How to collect udhari: 7 ways that work

Udhari is part of running a shop in India. Regular customers expect it, and giving credit brings them back. But every rupee stuck with a customer is a rupee you cannot use to buy stock — and the longer a balance sits, the harder it is to collect.

The good news is that most udhari comes back when the shop is organised and polite but persistent. These seven ways are in the order you should use them.

First, know exactly who owes what

You cannot collect what you cannot see. List every customer with a balance, and next to it the age of their oldest unpaid bill:

Start with the oldest balances — they are the ones most at risk — not just the biggest.

1. Write every udhari down, on the spot

Every credit sale gets an entry at the counter, with the date, what was taken and the amount. Show or send the entry to the customer right away. Disputes almost always start with “I don’t remember taking that”, and a same-day record ends that argument before it begins.

2. Give every customer a limit and a due date

Decide two things for each customer before you give credit:

• A credit limit — for example ₹5,000 for a household customer, more for a shop that buys from you every week.
• A due date — 15 days, or “by the 10th of next month” for someone paid a monthly salary.

When a customer reaches the limit, the answer is “please clear the old balance first”. It is easier to say when the rule is the same for everyone.

3. Remind on fixed days, politely

Most people pay when reminded at the right time. Keep a simple schedule: on the due date, 7 days later and 15 days later. A short WhatsApp message with the exact amount works better than a phone call that feels like pressure:

Namaste Gupta ji, your balance at Sharma General Store is ₹3,150 (bills of 12 and 20 September). You can pay by UPI here: [link]. Thank you!

Mention the amount and the bills, keep the tone friendly, and send it at a sensible hour.

4. Make paying easy

The fewer steps to pay, the sooner money comes in:

• Put a UPI link or QR code in every reminder and on your bills.
• Accept part payments. ₹1,000 today is better than ₹3,150 “next week”.
• Apply each payment to the oldest bills first, and tell the customer what is still due.

5. Share the statement when there is a doubt

When a customer says “I already paid” or “it can’t be that much”, send the party statement: every bill and every payment with dates. Most of the time the conversation ends there. If you find a mistake on your side, correct it at once — that builds the trust that gets the rest paid.

6. Offer a plan or a small settlement

For a large or old balance, a plan works better than repeated reminders. Verma Kirana owes ₹12,400: agree on four weekly payments of ₹3,100 and write the dates down. For someone who can pay in full today, a small discount for paying now — say 2%, which is ₹248 on ₹12,400 — can be cheaper than months of chasing.

7. Stop new credit, then escalate in writing

If a balance keeps growing despite reminders:

• Stop new credit until the old balance is cleared, and say so politely.
• Send a written reminder with the statement and a final date.
• Selling to another business? If you are a registered micro or small enterprise, the MSMED Act, 2006 says a business buyer must pay within 45 days of accepting the goods, or owe compound interest at three times the bank rate notified by the RBI. Delayed-payment cases go to your state’s Micro and Small Enterprises Facilitation Council, and since June 2025 they can be filed online on the Ministry of MSME’s ODR portal.
• A cheque has bounced? The law sets strict time limits for a bounced cheque, so speak to a lawyer the same week.

What not to do

• Do not shame customers in public or post their names in a group.
• Do not threaten or use force — it can land you in trouble and you will lose the customer anyway.
• Do not add interest that the customer never agreed to.

The Khata in ApnaInventory does most of this for you: “You gave” and “You got” in two taps, every customer’s balance joined to their bills, a list of who is late and by how many days, and a WhatsApp reminder that carries a UPI link. If you still keep udhari in a notebook, read khata book vs billing app first. And a correct bill avoids many disputes — see what must be on a GST bill.

FAQ

How much udhari is too much?

Watch two numbers: your total udhari compared with a month’s sales, and the part that is older than 60 days. If the old part keeps growing month after month, tighten limits before it hurts your cash.

Can I charge interest on late payment?

Only if the customer agreed to it beforehand, for example in written terms of credit. For sales by registered micro and small enterprises to other businesses, the MSMED Act gives a right to interest after 45 days.

Should I stop giving credit altogether?

Usually not — credit keeps regular customers coming back. Control it with limits, due dates and reminders instead.

What should a reminder message say?

The customer’s name, the exact amount, which bills it is for and an easy way to pay, like a UPI link. Keep it short and friendly.

Sources

• MSMED Act, 2006 on delayed payments (45 days, interest at three times the bank rate, Facilitation Councils) — Lok Sabha answer, Ministry of MSME, 3 August 2023
• MSME ODR portal for delayed payment cases (launched 27 June 2025) — ICAI MSME newsletter, July 2025

Checked on 2 November 2026. This is general guidance, not legal advice — for a dispute, talk to a lawyer.