A wholesaler can give credit safely by deciding up front who gets credit and how much: check each new buyer's GSTIN, give credit only after a few cash purchases, set a limit and a short credit period per buyer, and stop credit the day a bill goes overdue. Track every buyer's balance and ageing in one place, and start reminder calls early, before small balances grow.
Simple rules that protect a wholesaler
- Cash first, credit later. Let a new buyer make a few cash purchases before you open credit.
- One limit per buyer. Write it down and do not exceed it without a deliberate decision.
- Short periods. Retail stock turns quickly, so keep credit periods short.
- No new credit on an overdue bill. Apply it to every buyer, so it is a rule and not a personal decision.
- Written records. A bill for every supply and a signed acknowledgement for every delivery.
Checks before opening credit
- Check the buyer's GSTIN with the free GST lookup or the free Basic check in the app. Confirm the trade name matches the shop.
- Look for reports from other suppliers in the defaulter network.
- For larger limits, take the Advance GST report for the filing record, or the GST + Financial report for court cases and the owner's credit record (with consent).
- Ask one or two other suppliers how the buyer pays.
For the full list, see how to check a buyer before giving credit.
Tracking and collecting
- Keep invoices, payments and limits per buyer in Receivables, with ageing and a daily alert on newly overdue invoices.
- Import your existing receivables from Tally, Excel or CSV in the web app.
- Start a soft follow-up as soon as a bill is overdue; move to a hard follow-up if the buyer stops responding.
- Send a legal notice for a bounced cheque within 30 days of the return memo.
- Report buyers who do not pay to the defaulter network to warn other suppliers.
If you also bill from a counter, FundRaksha Book handles GST billing, stock and customer credit.
Frequently asked questions
Should a wholesaler give credit to new retailers?
Only after basic checks and, ideally, a few cash purchases. Start with a small limit and a short credit period.
How do I stop small balances from becoming bad debts?
Stop new credit the day a bill is overdue, track ageing for every buyer, and start reminders early. Small balances are easier to collect while they are recent.
Can I see if a retailer has defaulted with other suppliers?
The FundRaksha defaulter network shows approved reports from suppliers who use FundRaksha. It is free for FundRaksha Trust users.
What should I do if a retailer's cheque bounces?
Send a demand notice within 30 days of the bank's return memo under Section 138 of the Negotiable Instruments Act, and keep the cheque and memo safe.
This guide is general information for Indian businesses, not legal or tax advice. GST data shown by any tool comes from public records and should be confirmed on the GST portal before you act on it.