Distributor inventory: routes, credit and ageing

A distributor's stock problem is solvable with any decent system. The business problem is receivables: hundreds of retailers, goods on credit, and a salesman on a route who needs to know who owes what before he leaves. Run routes, credit limits, and ageing buckets off the same records as your invoices, and collection stops being a memory exercise.

What makes distribution different from retail stock?

Volume of parties, not volume of stock. A shop has one counter and a few hundred customers who pay on the spot. A distributor has a few hundred customers who pay in thirty or sixty days, ordered through a salesman, delivered on a route, and collected on the next visit.

That changes what your software has to be good at. Fast billing matters less than knowing, per party, what is outstanding, how old it is, and who is going past them tomorrow.

What is a delivery route and why record it?

A route is the beat one salesman covers — a set of customers, usually by area, visited in a repeating cycle. Recording it turns your customer list from an alphabetical directory into a work plan.

Once every customer carries a route tag, three questions become one click each: what is due on this route, who on this route has not paid, and which route is carrying the most old money. In KillStock you create your routes under Settings and tag each customer with theirs; reports and collections can then be filtered by route.

How should I use ageing buckets?

Bucket by how old the money is, not by how big it is. A ₹5,000 bill at 70 days is a worse problem than a ₹50,000 bill at 10 days, and a flat outstanding list hides that completely.

Bucket	What it means	What to do
0–15 days	Within terms	Nothing. Do not chase.
15–30 days	Just past due	Reminder on the next visit.
30–60 days	Genuinely late	Call the owner, not the counter staff.
Beyond 60 days	At risk	Stop further credit until part payment.

Set the boundaries to your own terms — if you sell at 45 days, a 30-day bucket is noise. The Outstanding report in KillStock lets you define three age buckets yourself, filter by route, and set a minimum amount due so small balances stop crowding the list.

Worked example: your total receivable is ₹18,00,000 and it looks alarming. Bucketed, it is ₹11,00,000 within terms, ₹4,00,000 at 15–30 days, ₹2,20,000 at 30–60, and ₹80,000 beyond 60. Only the last two lines — ₹3,00,000 — need anyone's attention this week.

How do I set credit limits that actually hold?

A credit limit only works if it measures what the customer owes right now. That means invoices raised, minus payments received, minus credit notes issued. A limit that only ever counts sales will block every good customer eventually, which is why staff learn to override it.

Three rules keep limits usable:

• Set the limit from payment behaviour, not from order size. A party who pays at 30 days deserves more headroom than a bigger one who pays at 75.
• Review after every dispute. A rejected consignment that is never credited will silently eat a customer's limit.
• Make the block visible at order entry, not at delivery. Finding out at the shutter is how goods come back on the van.

What does a collection list need to have on it?

Everything the salesman would otherwise have to ask the office for. At minimum: the customer, the amount due, and the date of the oldest unpaid bill — because the oldest bill is what the conversation is actually about.

KillStock's route-wise collection list shows, for each route, every customer with money due and their oldest unpaid bill. You can print it or share it on WhatsApp before the salesman leaves, so the list in his hand matches the ledger in the office.

Can field staff record collections without seeing everything?

They should not need access to your whole business to hand over a receipt. Give them a role scoped to the job.

KillStock has a Collector role for field staff. A collector signs in and sees only their own routes: each customer's outstanding and open bills, and a simple screen to record a cash or UPI receipt. The money is applied to the oldest bills first, automatically. A collector can cancel a receipt they recorded the same day — a wrong amount, say — but nothing else, and everything they do appears in the activity log.

Collector seats are a paid add-on rather than part of a plan, so they are not something you can switch on yourself — contact us and we will enable them for your account.

What should I check at the end of every week?

Four numbers, and none of them is your sales figure.

1. Total outstanding, by bucket. Watch the shape, not the total. Money moving from the 15–30 bucket into 30–60 is the early warning.
2. Collections against the week's plan. Route by route. A route that consistently under-collects is a conversation, not a spreadsheet problem.
3. Parties over their credit limit. Should be a short list, and each name should have a reason.
4. Stock ageing. Slow stock and slow money are the same disease. An inventory ageing report tells you which lines are financing your customers rather than your business.

If you distribute perishables or anything dated, add a fifth: what is nearing expiry. Picking the earliest-expiring stock first — see FEFO, and our explainer on FIFO, LIFO and FEFO — is the only discipline that prevents returns you have to credit later.

Does the stock side still matter?

Yes, it is just the easier half. Get three things right and it stays quiet: one catalogue across your godowns, transfers recorded properly so in-transit stock is a real state rather than a gap, and a reorder point per item and location so a fast-moving line does not go blank mid-route.

Delivery documents matter more for a distributor than a retailer. Goods that move without a bill — to a branch, on approval, or for job work — need a delivery challan, and it must carry the item description, HSN code, quantity, value, and place of supply. Whether you charge CGST and SGST or IGST depends on where the goods are going — see how to decide, every time.

FAQ

How do I decide how many customers a route should have?

Work back from a day. Count how long a real visit takes, including waiting and collection, and how far apart the parties are. Most distributors land between 15 and 30 stops a day. If a route regularly runs over, split it — a route nobody finishes is a route where the last customers are never chased.

What is the difference between an ageing report and a statement?

An ageing report is a list across all parties, grouping money by how overdue it is, so you can prioritise. A statement is one party's full account — every invoice, payment, and credit note — and it is what you send when a customer disputes the balance. You need both, for different conversations.

Should a salesman be allowed to give a discount at collection?

Only with a rule and a record. If a party pays late and wants a deduction, that is a credit note approved by you, not a lower receipt entered in the field. Otherwise your ageing quietly becomes fiction, because the bill stays open for an amount nobody intends to collect.

Can I stop supplying a customer automatically when they cross their limit?

Treat the limit as a block at order entry rather than an automatic cut-off. A hard stop with no human decision breaks good relationships over a timing difference. What you want is that nobody can raise the order without someone senior knowingly allowing it, and that the allowance is recorded.

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Distributing on credit across routes? See what is included on each plan on our pricing page, talk to us about collector seats for your field staff, or read our guide to choosing inventory software in India for the fit questions to ask first.