Which bill gets paid first when cash is short

Rank every bill by one question: what does the shop stop doing if this is not paid? Pay in full the things that would close you or stop you selling, pay your helper, then split what remains across your suppliers with a date attached to each. Silence costs more than a short payment.

The Tuesday when four people want money

The rent is due. The electricity bill has a final date on it. Your helper is paid on the first and it is the second. And the supplier whose van comes on Thursday will not unload unless something goes back with the driver.

You count the galla. It holds a little over half of what all of them want, and the recovery you were counting on did not arrive because two customers had a thin month of their own.

This is not a rare situation and it is not a sign of a failing shop. Almost every small business meets it a few times a year, and the difference between the ones it damages and the ones it barely touches is not the size of the shortfall. It is whether the shopkeeper has an order decided in advance, or decides in the moment, under pressure, in front of whoever is standing there.

Do not let the loudest voice decide

The default method in most shops is to pay whoever is most difficult about it. It feels like managing people. It is actually the most expensive possible order.

The supplier who calls every morning gets paid. The one who says nothing does not, and he is often the one whose goods you sell most of. The landlord waits because he is polite. Your helper waits longest of all, because he cannot easily complain, which is exactly why he should never be at the bottom.

Paying by pressure has a second cost that shows up months later. You teach everybody around your shop how to get paid by you, and what you have taught them is to push. The quiet supplier learns that quietness does not work, and next season he is on the phone too.

So decide the order on a calm evening, once, and apply it every time. It takes the argument out of the moment, which is the same reason a written credit policy protects you at the counter.

There is one more thing pressure does that is worth naming. It makes you pay the person in front of you, which means whoever happens to walk in on the day the money is there gets it, regardless of what he is owed or how central he is to your shop. That is not a decision at all; it is a queue formed by chance. A shopkeeper who has an order in his head can look at a man standing at his counter and say a date instead of reaching for the galla, and that single ability is most of what separates a shop that recovers from a bad month from one that spends three months recovering from it.

The one question that ranks every bill

Forget size, forget who asked first, and ask this: what does the shop stop being able to do if this one is not paid?

Ask this of every bill: what stops if it is not paid?

• The shop closes, or the tenancy is at risk
• The power goes and the stock inside spoils
• The goods that make up most of your selling stop coming
• Your helper cannot feed his household this week
• A slow line pauses for a month
• A planned improvement waits until the season turns

That question sorts everything, because it separates bills that threaten the shop's ability to earn from bills that are simply owed. Both must be paid. Only one of them stops the shop from making the money that pays the other.

Rent that could end your tenancy is the shop's whole existence. Power that keeps the freezer running is the stock inside it. The supplier who brings the goods that make up most of your selling is the income of the month to come. Those three are not "big bills". They are the shop's ability to open tomorrow.

Notice what is not in that category: the supplier of a slow line you could pause for a month, the shop improvement you had planned, the money you were going to take out for the house. Those are all legitimate, and none of them stops the shop from earning, which is why they wait.

The ladder most shops end up with

Written down, in the order almost every experienced shopkeeper arrives at eventually.

The order almost every experienced shopkeeper reaches

1. 1Anything that could close the shop or lose the placeRent arrears, a licence, the power connection.
2. 2Power and anything protecting the stock you holdA dead freezer costs more than the bill did.
3. 3Your helper, in full if possible, in part with a date if notHe has no other income and cannot wait quietly.
4. 4The supplier whose goods are most of your sellingThis is the income of the month to come, not just a debt.
5. 5Everybody else, split by what they mean to your sellingPart payment plus a date, never silence.
6. 6Your own household draw, as a fixed amount, not leftoversSet before the bad week, not decided during it.

Notice where the helper sits. He is high on the ladder for a practical reason as well as a decent one: a worker who is not paid on time starts looking for another job, and the cost of losing him lands on you within weeks, as described in keeping a helper's salary and advance straight. If the month is truly bad, pay him part on the day and the rest on a named date, and tell him before he has to ask.

Notice also what is missing from the top of the ladder: money for your own house. That is not cruelty, it is the reason the two must be separated in the first place, as in keeping shop money and house money apart. A shop that funds the household out of whatever is left over on a bad Tuesday will have both problems at once, forever.

One warning about the ladder. It is an order for a bad week, not a permanent ranking of the people around your shop. A supplier who sits near the bottom on a thin Tuesday is not less important than the one at the top; he simply happens to be the one whose absence would not stop you selling that particular week. Say that to him if it ever comes up, because a man who thinks he has been placed last permanently behaves very differently from one who understands he was placed last once.

Pay something to everybody, not everything to one

Once the top of the ladder is covered, the temptation is to clear one supplier completely and tell the others nothing. Resist it.

