Dorcas had a notebook at the till in her pharmacy in Meru, and it was the source of more arguments than she cared to remember. It held the names of customers who bought on account, the amounts they owed, and a few crossed-out entries where someone had promised to pay “by Friday” and never did. Some of the names belonged to people she trusted completely: a teacher who always settled up at the end of each month, a mother whose husband worked away and who sent money when she could. Others belonged to customers who had simply stopped coming in, leaving her with a balance she had no way of collecting. The notebook made her uneasy. It was informal, it was growing, and she was not sure she was being fair to herself or to the people on it.
Dorcas’s question was a common one. When should a pharmacy let people take medicine now and pay later, and when should it insist on cash? The honest answer is that there is no single rule. The right policy depends on the kind of medicine, the customer’s circumstances, the pharmacy’s own cash position, and a firm commitment that no one is refused essential care simply because they cannot pay on the day. This post sets out how to think through those choices, and how to write a credit policy that is clear, fair, and sustainable.
Why credit is a real decision
Offering credit feels generous, and sometimes it is. A regular customer who runs short of money at the end of the month, or a family facing an unexpected illness, may genuinely need a few days’ grace. But credit is also a loan, and it has costs. Money tied up in unpaid accounts cannot pay suppliers, staff, or rent. Bad debts reduce profit. And informal arrangements, like Dorcas’s notebook, can produce disputes, misunderstandings, and quiet resentment on both sides.
A pharmacy’s credit policy should therefore be a deliberate business decision, not something that happens whenever a customer asks. It should answer clear questions: who qualifies, for what products, up to what limit, for how long, and what happens when payment is late.
Separate essential medicines from everything else
The most important principle is that access to essential medicines should not depend on a customer’s ability to pay on the day. A person who needs a medicine for a serious or chronic condition should not be turned away because their purse is empty. A pharmacy that refuses essential medicines for lack of cash may protect its short-term cash flow, but it puts a patient’s health at risk and damages its standing in the community.
That does not mean every medicine must be given on credit. It means the policy should be built around the difference between essential and non-essential items, and should include a fair route for essential care when cash is short. Many pharmacies handle this by allowing a short arrangement for essential prescriptions, with a clear agreed date for payment, while keeping cash-only sales for lower-priority items such as cosmetics, luxury supplements, and some non-prescription products.
Be careful with the words you use. “Essential” should be defined in the policy and linked to the prescriber’s advice, not to the customer’s convenience. Check the current position on prescription and dispensing rules with the Pharmacy and Poisons Board before writing any arrangement that involves delaying payment for regulated products.
When credit makes sense
Credit tends to suit a few specific situations. Long-standing customers with a clean payment history are the clearest case. Dorcas’s teacher, who had paid every month for years, was a customer she was happy to trust with a short account. Trust built over time is a sound basis for a credit arrangement, and it tends to be stronger than any formal check.
Institutional customers, such as a clinic, a nursing home, or a small employer that buys stock for its staff, may also be suitable for account terms. They usually have a regular purchasing cycle and a formal payment process, which makes credit easier to manage. Even so, put the terms in writing, set a credit limit, and agree on invoicing and payment dates.
Short-term arrangements for essential prescriptions can make sense when a customer is genuinely in need and has a plausible route to payment. A clear, agreed date, a note of the amount, and the customer’s signature protect both sides. Limit these to a small number of days or to a single payment cycle, and do not let them roll on indefinitely.
Credit may also suit a customer who has had a difficult period but is returning to regular payment. In those cases, a repayment plan with set instalments can help rebuild the relationship while protecting the pharmacy’s position.
When cash should be the rule
There are equally clear cases where cash only is the sensible policy. A customer who has a history of missed payments, who has left a balance unpaid for months, or who cannot give any reasonable plan for payment should not be given further credit until the existing debt is settled. Continuing to extend credit to someone who is not paying only deepens the problem for both of you.
Non-essential products, especially those with lower margins and no clinical need, are usually best sold for cash. Offering account terms on cosmetics, gifts, or optional supplements can quickly turn into a large unpaid balance on items that were never urgent.
New customers without any history with the pharmacy are often best served on a cash basis at first. A simple rule, such as cash for the first few visits and account terms considered after a track record is built, keeps the risk manageable and gives both sides time to get to know each other.
Cash only should always be explained kindly. Tell the customer what the rule is, why it applies to them, and when it can be reviewed. Never make a customer feel judged for their circumstances, and where a medicine is essential, make sure the conversation includes a discussion of what they can do to get their medicine, such as speaking with their prescriber about a lower-cost alternative or checking whether any support is available locally.
