Accounting
Credit control for Bangladeshi businesses: aging, collections and credit limits
Late-paying customers drain cash. Learn how to read a receivables aging report, set customer credit limits and run a collections routine that works.
A sale is not income until you are paid. For wholesalers, manufacturers and service firms that sell on credit, the gap between invoice and cash is often the biggest drain on working capital. Profitable businesses run out of cash all the time because customers pay late, and then the owner borrows from the bank to fund customers who are effectively borrowing from them for free.
Credit control is the discipline of deciding who gets credit, how much, how long, and what happens when they do not pay. It does not need a big department. It needs three things: a credit limit per customer, a regular look at aging, and a collections routine that someone owns.
Step 1: decide who gets credit and how much
Before you extend credit, collect the basics: legal name, trade licence, BIN and e-TIN if applicable, contact persons, address, and trade references. Look at the customer's payment history with you and, where you can, with others in the market. Then set two limits: an amount (the maximum outstanding) and terms (the number of days).
- New customers: start with a low limit or advance payment, and raise it as they prove reliable
- Existing customers: review limits regularly, at least once a year and after any late-payment pattern
- Size the limit to the customer's real capacity and your own risk appetite, not to the size of their last order
- Record the limit on the customer record so the system, not memory, enforces it
In eSolverBooks, a credit limit can be set on the customer record, and where no limit is set, invoices are never blocked for that customer. That default is convenient, but it means customers with no limit have unlimited credit, so set limits deliberately.
Step 2: read the aging report properly
An aging report groups unpaid invoices by how overdue they are. The usual bands are current, 1 to 30 days, 31 to 60, 61 to 90 and over 90 days overdue. The bands matter less than what you do with them.
| Band | What it usually means | Action |
|---|---|---|
| Current | Within terms | No action. Check that invoices were actually delivered and accepted |
| 1-30 overdue | Often a process delay, such as approval or cheque preparation | Friendly reminder with statement and invoice copies |
| 31-60 overdue | Possibly a dispute or cash strain | Call, find the reason, get a promise date |
| 61-90 overdue | Serious | Hold new deliveries, escalate to owner level, agree a payment plan |
| Over 90 | At risk | Stop credit, consider formal steps, assess whether provision is needed |
Look at concentration as well as age. If three customers account for most of the overdue amount, you have a collections problem with three people, not a general problem. Look at trends month to month: total receivables rising faster than sales means collection is slowing.
Step 3: run a collections routine
- 1Send statements on a fixed day each month, showing open invoices, receipts and the current balance.
- 2A day or two before the due date, a polite reminder to customers with large invoices.
- 3On the day after the due date, a call or message: has the invoice reached the right person, is there a query?
- 4Record every contact: date, person, what was promised. A note saying he will pay next week is worth nothing without a date.
- 5If a promise is broken, escalate. Move to a more senior contact, and put new orders on hold until the account is back within terms.
- 6Apply receipts to specific invoices as soon as money arrives, so the aging is true.
Disputes, deductions and short payments
A lot of overdue money is not unpaid; it is disputed. The customer claims a short delivery, a price difference or a quality issue and withholds the whole invoice. Separate the disputed part from the undisputed part, collect the undisputed part now, and resolve the dispute with a credit note if it is justified. Link any credit note to the invoice it adjusts so the customer's statement and your VAT records agree.
Cheques and post-dated cheques
Many B2B customers pay by cheque, including post-dated cheques. A PDC in your drawer is not cash and should not remove the invoice from overdue lists without a record. Track each cheque with its date, bank and amount, and treat a bounce as a reopened debt. We cover this in our article on handling cheques and PDCs.
Pricing credit honestly
Credit has a cost. If you borrow from a bank at a given interest rate to fund a customer's 60 days, that interest is part of what the sale costs you. Some businesses offer a discount for early payment, or hold different price lists for cash and credit. Whatever you choose, make sure the sales team knows the cost of long terms, rather than treating them as a free concession.
Measure it
Pick two or three simple measures and watch them monthly: total overdue as a share of total receivables, average days to collect, and the number of customers over their limit. You do not need sophisticated analysis. You need the same report on the same day each month, reviewed by someone who can pick up the phone.