Running an FMCG Distributorship: Credit, Schemes and Route Cost

• 01Credit to retailers is given on relationship and not on a limit, so outstanding grows with the loudest buyers while the brand payment date does not move.
• 02Scheme and discount claims from brands take a trail of signed sheets and delivery proofs, and the amount owed to you sits unrecorded until a brand official asks for it.
• 03Stock from several brands is held together, and slow or near-expiry lines are found only at a physical count, after the money is already stuck.
• 04Vehicle, driver, salesman and fuel are paid for each route, but nobody knows what a route earns after those costs, so a poor route continues for years.
• 05Orders are taken verbally by salesmen and entered later, so what is delivered and what is billed differ, and the difference lands as a loss.

• Retailer outstanding by age

  Unpaid retailer bills grouped by days since billing, as a share of total outstanding.

• Scheme claims still due

  Claims filed less claims received, by brand, with the date each was submitted.

• Stock ageing

  Closing stock at cost grouped by months since receipt, by brand and line.

• Margin per route

  Margin on the route sales less vehicle, driver, salesman and fuel cost for the same month.

More than a quarter of the balance is past 30 days. The names behind those two bands are where the next collection round starts.

• 01Giving credit by relationship and not by a limit, so retailer outstanding by age grows on the oldest balances while the brand payment date stays fixed.
• 02Leaving scheme claims unfiled until a brand asks, so the amount still due from each brand is unknown and the proof papers are lost.
• 03Running a route without a costing sheet, so margin per route after vehicle, driver and salesman never gets read.

• 01A retailer outstanding list by age, with a credit limit against each name.
• 02A scheme claim register with the brand, period, amount, proof status and date submitted.
• 03A stock ageing sheet by brand and line with the cost of anything near its shelf-life limit.
• 04A route costing sheet: sales, margin, vehicle, driver, salesman and fuel for each route.
• 05An order-to-bill check that matches what was ordered, loaded and billed.
• 06A brand-wise margin and payment cycle view so the weakest brand is visible.
• 07A collection routine tied to the route day, with a named person for each retailer.
• 08A monthly cash view of what is owed to brands, owed by retailers and held in stock.

1. List every retailer with an unpaid balance and the date of the oldest unpaid bill. Group them as up to 15 days, 16 to 30, 31 to 45 and above.
2. Hypothetical example: you sell ₹20,00,000 a month and retailers take 21 days on average to pay. Your receivable is about ₹14,00,000. If your margin is 4% of sales, you earn ₹80,000 a month. If the cost of money is 1% a month, the credit alone costs ₹14,000, which is 17.5% of the margin.
3. Write down every scheme claim you have submitted or could submit, with the amount and the date. Add up what is still unpaid by brand.

1. First call: you describe the business and the numbers you already track.
2. Your first sheet: the one described under What you get, built from your own books.
3. The rhythm: a regular review of retailer outstanding by age, scheme claims still due, stock ageing, margin per route.
4. What you hold at the end: a written sheet and a named owner for each number.

• Financial Health Audit

  A management-level review of margin by product, the cash cycle, receivables and costs, ending in indicators you track monthly. Not a statutory audit.

• Business Audit

  Financial Health Audit is part of Business Audit. See the full service if the problem is wider than one piece.

• Cash is always tight, even when sales look good

  Full order book but an empty account? See how collections, stock, credit terms and timing gaps drain cash, and how a 13-week forecast eases the squeeze.

• I cannot see how my business is really performing

  If you steer by bank balance and gut feel, you are driving blind. See how a few trusted numbers, a monthly report and a review meeting fix that.

• How this differs from Grocery stores and supermarkets

  A distributor sells to retailers on credit and lives on receivables and claims; a grocery store sells to households for cash or card and lives on shelf turn and shrinkage.

• How this differs from Institutional food suppliers

  An institutional supplier serves a few large buyers on contract; a distributor serves many small retailers on route and credit.