Selling on Credit in a Nigerian Market: How to Do It Without Losing Money

The sun is beating down on your stall in Balogun Market. A regular customer, Mama Ngozi, wants to buy fabric for her daughter’s wedding, but she doesn’t have all the cash today. She promises to pay you by Friday. Do you say yes and risk losing that money, or do you miss out on a sale? Many traders face this every day. Selling on credit can boost your sales and customer loyalty, but if not managed well, it can lead to serious losses and sleepless nights.

Why Some Traders Give Credit

Giving credit is not just about helping a customer; it’s a strategy some traders use to build strong relationships and increase their business. When you trust your customers and they trust you, sales can go up. Imagine a customer who always buys from you but sometimes needs a few extra days to pay. If you allow them to buy on credit, they will keep coming back, and they might even tell their friends about your good service. This is especially true in busy markets like Oshodi or Onitsha Main Market where relationships are built over years.

Here are some reasons traders offer credit:

• Customer Loyalty: It makes customers feel valued and encourages them to return.
• Increased Sales: Customers can buy more when they don’t have to pay the full amount immediately.
• Building Trust: It strengthens the bond between you and your regular customers.
• Competitive Advantage: In a crowded market, offering credit can set you apart.

Who Should You Sell To On Credit?

The most important rule when selling on credit is: know your customer. Not everyone deserves to buy from you on credit. You should only offer this to people you know very well and who have a proven track record of paying back on time. Think about your most loyal customers, those who have been buying from you for years and have never defaulted. These are the people you can consider.

Here’s how to decide:

• Reputation: Do they have a good name in the market?
• Payment History: Have they always paid you back promptly in the past?
• Reliability: Do they keep their promises?
• Necessity: Is this a loyal customer who sometimes faces temporary cash flow issues?

It is also wise to set a limit. For example, you might decide that a customer can buy up to N10,000 worth of goods on credit at any one time. This prevents you from losing too much money if something goes wrong.

How to Record Credit Sales Properly

This is where many traders make mistakes. They sell on credit and forget to write it down, or they write it in a dusty notebook that gets lost. When the customer comes to pay, you can’t remember the exact amount or when it was supposed to be paid. This leads to arguments and lost money. Every single credit sale must be recorded immediately.

Your record should include:

• Customer’s name
• Date of sale
• Items sold and their value
• Agreed repayment date
• Agreed repayment amount

If you are using TrustAm’s WhatsApp Business Assistant, recording a credit sale is as simple as sending a payment request for the exact amount and noting it’s a credit sale. The system automatically records it. You can also log cash sales or even expenses using voice notes or by snapping a photo of a receipt. This way, your books write themselves, even when you’re busy.

Chasing Your Money: The Polite but Firm Approach

When the repayment date arrives and you haven’t received the money, it’s time to follow up. This is a delicate part of selling on credit. You need to be firm enough to get your money but polite enough not to offend your customer. A good approach is to remind them gently.

You can try these methods:

• A quick phone call: “Good morning, Alhaji. Just a friendly reminder about the fabric you bought last week. The payment is due tomorrow. Thank you!”
• A polite text message: “Hi Mrs. Bola, hope you’re well. Just checking in about the N5,000 balance for the shoes you purchased on Monday. Due date is Friday. Thanks!”
• In-person follow-up: If they are a regular visitor to your stall, a quick word when they next come by can work.

If the customer still doesn’t pay, you might need to be more direct. TrustAm has a debt book feature that helps you track who owes you money and for how long. It can even send automatic polite reminders to customers on the due date, complete with a payment link. This takes the stress off you and makes it easier for customers to pay.

Using Technology to Manage Credit Sales

Gone are the days when a notebook was your only option. With your phone, you can manage your credit sales much better. Tools like TrustAm’s WhatsApp Business Assistant make it easy to record sales, track debts, and get paid without leaving WhatsApp. When a customer pays, you automatically get a stamped receipt, and so do they. This stops fake alerts and makes sure everyone agrees on the transaction amount. You can even set up unique account numbers for each order that expire in 24 hours, making payments clear and secure.

Benefits of using a digital tool:

• Accuracy: Reduces errors in recording sales and debts.
• Efficiency: Saves time compared to manual record-keeping.
• Customer Convenience: Customers can pay easily through the provided links.
• Security: Helps prevent fraud and fake alert scams.

For traders in markets like Computer Village or Alaba International Market, where transactions are constant, having a system that works within your existing tools like WhatsApp is a game-changer. You don’t need to download any new app; everything happens inside WhatsApp.

What If They Don’t Pay?

Sometimes, despite your best efforts, a customer might not pay. This is the biggest risk of selling on credit. If it’s a small amount and a regular customer, you might have to decide if it’s worth losing the customer over. However, for larger amounts or repeated issues, you may need to consider other options. This could involve a more serious conversation, involving a trusted elder in the market, or in extreme cases, legal action if the amount is significant. But by carefully selecting who you sell to on credit and recording everything properly, you can significantly reduce the chances of this happening.

Final Tips for Selling on Credit

Selling on credit can be a powerful tool for growing your business in Nigeria, but it requires careful management. Always remember that cash flow is king. Don’t let credit sales tie up too much of your money. Start small, with trusted customers, and use a system to keep track of everything. This will help you make more sales, keep your customers happy, and most importantly, ensure you get paid.