Can This Customer Take More Goods? Deciding on Credit

A good customer who is already near their limit has just sent another order, and somebody on the order desk has asked you, can we ship this? By the end of this guide you will be able to work out what that customer really owes the group, say why the figure on the order screen is usually smaller than the truth, and make the call — release, hold, part-ship or refuse — in a way the order desk can act on and your finance manager can check later. The first time takes about twenty minutes. After that, about five.

This page is for the person who says no. It covers the judgement that stays yours with or without BigLedger. For the setup underneath (building terms and limits and attaching them to customers), see Credit Limits and Payment Terms.

Meet GadgetSphere

GadgetSphere is a group of three companies: the retail company (GS), the online store (GSO) and the distribution arm (GSD). One of GadgetSphere Distribution’s resellers, an IT dealer in Penang, has a RM 150,000 limit on Net 30 terms. The same dealer also buys accessories on account from the retail company for walk-in top-ups.

Today the dealer’s buyer sends an order to GSD for ten ultraportable laptops at RM 4,200: RM 42,000 plus RM 2,520 SST, RM 44,520.

Here is what the dealer owes this morning, which nobody has added up yet:

What	Company	Amount
Invoices finalised, not yet paid	GSD	RM 112,400 (RM 38,000 of it is 45 days old)
Orders finalised, not yet invoiced	GSD	RM 21,600
Invoices finalised, not yet paid	GS	RM 31,500
A quotation they have accepted by e-mail, not yet raised as an order	GSD	RM 60,000

The idea that makes this page make sense: exposure has three layers

Your exposure to a customer is everything that can turn into money they owe you. It has three layers, and BigLedger can see them to different degrees:

Invoiced and unpaid. A finalised invoice has an open balance, and the balance goes down as receipts, credit notes and contras are applied to it. BigLedger knows this exactly. It is what the ageing reports show.
Ordered and not yet invoiced. A finalised sales order is a promise to deliver. BigLedger knows it exists, but as you will see below, the credit figure on the order screen counts it only in some workflows.
Promised and not yet ordered. A quotation the customer has accepted, a deal agreed on the phone, a framework contract. A quotation posts nothing and reserves nothing, so BigLedger has no idea this layer exists.

The credit decision is about all three. The screen shows you part of the first two.

Before you start

You can open the Debtor Report and run its reports for every company in the group, not just the one you work in. If your permissions only cover one company, ask for read access to the others. You cannot judge group exposure from inside one company.
You can see the customer’s record in Customer Maintenance, including the credit limit and the two status dropdowns.
You know whether the credit check on the order and invoice screens is switched on in your tenant (Step 3 explains it). If you do not know, ask your administrator, or test it: raise a draft order for a test customer with a RM 1 limit and press FINAL.

Step 1: Add up what the customer owes across the whole group

The outcome: one number for layer 1, covering every company.

Finance > Debtor Report > Outstanding Document Report

Leave the Company filter empty (or select all your companies), search for the customer, and read the ARAP Balance column for each row. Each company’s documents are listed separately, with the company on every row. Add them up.

For the dealer: RM 112,400 at GSD + RM 31,500 at GS = RM 143,900 invoiced and unpaid.

Then open the Aging Report for the same customer and read how old that money is. RM 143,900 that is all under thirty days old is a customer who is buying a lot. RM 143,900 with RM 38,000 at 45 days is a customer who is buying a lot and paying late, which is a different conversation.

Why you have to do this by hand. Every figure BigLedger computes for credit is computed one company at a time. The customer record is shared across the group, and so is the limit on it, but no screen adds up what the customer owes the group as a whole. Adding the companies together is your job, and this report is where you do it.

If the customer is billed in two currencies, convert it yourself. A credit limit carries one currency, and nothing converts. If the dealer also has USD invoices with GSD, turn them into ringgit at today’s rate on paper before you add them in. Do not trust any single figure on screen to have done it for you.

Step 2: Add what is ordered and what is promised

The outcome: the full exposure, all three layers.

