Contractors are your best and riskiest customers
A good contractor brings steady orders from site after site. That is why hardware and building material shops compete to keep them. But contractors also take the most credit. They buy during the job and pay when their own client releases money, which can take weeks or months.
Managing this credit well is often the difference between a shop that grows and one that is always short of cash.
Agree on terms before the first order
Before you open a credit account, agree with the contractor on a limit and on when payments will be made. Some shops tie payments to site milestones. Others fix a number of days. Write it in the contractor's record so everyone at the counter knows the terms.
- Credit limit for the contractor
- Usual payment period
- Who at the contractor's side can place orders
- Who can collect material on their behalf
- Mobile number for statements and reminders
Record the site with each bill
A contractor may run three or four sites at once. If all bills go into one total, it becomes hard to answer which site the material went to. Recording the site name with each bill helps the contractor bill their own client and makes your statements easier to accept.
It also helps you see if one site is consuming credit without payments coming back.
Control who can pick up on credit
A common problem is helpers or masons collecting material in the contractor's name without approval. Then the contractor disputes the bill. Keep a list of approved people for each contractor, and if someone new comes, call the contractor before releasing material on credit.
Review dues every week
Look at all contractors with balances every week. Sort them by days pending. Call anyone past their agreed period. A short call early is much easier than a difficult conversation after three months.
When a contractor pays, record which bills the payment covers. Round-figure payments are common, and without notes, nobody later knows which bills are still open.
Use statements, not memory
When you follow up, send a statement with bill dates, sites and amounts. Contractors deal with many suppliers and genuinely lose track. A clear statement often gets a payment faster than any amount of reminding.
Know when to stop credit
If a contractor crosses the limit or stops paying, stop new credit politely until the balance comes down. You can still sell for cash. Explain that it is your shop's rule. Most contractors understand, and those who do not are often the ones who would have caused bigger losses later.
Common mistakes
- No agreed credit limit or payment period
- Bills without the site name
- Releasing material to unknown helpers on credit
- Not linking round-figure payments to bills
- Reviewing dues only at the end of the financial year
Separate cash sales from credit sales
Some contractors buy for cash on one day and on credit the next. Make sure the counter staff know which is which, and mark every bill clearly. A cash bill accidentally posted to credit inflates the contractor's balance and leads to an awkward dispute later.
Also decide whether walk-in masons and painters sent by a contractor get credit in that contractor's name. Write the rule down and apply it every time.
Keep records easy to share
Contractors often need your statement to settle accounts with their own clients. When you can send a clean, site-wise statement quickly, you become the supplier they prefer to deal with. Good records help you collect, and they also help you keep the customer.
Review the contractor list each quarter
Every few months, look at your contractor list as a whole. Who buys regularly and pays on time? Who buys less but still holds a large balance? Use this review to raise limits for good payers and tighten terms for slow ones. It also shows which contractors have stopped buying, which may be worth a friendly call to find out why.
How Lohshala helps
Lohshala keeps a credit ledger for every contractor with each invoice and payment. You can see which contractors have dues and how long they have been pending, and share a statement when needed.
Quotations turn into invoices without retyping, and delivery tracking shows which material reached which site. The D&D Technology team can show you this with your own data. Message +91 95116 38160.
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