Glossary · Credit management
Credit limit
A credit limit is the maximum amount a customer may owe you at one time. New work beyond it waits until the balance comes down.
A credit limit caps your exposure to one customer. It covers everything outstanding — overdue and not-yet-due invoices together — not just a single invoice.
Set it from what you know: the customer’s credit report, trade references, their size, and their payment history with you. Start new customers lower and raise the limit as they pay on time.
A limit only works if something happens when it is reached. The usual rule: no new orders or new work while the account is at its limit, or while anything on it is significantly overdue.
Example
A client has a €25,000 credit limit and owes €19,000. A new €9,000 project would take them to €28,000, so it starts once €3,000 more has been paid.