Customer Credit Limit

As a business owner, you might sell your goods/services on credit to your customers. This in turn, increases the risk of having huge amounts of overdue balance by customers. Zoho Books now lets you set a credit limit for each customer, thereby letting you have control over the outstanding receivable balances. So, apart from just sending payment reminders for overdue invoices, enabling this will help you to avoid many outstanding invoices.

You will also be able to view the customer’s credit limit in the Customer Balances Report.

Prerequisite: Credit limits can be set only in the organisation’s base currency even if a foreign currency has been associated to the customer.

In this page:

Enabling Customer Credit Limit

To set credit limits, you will first have to enable the feature from your preferences. To do this:

Enable Customer Credit Limits

Sales Order Credit Limit

You can choose to enable credit limit for a customer’s sales order. To do so, mark the box Include sales orders’ amount in limiting the credit given to customers. When the customer’s credit limit is crossed, you will be restricted or warned accordingly.

This restriction or warning message will be shown for sales orders based on the Credit Limit Preferences you have set.

When will the credit limit be considered?
With regards to sales orders, the restriction or warning message will be shown in Zoho Books in the following cases:

In other places:

When will it not be considered?
The amounts for different sales orders will not be taken into consideration in the following cases:

After making the required changes, click Save.

Setting Credit Limits for Customers

Once you have enabled the option, you will have to set a credit limit for each customer. Setting a limit can be useful when other users in your organization create invoices for a customer whose future ability to pay back, is unknown to them. To set limits:

Customer Credit Limit Workflow

Once you enable the option and set the credit limit, you will be able to keep track of the limits set and further invoices being created. Based on your preferences, you will be notified while creating transactions.

Restrict Creating or Updating Invoices

If you have chosen to restrict creating and updating invoices, you will be warned when the invoice total and your balance due exceeds the credit limit.

Show a Warning and Allow Users to Proceed

When your invoice total and balance due exceeds the credit limit, you will be warned before proceeding with the transaction.

Note: Recurring invoices created for your customers will still be sent to your customers. However, you will receive an email notification when the recurring invoice value and outstanding balances exceeds the credit limits.

Next > Delete customer/vendor

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