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 available-credit figure the credit check uses 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.

The decision runs across three pages: Step 1 here, Steps 2 and 3 on Count the full exposure and know which figure to trust, and Steps 4 and 5, with who does what, on Decide and record it.

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

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.

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 Step 3 explains, the credit check at FINAL 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.

If your last system stopped the invoice at save

Many accounting systems check the limit the moment you save an order or invoice. If the customer is over, the document is blocked, the overdue invoices are listed on the screen, and a supervisor types a password to let it through. If that is what you are used to, BigLedger will surprise you. It does not work that way, and nothing you switch on will make it work that way.

What BigLedger does instead:

Nothing at save. A draft saves whatever the customer owes.
An optional check at FINAL, on two back-office screens only, the Sales Order and the Sales Invoice. It is off until somebody switches it on (Step 3). If you run an online store where customers sign in to buy on account, the store makes the same check at checkout (Step 3).
One company at a time. What the customer owes your other companies is not counted.
The invoice that crosses the limit goes through. The invoice screen refuses only a customer who had no room left before this invoice, so the invoice that takes them over posts. The next one is refused.
No list of overdue invoices at the limit. The invoice screen lists a customer’s overdue invoices only after you have put them on stop for late payment (Stopping Supply to a Customer, Step 1). A new invoice for a customer already past their limit shows a warning banner, and the banner blocks nothing.
No override password. To let an order through, somebody who can edit the customer raises the limit. Step 5 explains how to make sure it comes back down.

So the parts of credit control your old system did at save are now people’s jobs:

The job your old system did	Who does it now	When	How they know it is done
Refusing the order that goes over	The credit controller decides (Step 4). The check on the Sales Order screen refuses some of these for you, one company at a time	Before the order is finalised, whenever the order desk asks. Anything over an amount you agree goes to you first	Every order over the limit that was finalised has a decision recorded in the customer’s Alert Message (Step 5)
Catching the invoice that crossed the limit	The credit controller	Every morning, before the day’s deliveries leave: run the Aging Report for all companies for each customer’s total, and compare it with the Credit Limit the Outstanding Document Report shows beside that customer’s documents	Every customer over their limit on that report has either an Alert Message with today’s decision or a stop
Showing the overdue invoices to whoever is selling	The order desk, from the Outstanding Document Report (overdue rows are shown in red). For a customer who must be stopped for lateness, the credit controller sets the stop, and then the invoice screen shows the list	Before releasing any order for a customer on your watch list	The desk can name the oldest overdue invoice when you ask
The supervisor’s password	The credit controller raises the limit. The finance manager approves anything above the amount you agreed (see Who does what)	Only after the decision in Step 4	Every raised limit has a reset date on the customer and in your calendar
Counting the whole group	The credit controller, by hand (Steps 1 and 2)	For every decision on a customer who buys from more than one company	You can say one group figure for the customer
Making sure the check is really on	Your administrator, with you	Once, and again after anyone changes the Sales Order or Sales Invoice settings	A draft order for a test customer with a RM 1 limit is refused at 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, and the Aging Summary strip above the grid totals every row shown — with one customer and every company selected, that total is the group figure.

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 come here for it. 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 the credit check and the credit banner never add the companies together. This report is the one place the group total is read, and reading it before you decide is your job.

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. The FINAL check in Step 3 adds the currencies together without converting them. You know you have it right when your working has one line per currency, each converted at a rate you wrote down, before any total.

Next: Steps 2 and 3, count the full exposure and know which figure to trust.

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 credit check 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.
Somebody quotes you an available-credit figure. You can say which of the two calculations in Step 3 it came from, and whether it can refuse anything. The figure customers see on their own online-store orders page can refuse their next checkout; the credit bar your staff see on that store account in the back office refuses nothing.

Common mistakes

Trusting either available-credit figure as the customer’s position. The FINAL check’s figure is one company’s receivable, minus open delivery-queue amounts that exist only in some workflows. The online store shows the FINAL check’s figure for the store’s company only. The back-office store-account bar is one currency and an older limit. Each 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. You know it holds when no salesperson appears among the users who can press FINAL on sales orders, which you check in the Sales Order screen’s permission settings each quarter.

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 a locked invoice with a credit block. The invoice screen locks a finalised invoice 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.