13/09/2026
Very impactful
Last month, we supplied 10,000 litres of AGO that landed at the cost of N1,750 per litre. We invoiced the hotel at N1,800 per litre on credit.
Simple calculation.... N50 profit per litre on 10,000 litres, that is N500,000 profit.
Beautiful business as many would think but close to 30 days now, the customer has not paid.
Meanwhile, AGO has jumped to about N1,950 per litre at some depots as at today.
Now, even if the customer pays the full N18 million today, we will need N19.5 million to replace the same 10,000 litres.
Where will the extra N1.5 million come from? We may have to borrow it abi?
Think about that.
Our sales team recorded a profit of N500,000, but the business actually needs an extra N1.5 million just to return to where it started last month.
The product has left our tank, the customer is using the diesel and invoice is smiling inside our records.
But the money is sleeping inside the customer’s account. So, on paper, we made money, but in reality, we became poorer.
This is one of the quiet ways profitable businesses die in Nigeria without knowing.
You see, sometimes, your company is selling enough but the real problem is that the money is not coming back fast enough.
Your sales report says N500 million and everybody claps for your sales team and you even paid commission.
The customers have collected the goods oohh, then salary day arrives and the accountant is searching everywhere for N20 million.
That is when you learn the painful difference between revenue and cash.
I will share with you what I usually tell my team. A sale is not complete because an invoice has been raised.
A sale is complete when profitable cash enters your account early enough to replace the goods and keep the business moving.
Not every customer owing you is a bad person ooh, but you see those good customers with poor payment discipline can destroy your business.
Every company selling on credit must answer these five questions.....
1. Who approved the credit?
2. What is the customer’s credit limit?
3. On what exact date must payment arrive?
4. Who is personally responsible for collecting it?
5. What happens when the payment date is missed?
If nobody can answer these questions, you do not have a credit system.
Now, here are three lessons every business owner must apply....
First, reward salespeople for cash collected, not only invoices raised.
Second, review your unpaid invoices every week. A debt that is 7 days old is not the same as one that is 60 days old.
Third, stop supplying customers who have crossed their agreed credit limit, no matter how important they appear.
The job of your sales department is not just to move products out of your warehouse. Their main job is to bring profitable cash back into the business.
Turnover can impress the public and they clap for you to get excited but what the investors are looking for is the real profits after you collected cash, restocked your business and paid your bills.