Sales > Sales Order (Internal) > listing, filtered to the customer

Look for finalised orders that have not been fully invoiced. Partial Delivery Workflow explains how to read an order’s outstanding quantity. For the dealer, that is RM 21,600 at GSD.

Then ask the salesperson one question: what have you promised this customer that is not in the system yet? Nothing on any screen can answer this, because an accepted quotation or a verbal deal leaves no trace until somebody raises the order. For the dealer, it is the RM 60,000 quotation.

Layer	Dealer	Running total
Invoiced and unpaid, all companies	RM 143,900	RM 143,900
Ordered, not invoiced	RM 21,600	RM 165,500
Promised, not ordered	RM 60,000	RM 225,500
Today’s order	RM 44,520	RM 270,020

The dealer is already RM 15,500 over a RM 150,000 limit before today’s order. Counting the promised quotation, they are RM 120,020 over.

Step 3: Know what the order screen will tell the order desk, and why it is wrong

The outcome: you can explain the screen’s number to the person who is looking at it.

BigLedger has one credit check at the moment of sale, and it is optional. It is a setting on the Sales Order and Sales Invoice screens. On the invoice screen it can also be switched on for individual users through a permission. When it is on, pressing FINAL makes the screen ask for the customer’s available credit and refuse the document if there is not enough.

That figure is:

the limit on the order − what this customer owes this company − what is on this customer’s open delivery queue in this company

Three things about it matter to you:

It is one company. For GSD’s order it counts GSD’s RM 112,400 and ignores GS’s RM 31,500 completely.
It counts open orders only if you deliver on a delivery order. The “open delivery queue” is orders waiting for a delivery order, and delivery orders waiting for an invoice. GSD invoices straight from the order, so its RM 21,600 of open orders counts for nothing.
It never sees promises. The RM 60,000 quotation does not exist as far as it knows.

So on GSD’s screen: RM 150,000 − RM 112,400 − RM 0 = RM 37,600 available. On the Sales Order screen, today’s RM 44,520 is subtracted, the result is below zero, and FINAL is refused with a message naming the customer code and the available figure. The screen gets the answer right, but for the wrong reason, and only by RM 6,920. Had the order been RM 36,000, it would have gone through, with the dealer already RM 15,500 over on the full picture.

The invoice screen is different. It does not add the invoice you are finalising to the sum. It only refuses when the customer has no room left before this invoice. So the invoice that carries a customer over their limit goes through, and the next one is refused.

What is not checked at all: the cash bill, the delivery order, quotations, and any document that arrives through an integration or the API rather than through those two screens. The server itself checks only one thing about the customer at FINAL, the blacklist flag (Stopping Supply to a Customer).

If FINAL does nothing at all. From inside an order, with the check switched on, an order for a customer who has no credit limit attached can neither post nor show a message. Nothing happens. This is a known product defect. Attach a limit to the customer, or finalise the order from the listing, where a customer without a limit is not checked.

Step 4: Decide, and name what each choice costs

The outcome: a decision you can defend, with its consequence stated.

This is the job, and it is the same job it was before any software. There are four answers:

Decision	What happens commercially	How you make it happen in BigLedger
Release	You take on the extra risk to keep the customer and the sale. Right when the customer pays reliably and late money is a timing issue, not a solvency one	The order is finalised. If the credit check refuses it, somebody who can change the customer’s credit limit raises it, and a date is written down for putting it back (Step 5)
Hold	The goods wait until money arrives. The customer is told why, and when it will ship. You risk losing the order to a competitor	Leave the order in draft. A draft order posts nothing and is not a promise. Whoever holds the FINAL permission on sales orders is the person who releases it, so make sure that is not the salesperson who wants it shipped
Part-ship	You ship what the current headroom covers, and the rest waits for a payment. Often the best answer for a good customer who is temporarily stretched	Finalise the order, then invoice only part of it, as in Partial Delivery Workflow. The rest stays open on the order
Refuse	You protect the receivable and may lose the customer. Right when the money you already have at risk is doubtful	Do not raise the order. If the refusal must also stop the rest of the business selling to them, that is the blacklist (Stopping Supply to a Customer)

For the dealer, a sensible call is hold, with an offer to part-ship. They are over on invoiced-plus-ordered alone, and RM 38,000 of the invoiced money is fifteen days late. Tell them that five laptops (RM 22,260) ship the day the RM 38,000 arrives, and the other five ship when the next invoice is paid.

