Stopping a sale before it becomes a bad debt

Credit limits written on a customer card are advice. Credit limits the system checks while the invoice is still on screen are control. The difference shows up in the receivables ledger.

Most distributors set credit limits. Rather fewer enforce them, and the gap is usually not policy but timing. The limit lives in the customer master, the exposure lives in the receivables report, and the two meet at month end — long after the goods have gone out. By the time anyone notices a customer is over their limit, the decision that put them there was taken weeks ago by someone who had no way of knowing.

Checking at the point of sale changes what the limit is for. When the invoice is still on screen, the counter shows the customer's limit, what they currently owe, and what is overdue. If the sale would take them past the limit, that is known while the customer is still standing there — which is the only moment at which anything can actually be done about it.

The subtlety is that a hard block is often the wrong answer. Sometimes the customer is good for it, sometimes a payment is on its way, sometimes the branch manager simply knows something the system does not. So the check is graded: some customers are warned, some are blocked, and some are exempt — and which is which is configuration, per company and per customer, not a rule baked into the software.

What matters as much is what happens when no limit is set. A customer with no credit limit recorded is not a customer with a limit of zero; they are a customer nobody has assessed. Treating those two the same either blocks half the customer base on the day the feature is switched on, or quietly lets an unassessed account run up an unlimited balance. They are different situations and the system keeps them different.

The result is not that sales get refused more often. It is that the conversation about credit happens at the counter, with the invoice in front of both people, rather than in a collections call three months later.