Credit Management: When Farmers Ask to Pay Later

"Can I pay you next week? I have a buyer coming on Friday." Every livestock farmer in Africa has heard this sentence. The restaurant owner who wants 20 chickens on credit. The fellow farmer who needs feed and promises to pay after selling his batch. The family member who takes eggs every week and "will settle at the end of the month."

Saying yes to all of them means you become a bank — a bank with no interest, no collateral, and no collection mechanism. Saying no to all of them means you lose customers to competitors who do extend credit. The answer is neither yes nor no — it is a structured credit policy with rules.

The 7 rules of farm credit management

1. Never extend credit for more than 30% of your monthly revenue

If your farm generates 500,000 FCFA (~$833 USD) per month in revenue, the total outstanding credit to ALL customers combined should never exceed 150,000 FCFA. If 3 customers each owe 50,000 FCFA, you have hit your limit — no new credit until someone pays. This prevents the death spiral where your entire cash flow is tied up in IOUs.

2. Always collect a deposit (30-50%) before delivery

When a customer orders, require a deposit. "I can hold 20 broilers for you for December 22 at 6,000 FCFA each. I need a 50% deposit (60,000 FCFA) to reserve them." This filters out unserious buyers and gives you working capital to buy feed for the remaining growth period. If the buyer does not show up, you keep the deposit and sell to someone else.

3. Set a maximum credit limit per customer

Establish a credit limit per customer based on their track record. First-time customer: 0 FCFA credit (cash only). After 3 successful cash transactions: 20,000 FCFA limit. After 6 months of reliable payment: 50,000 FCFA limit. Never exceed the limit, no matter how good the story.

4. Always record the debt in writing — even a WhatsApp message counts

"I will pay you 45,000 FCFA for the 30 eggs and 5 broilers by Friday, October 25." Sent via WhatsApp. This is a legally enforceable acknowledgment of debt in most African countries. If the customer does not pay, you have a timestamped record. Never extend credit based on a verbal agreement alone — memories conveniently fail.

5. Charge a credit premium (10-15% above cash price)

If a customer insists on paying later, the price goes up. "Cash price: 3,000 FCFA per bird. Credit price (pay within 7 days): 3,500 FCFA per bird." This compensates you for: (a) the time value of money, (b) the risk of non-payment, and (c) the administrative cost of tracking the debt. Most customers will suddenly find the cash when they see the credit premium.

6. Stop supplying the moment a payment is late

If a customer is 1 day late, they get no more product until they pay. This is the hardest rule to enforce but the most important. The moment you supply a late payer, you teach them that lateness has no consequences. The debt will grow, your cash flow will shrink, and eventually you will be owed so much that you cannot refuse — you have become dependent on them.

7. Write off bad debt quickly — do not throw good money after bad

If a customer has not paid in 90 days despite reminders, write off the debt and move on. Do not extend more credit to them in the hope they will eventually pay. A bad debt of 50,000 FCFA is painful but survivable. A bad debt of 200,000 FCFA because you kept supplying a non-payer is fatal.

The credit decision tree

When a customer asks to pay later, run through this decision tree:

1. Is this a new customer? Yes → cash only, no exceptions.
2. Is this an existing customer with good payment history? Yes → proceed to step 3.
3. Will total outstanding credit exceed 30% of monthly revenue? Yes → decline politely: "I have reached my credit limit this month. Cash only until the 25th."
4. Does the customer owe anything from a previous transaction? Yes → no new credit until previous balance is cleared.
5. Is the request for a large amount (>100,000 FCFA)? Yes → require 50% deposit + written commitment with date.
6. Is the request for a small amount (<50,000 FCFA)? Yes → agree but set a firm date: "Pay by Friday the 25th. If not, the price goes up 15%."
7. Document everything. Send a WhatsApp message confirming the amount, the product, and the payment date.

The 3 phrases that should trigger a "no"

• "I will pay you double next month." No one pays double. This is a desperation sign.
• "God will bless you if you help me." God helps those who help themselves. Cash only.
• "I am your family / friend / brother." Family and friends should be the FIRST to pay you, not the last. If anything, family should pay upfront to support your business.

Mobile money: the game-changer for farm payments

Mobile money (MTN MoMo, Orange Money) has made credit management much easier. Instead of "I will bring cash next week," the customer can transfer the money on the spot. "I understand you need to wait until Friday — but can you send the deposit via MTN right now? Just 30% to reserve the birds." If they cannot send 30% via mobile money right now, they will not pay in cash on Friday either.

FarmWise tracks every sale, every payment, and every outstanding balance. When a customer's balance exceeds their credit limit, the dashboard flags them in red. No more guessing who owes you — the numbers are always one tap away.