Two questions to ask before any release:

Is the late money disputed, or just late? A disputed invoice is a customer who does not think they owe it. Releasing more stock does not help you collect it. See Chasing Overdue Accounts.
Who else in the group is selling to them this week? Your decision at GSD does nothing to stop GS’s counter selling to the same customer. If the risk is group-wide, so is the conversation.

Step 5: Record the decision where the next person will see it

The outcome: the order desk, the counter and your successor all know what was decided without asking you.

Master Data > Customer Maintenance > (the customer) > Main > Alert Message

The customer record has an Alert Message of up to 255 characters. It appears in a banner at the top of the account panel whenever somebody picks this customer on a new sales order or sales invoice. Use it for exactly this:

Credit hold 24 Sep: RM 38,000 overdue. Part-ship only after payment. Refer to credit control.

Then write the same reason in the Remarks on the held order, so that the order carries the reason.

If you released an order by raising the limit, write the date you will put it back in the alert message too. Nothing in BigLedger will remind you. A temporary limit that nobody lowers becomes the new limit. Put the reminder in your own calendar for the day after the invoice is due.

Who does what

Credit control works when the person who wants the sale is not the person who approves the risk. BigLedger has no approval step on any sales document, so this separation comes from who holds which permission:

The salesperson raises the order and knows about the promises (layer 3). They should not hold FINAL on sales orders for credit customers, or the right to edit a customer’s credit limit.
The credit controller (you) works out the exposure, makes the decision, holds the right to change credit limits and the two status dropdowns in Customer Maintenance, and writes the alert message.
The finance manager approves any release above an amount you agree in advance (for GadgetSphere, anything that takes a customer more than 20% over), and reviews the list of temporary limit increases once a month.

Anyone who can edit a customer in Customer Maintenance can change its limit and its status. There is no separate permission for the credit fields. If you want those fields to be credit control’s alone, limit who can edit customers.

What success looks like

Run this for any customer, in under a minute:

You can say one number for their exposure across the group (invoiced plus ordered plus promised), and name which of the three layers the order screen would have missed.
Pick the customer on a new sales invoice. If you placed them on hold, the alert message is in the banner at the top.
Every limit you raised this month has a date to reset it, written on the customer and in your calendar.

Common mistakes

Trusting the order screen’s available figure as the customer’s position. It is one company’s receivable, minus open delivery-queue amounts that exist only in some workflows. It is a floor, not the answer. Always add the other companies.

Assuming the check is on. It is a setting. Many businesses have never turned it on, and then FINAL checks nothing but the blacklist. Test it with a test customer before you tell the sales team “the system will stop it”.

Expecting the system to stop the invoice that goes over. The invoice screen refuses only when there is no room before the invoice. The order screen is the one that counts the new document.

Expecting a salesperson’s own credit limit to be checked. Some systems let you give each salesperson a ceiling of their own. BigLedger checks only the customer. If a salesperson’s authority to extend credit stops at an amount, that is a rule you enforce through who can finalise, not something the software will test.

Raising a limit to release one order and never lowering it. Every temporary limit needs a reset date, written on the customer. Without one, a RM 20,000 exception becomes the new normal.

Confusing an invoice that cannot be edited with a credit block. A finalised invoice cannot be edited because it is FINAL, not because of the customer’s credit. BigLedger has no credit lock on drafts. If a draft will not finalise, read the message: “Customer is blacklisted…” is the blacklist, a toast naming an available credit limit is the optional check, and anything else is not credit.