Rules for selling on credit

Is selling on credit legal?

Generally, yes. A shop handing over goods today and taking the money later is making a normal sales agreement with deferred payment. Rules differ from country to country, but the basic idea is the same almost everywhere.

An agreement can often be spoken rather than written, but if there is a dispute it is usually up to you to show what was sold and what is still owed. That is why dated, regular records are the most important part of selling on credit.

Some kinds of credit, such as regular installment plans for consumers or charging interest, can bring extra rules: written contracts, disclosures or licences. If you do this often, check with a local accountant or lawyer.

Do you need a receipt or invoice for a credit sale?

Usually, yes. In many tax systems the duty to issue a receipt or invoice, and the sales tax or VAT, arises at the time of sale, not when the customer finally pays. Leaving a sale off the books because the money comes later can cause tax problems.

• Issue the receipt or invoice your rules require at the sale, and record the payment separately when it comes.
• Which document you need and by when depends on your country and your type of business.
• Late fees or interest may have their own tax treatment.

Your accountant can tell you exactly what applies to your shop. Sending them regular Excel reports or statements makes their job easier.

What is a promissory note and when does it help?

A promissory note is a signed written promise by the customer to pay a set amount on a set date. For large or long-term credit it gives you stronger proof of the debt than a line in a notebook.

The exact requirements depend on local law, but a note usually states:

• That it is a promise to pay
• The amount, often in figures and in words
• The due date and place of payment
• The name of the person to be paid
• Where and when it was made
• The signature of the person who owes the money

In some countries a properly made note can make collection faster if the debt is not paid; a note that is missing required details may lose that advantage. Standard forms are often available, but if you are unsure, have a lawyer look before you use one.

Why do written records and customer confirmation matter?

If a debt is ever questioned, your strongest position is dated entries plus some sign that the customer accepted them. For small, everyday credit that is usually regular statements and the customer’s written replies.

• Record every sale with date, amount and items when it happens.
• Send customers a statement once a month.
• Keep written replies such as "that’s right" or "I’ll pay on Friday".
• Keep receipts, invoices and payment slips with your records.

Baki Fast shares a PDF statement for any period. If your customer uses Baki Fast too, a shared account lets you both see the same account on your own phones, so the entries are never a mystery.

Time limits, interest and late fees

Debts do not stay collectable through the courts forever: most legal systems set a time limit, and it varies by country and by type of claim. If an old debt matters to you, ask a lawyer how long you have.

If you want to charge interest or a late fee, agree it with the customer in advance and show it clearly on the paperwork. Fees added afterwards, without warning, invite disputes and may not hold up. Some places also cap how much interest can be charged.

To plan payments in parts, try the installment calculator.

How do you collect an unpaid credit debt?

Start with friendly steps and move to formal ones only if needed. Keep a written trail at every step; it makes the next one easier.

1. Reminder: A short, polite message. See payment reminder message examples.
2. Statement: A full list of entries and the balance owed.
3. Conversation: Agree on part payments or a new date.
4. Formal demand letter: A written demand for payment by a set date, sometimes sent through a lawyer or an official service.
5. Legal action: Small-claims courts or other local procedures. A lawyer can tell you which route fits your case.

At no stage should you make a debt public. Posting a customer’s debt in the shop, online or in a group chat can break privacy and data protection rules and cause you a separate problem.

Is Baki Fast accounting software?

No. Baki Fast is a credit book that keeps your customer and supplier accounts in order. It is not official accounting software, it does not issue invoices or e-invoices, and it does not replace the receipts and invoices your rules require.

What it does is keep dated records of who owes what, what they took and when they paid, and let you share them as statements and Excel files. That makes conversations with your accountant and your customers much easier.