Set a credit limit and stick to it
A credit policy without limits is an invitation to trouble. Decide the maximum balance each account can carry, and make it proportionate to the customer’s history and the pharmacy’s ability to absorb a bad debt. A limit that is comfortable for a long-standing regular may be dangerous for a new customer.
Check balances regularly, and do not allow accounts to exceed their limit without a formal review. If a customer approaches the limit, speak to them early, rather than waiting until the balance is overdue and the relationship has soured.
Keep a written record of every account: the customer’s name and contact details, the agreed limit, the payment terms, each transaction, and each payment. A proper ledger, whether on paper or in your dispensing system, replaces the notebook and makes disputes far easier to resolve.
Dorcas moved her notebook into a simple spreadsheet, and then into the shop’s point-of-sale system. Each account now shows the limit, the due date, and the balance at a glance. She reviews the list every week, and she has found that having the information clearly in front of her has made her more confident about where she can say yes.
Put it in writing
A credit policy should be written down and given to customers who use it. It should explain who can apply, what products are covered, the credit limit, the payment terms, what happens when a payment is late, how disputes are handled, and how the account can be closed. Customers should sign to show they have read and understood the terms.
Keep the wording plain. A policy full of legal phrases will not be understood by most people who need it, and an arrangement that people do not understand is an arrangement that will go wrong. Explain the key points out loud as well, and invite questions.
Review the policy every six months or so. Payment patterns change, costs change, and the pharmacy’s cash position changes. A policy that suited last year may need adjusting now.
Collecting what is owed with respect
Late payment is inevitable in any credit arrangement, and how a pharmacy handles it says a great deal about its character. Start with a friendly reminder shortly after a payment is due. If the balance remains unpaid, follow up with a call or a visit, ask what is happening, and try to agree a realistic plan. Keep records of every conversation.
Avoid public reminders, shaming, or any approach that could embarrass the customer in front of others. Do not withhold essential medicines as a form of collection. That is both unfair and, for a prescription, potentially harmful. If an account must be closed, do so clearly and in writing, and explain what the customer can do to settle the balance and restore their account in future.
Where a debt cannot be recovered, decide how you will treat it. Some pharmacies write off small balances after a period of effort. Others use a formal collection process for larger amounts. Whatever you choose, record the decision and apply it consistently, so that customers are treated fairly and your books remain honest.
Supply and cash flow
Credit affects cash flow directly, and cash flow affects your ability to pay suppliers and keep stock on the shelves. A pharmacy that gives generous credit to customers while paying its own suppliers promptly may find itself in trouble quickly. Before setting limits, look at your own supplier terms and your monthly cash needs, and make sure the policy is sustainable.
If you extend credit, plan for the gap. Make sure the money you are owed will arrive in time to meet your own obligations, and keep a cash buffer for months when collections are slow.
Reliable supply also keeps credit customers loyal. A customer who buys on account and finds their medicine missing will lose confidence in the arrangement quickly. Agree realistic stock levels for the products your account customers rely on most, and keep supplier relationships strong.
If you are looking for exporters who understand the Kenyan market and its import requirements, and who can support steady, documented supply on terms that suit your cash cycle, you can review the options at pharma exporter to Kenya. Verify product registration, certification, and documentation before committing, and confirm current import rules with the relevant authorities.
What Dorcas changed
Dorcas did not abolish credit. She kept it for a small number of long-standing customers and for essential prescriptions in clearly defined cases, with written terms and limits. Everything else became cash only. She introduced a simple form for new account holders, reviewed her balances every Friday, and wrote a short, plain-language policy that she gave to each account customer.
The notebook is gone. The teacher still pays at the end of each month, and the mother whose husband works away still settles when money arrives, now with a clear record that both of them can see. The customers who had simply stopped coming in were offered a repayment plan, and a few returned to settle their balances. Dorcas says the biggest change is that she no longer dreads the till. She knows who she is trusting, how far, and why.
Practical wisdom for owners
A pharmacy credit policy should protect patients’ access to essential medicines, protect the business from unpaid balances, and be easy for everyone to understand. Offer credit on a deliberate basis to customers with a clear track record or to suitable institutions, use short, written arrangements for genuine essential needs, and keep cash only for everything else. Set limits, keep proper records, review the policy regularly, and collect what is owed with respect rather than pressure. A credit policy done this way does more than manage risk. It keeps the community’s trust intact, and that trust is what keeps a neighbourhood pharmacy in business.
