Credit limit
In Arabic حدّ الائتمان
A credit limit is the maximum amount a customer may owe the seller at any one time before further sales on credit are stopped.
In plain words
Selling on credit is lending. A credit limit decides how much you are willing to lend each customer, based on their size, history and how promptly they pay, so one bad debt cannot sink a month’s margin.
The balance checked against the limit is usually what the customer has been invoiced and not yet paid, plus the new order. Some businesses also count open orders not yet invoiced. The check should run before the goods leave.
The common mistake is setting limits and checking them only in the office. Orders taken in the field then go straight past the limit, and the problem shows up at collection time.
- Credit limit
- SAR 30,000.00
- Invoiced, not yet paid
- SAR 26,500.00
- New order
- SAR 2,800.00
- Balance after the order
- SAR 29,300.00
- Room left under the limit
- SAR 700.00
In Axon Suite
How Axon Suite handles it
In Axon Suite each order is checked against the customer’s credit limit when it is saved, in the office and in the rep app, and held or refused as your settings say.
Feature
Credit limits on every order
Every order is checked against the customer’s limit the moment it is saved, in the office and in the rep’s app. Over the limit, it is held for someone with approval rights or refused, as your settings say.
Open: Credit limits on every order