Customer credit limits
A credit limit protects you from unlimited credit sales. This article explains the three fields on the Credit tab and exactly what happens when the limit is exceeded.
On this page
Three fields on the Credit tab
Open the party from Accounts and go to the Credit tab:
| Field | Meaning |
|---|---|
| Payment terms (days) | 0 to 365 days. Each invoice's due date = its date + these days. Zero means the invoice is due the day it is issued. |
| Credit limit | The highest debit balance you accept the customer to reach, in the base currency. Empty = no limit. |
| When the limit is exceeded | The policy: Allow, Warn (the default), or Block the sale. |
How the excess is calculated
When posting a sales invoice for a customer with a limit, the system computes:
current debit balance + new invoice total (in the base currency)
and compares it to the limit. The current balance is read from the ledger at the moment of posting with a locking read, so two simultaneous invoices for the same customer cannot both pass on the strength of the old balance. The check runs at posting, not when saving the draft, because a draft affects no balance.
What happens under each policy
Allow
Nothing. The invoice posts whatever the balance. Suitable for trusted customers or a sister company.
Warn
The invoice posts, but the result carries a warning and the invoice is flagged in the list as Posted with the credit limit exceeded. Suitable when you want to see the excesses without stopping sales.
Block the sale
Here posting stops, and the path depends on who is posting:
- Someone with the credit override permission (under "Invoice-specific permissions") sees the refusal message and must confirm the override explicitly by posting again with the override option. The invoice records them as the person who exceeded the limit.
- Someone without it triggers an approval request with the reason "Over the credit limit", and posting is refused with a message carrying the request number. The manager opens Home, then Approvals and approves or rejects; after approval the employee posts again and it goes through. See Posting, cancelling and approvals.
The refusal message
"Credit limit exceeded for customer X (balance A, limit L, after the invoice B)". The three numbers tell you exactly how much the debt is now and what it would become. To get through, either a receipt voucher from the customer lowers the balance, or raise the limit on their profile, or get the manager's approval.
The cashier and credit sales
The POS app downloads each customer's balance, limit and policy with their data, applies the same rule locally even without internet, and the server re-checks on sync. But a cashier cannot sell on credit in a customer's name at all unless they hold the credit sale in a customer's name permission; without it their invoices stay cash even when a customer is named. See Cashier permissions and Payments at the POS.
What happens in the books
The credit limit writes no entry and changes none. An invoice that passes with an excess is posted like any invoice: debit 1400 Customer receivables under the customer's name for the total, credit 4100 Sales and 2300 Output VAT. The only difference is that the invoice carries the excess flag and the name of whoever authorised it in the audit log.
Where to watch the debts
- Reports, then Ageing: how much of customer debt is not yet due, and how much is over 30, 60 or 90 days, based on each customer's payment terms.
- Reports, then Statement: one customer's movements in detail.
- The customer's balance at the top of their form in Accounts.
Details in Statement, liquidity and ageing.
Practical recommendation
Start with the Warn policy for all credit customers and watch the excesses for a month, then switch repeat offenders to Block the sale. Give the override permission to one or two people only; the audit log keeps who authorised every override.
Frequently asked questions
The customer has no credit limit. Is anything checked?
No. An empty limit means no ceiling, and the invoice posts whatever the policy.
Is the limit checked on a draft?
No. The check runs only at posting, because a draft changes no balance. So a draft may save and then be refused at posting.
The manager approved the request. Why was the invoice not posted?
Approval only opens the door. The employee must click "Post" again on the same invoice, and it goes through.
Does the limit apply to suppliers?
No. The credit limit is checked on the customer role only, for sales invoices.