Say Rs 62,000 is in the galla and Rs 123,500 is wanted

Rent, which puts the shop itself at riskRs 25,000

Power bill, protecting the stock you holdRs 8,500

Helper's salary: Rs 20,000 now, Rs 12,000 on the 12thRs 20,000

Main supplier, owed Rs 40,000, sent with a dateRs 6,000

Small supplier, owed Rs 4,000, cleared in fullRs 4,000

Slow line supplier, told plainly, paid nothingRs 0

Left in the galla to trade with tomorrowRs 2,500

Everybody heard from you the same dayRs 63,500 promised, Rs 62,000 paid

Made-up figures, chosen to show the shape. Put your own bills and your own galla into these rows; the order is what matters, not the amounts.

A supplier who receives a part payment with a date is a supplier who keeps supplying. A supplier who receives nothing and hears nothing assumes the worst, and the worst assumption in his trade is that you are about to stop paying anybody.

There is also a simple arithmetic reason. The value of a payment to him is not only the money; it is the signal. Rs 15,000 with a date attached buys you goodwill worth far more than Rs 15,000, and the whole point of a supplier relationship is that it survives your bad months, which is what buying stock on credit rests on entirely.

The one exception is a very small balance. Clearing a Rs 4,000 account completely, rather than paying Rs 1,500 of it, removes one person from the list and costs you almost nothing. Close small accounts, split large ones.

Split by what each supplier means to your selling, not equally. The man who brings a third of what leaves your shelves deserves a bigger share of a short payment than the one who brings a slow line you could pause for a month. Equal splits feel fair and are not: they treat the supplier who keeps you trading exactly like the one who does not.

Say the date, and then keep it

This is the part that decides whether a bad month costs you anything at all beyond the money.

✓Call before he calls you

• "This month is tight. Rs 6,000 today, the rest by the 15th."
• A date you are certain of, not one that sounds better
• A promise made only from money you can already see
• Paying early when a recovery lands early
• The same message to everybody on the list

✕Wait and hope it passes

• Not answering the phone for a week
• "All of it next week", said to end the conversation
• Promising out of a recovery you are only expecting
• Paying whoever is standing in front of you
• Telling one supplier and leaving the others guessing

Call before he calls you. That single habit changes how you are treated, because a man who hears from you on the second is dealing with a shopkeeper who is managing something, and a man who hears from you on the twentieth after four unanswered calls is dealing with somebody who is hiding.

Give a date you are sure of rather than a date that sounds impressive. "Half on Friday, the rest by the fifteenth" and then doing exactly that is worth more than "all of it next week" followed by silence. A date kept twice buys you a date believed on the third occasion, and that is the credit that actually matters in a bazaar.

And never promise from money that has not arrived. A recovery you expect is not money. Promise from what you can see, and if the recovery lands early, pay early and let him notice.

Changing the month so it does not repeat

A shortfall handled well is still a shortfall. Once the immediate week is dealt with, look at the cause, because these usually come from one of three places.

The first is credit going out faster than it comes back. If your open udhaar has grown while your selling has not, the shop is funding its customers out of its own bills. The fix is not harsher collection, it is a pause on new credit until the balance falls.

The second is a mismatch of dates. Your rent, your salary day and your main supplier all fall in the same week, while your own recovery arrives across the month. Moving one supplier payment date, by asking, is often the whole solution and costs nothing but the conversation.

The third is that the shop is not actually covering its costs, which is a different problem wearing this one's clothes. If a shortfall arrives every month rather than twice a year, the honest work is the arithmetic in how much your shop must sell before you earn, plus a proper daily count so you see it coming, as in why your cash box never matches your khata.

Common questions

Should my helper be paid before my supplier?

In almost every case, yes. He has no other income and no way to wait, and losing him costs you more than a delayed supplier payment. If you truly cannot pay him in full, pay part on the day and name a date for the rest, before he has to ask.

Is it better to clear one supplier or pay all of them a little?

Split across the large ones and fully clear the very small ones. A part payment with a date keeps a supplier supplying; silence does not, and a supplier who stops delivering turns a cash problem into a selling problem.

What if a supplier refuses to unload without full payment?

Then judge it by what it costs you to be without those goods for a week. If the line is central to your selling, pay him and delay something that does not stop you earning. If it is a slow line, let it wait and say so plainly.

Should I borrow to cover the gap?

Only for something that would otherwise stop the shop earning, and only when you can name the date it will be repaid from. Borrowing to keep a habit going, rather than to protect the shop's ability to sell, makes the same month worse next time.

How do I decide what my household gets in a bad month?

Decide it as a fixed amount you take before the crisis, not as whatever is left after it. A shop with no set owner payment will always be raided quietly, and neither side of the arithmetic will ever be true.

How far ahead should I see this coming?

A week is enough to act and a day is not. If you know your regular bills and your expected recovery, a few minutes at the start of each week will show you the tight ones early, which is the whole value of counting rather than sensing.