Running a pharmacy involves much more than just managing inventory and serving patients. It also requires careful financial navigation—from handling cash flow and managing payments to making strategic decisions, especially when resources are tight. Many community pharmacies already use supplier credit, but often not to its full potential.

When Supplier Credit Feels Like a Trap

Imagine this: You’ve taken stock on credit because you needed to restock fast. The supplier gives you 30 days. But by the time the payment is due, you’re still chasing insurance, your regulars are taking meds on credit, and your rent is around the corner. So what do you do? Roll it over. Delay payment. Or worse—borrow more to pay what you already owe.

In this scenario, supplier credit transforms from a potential lifeline into a financial snare. Sound familiar?

When Supplier Credit Becomes a Growth Tool

Now, picture this instead: You use supplier credit to buy fast-moving items you know will sell quickly. You move stock before the payment is due. You track your margins and plan your payments in line with sales. That 30-day window? It becomes a free loan that helps your business grow, without touching your cash reserves.

That’s the real power of using supplier credit smartly.

How To Get There – Smart Ways To Use Supplier Credit

Let’s walk through practical tips you can use starting this week.

1. Match Credit to Fast-Moving Stock

Only use supplier credit for products you know will sell within the credit period. Paracetamol? Yes. Rare injectables? Probably not. Fast sales = faster cash to pay off your supplier without stress.

✅ Tip: Pull your top 20 selling items from the past 3 months. Prioritize those for credit orders.

2. Create a Simple Credit Calendar

Don’t rely on memory. Use a basic calendar (even a wall one!) to track when credit payments are due. It's a straightforward way to avoid late fees and maintain excellent supplier relationships.

✅ Tip: Mark due dates 3 days before actual deadlines so you have breathing room.

3. Negotiate Longer Terms Strategically

If you’ve been consistent with a supplier, ask for better terms. An extra 7 or 14 days can make a big difference in your cash flow. Just don’t ask when you’re already late!

✅ Tip: Time your ask after a solid repayment streak and regular orders.

4. Separate “Cash Stock” from “Credit Stock”

Mentally (or physically) separate products bought on credit. It helps you track what needs to be paid back and avoid using credit for slow-moving stock.

✅ Tip: Use color stickers or shelf tags to track which items are on credit.

5. Avoid Using Credit to Plug Holes

Don’t use supplier credit to cover up other cash problems (like overdue bills or staff salaries). That’s how you end up in a cycle of debt. Instead, use it as a planned tool, not a desperate fix.

✅ Tip: If you're considering using credit that way, pause. Look at your financials first.

6. Use Credit Discounts to Your Advantage

Some suppliers give discounts for early payments. If you can sell fast and pay early, grab those deals! It’s an easy way to increase your margins without raising prices.

✅ Tip: A 2% early payment discount on KES 100,000 stock is KES 2,000 in your pocket.

It’s Not Just Credit—It’s a Strategy

Supplier credit is not free money. But when used wisely, it can help you grow without loans, build stronger supplier relationships, and give you a cash flow edge.

It all comes down to using it with purpose, not panic.

PS: Want more smart money tips like this?

Check out the latest issue of The Chemist magazine – packed with practical ideas to grow your pharmacy. 👉 https://thechemist.co.ke/magazine