with a date on it already paid?
- Is the discount bigger than what one missed date would cost me?
- Is the floor back in the drawer?
The first question is the one that matters. Would you place this order, at this size, if the recovery had not come in? If the honest answer is no, the money is deciding and you are not. A drawer should never decide what goes on a shelf. Customers decide that, and they have not changed since Monday.
Decide the split before the money arrives
The only reliable way to win this is never to make the decision while holding the notes.
A shop that has decided in advance what a big recovery does has nothing to decide on the Tuesday. It already knows: dated bills first, short stock second, the floor third, and whatever is left is the owner's to place on purpose. When the Qureshi bag lands, that shop writes it down, pays what it owes, and goes back to work. The money is not spent twice because there was never a moment in which it looked spare.
Decided in advance, or decided holding the notes
Write your own version inside the cover of the ledger. It is three lines. What has a date. What is short. What the floor is. When a big balance clears, run the number down those three lines before you phone anybody.
Then look at what is really left. Say the Qureshi money lands in a shop that has done this.
Say Rs 90,000 lands, and the shop runs it down the order
Example numbers only. The shopkeeper who expected Rs 40,000 spare was reading the drawer, not the ledger.
Rs 6,000, out of Rs 90,000. That is the normal result, and the shopkeeper who expected Rs 40,000 spare was looking at the drawer instead of the ledger. The other Rs 84,000 was never spare. It was owed, or short, or borrowed from the floor.
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The one honest place for the leftover
Bilal keeps a hardware and paint shop, and at nine at night he is counting down the drawer after a day like Rafiq's Tuesday. A builder cleared Rs 60,000 of old bills at four in the afternoon. Bilal ran it down his three lines. The cement supplier got his Rs 28,000, the helper got the Rs 9,000 that was three days late, the floor went back up to Rs 15,000, and Rs 8,000 is sitting in front of him with no name on it.
Two things can happen to Rs 8,000 with no name on it. It can stay in the drawer, where it will disappear over the next ten days into a little more of everything. Or he can take Rs 5,000 out for himself, on purpose, tonight, write "Bilal, drawing, Rs 5,000" in the ledger, and put the other Rs 3,000 into the floor.
The second is the honest one, and it is the only place a leftover should go. A shopkeeper who never pays himself on purpose pays himself by accident, in small unwritten amounts every day. The leftover from a big recovery is the right moment to do it properly: an amount, a name, a date, and a line that says the money left the shop and went to the house. Keeping shop money and house money apart begins with exactly that line.
Take it. Write it. Do not let it leak.
The recovery that really is a gain
There is one version of this that is not a refund, and it deserves different treatment.
Say a customer moved away two years ago owing Rs 14,000, and you stopped counting on it. The balance is still on his page, but you had given it up in your head, and if you were honest, in your review of old balances too. Then one afternoon his brother walks in and pays it.
That money is not already spent. You absorbed that loss long ago and closed the gap from your own pocket. So this Rs 14,000 is genuinely new to the shop today. It is the one recovery that really behaves like a windfall.
Treat it differently in two ways. First, still run it past the dated bills, because a bill with a day on it beats everything, gain or no gain. Second, if nothing dated is waiting, this is the money that can go straight to the fourth step, the thing you have been wanting, because nothing is hiding behind it.
Whichever kind it is, the entry matters. A recovery written against the customer's own balance is a recovery. The same Rs 14,000 dropped into the day's sales total makes that afternoon look like the best of the month, and the month's profit look like something it is not. In Wasoolo a payment is recorded on the customer's own khata, so it comes off what he owed and never into what you sold, and the profit view for that month stays honest. A paper ledger follows the same rule: the line goes on his page, not in the sales column. Wasoolo is free to download if you want the two kept apart by default.
Common questions
The supplier's discount for a big order is real money. Why give it up?
Because the bill with a date on it is also real money, and it costs more when it is late. Say 3% off Rs 40,000 is Rs 1,200. One missed date costs you the terms you built with that supplier, and over a year those are worth far more than Rs 1,200.
What counts as short stock, and what counts as a supplier pushing?
Short is what customers asked for and did not get, more than once, in the past ten days. Pushed is anything you would not have ordered at that size on Monday. If you cannot name the customers who wanted it, it is not short.
How big should the cushion be?
Enough to cover your worst normal week without borrowing. For most small shops that is one week of supplier payments plus the rent. The exact figure matters less than having it written down, so you know the moment you have gone below it.
Should I pay off old supplier balances that are not yet due?
Not before the dated ones. Once everything with a date is clear and the shelf is right, paying an old balance early is a fair use of the money. But it comes after the floor is back, not before.
I want to take some out for the house. How much is reasonable?
Whatever is left after the first three steps, and not a rupee more. The amount matters less than the fact that it is decided, written and taken once, instead of leaking out of the drawer over the next fortnight.
Does any of this change if the recovery came into my mobile account instead of cash?
No. It is the same money and the same order. The only difference is that a balance on a phone is easier to forget, so write it against the customer's page the same day and move whatever needs moving into cash before Friday.