Monitor Customer Credit Usage
Monitor customer credit usage by reviewing outstanding balances in the Group Outstandings report and comparing them with the approved credit limits defined in customer ledgers.
Ensure that:
- Customer ledgers have been created.
- Credit limits and credit periods have been defined for customers, where applicable.
- Credit sales have been recorded.
- Customer receipts have been recorded, if collections have been received.
- You have access to outstanding receivables and customer reports.
Review Customer Credit Usage
Review outstanding customer balances and identify customers with high credit utilisation.
In the Group Outstandings report:
- Select the required customer group, such as Sundry Debtors.
- Review the outstanding balances displayed for the customers in the selected group.
- Assess customer credit utilisation by comparing the current outstanding balance with the approved credit limit defined in the customer ledger. This helps you understand how much credit is currently in use and the available credit exposure for the customer.
- Identify customers with high credit utilisation.
Analyse Customer Credit Exposure
Review customer credit limits, utilisation, and overdue balances before extending additional credit.
In the Ledger-wise view of the Group Outstandings report:
- Review customer outstanding balances.
- Identify customers approaching or exceeding their limits.
- Review overdue invoices and ageing information.
- Assess payment behaviour and collection risks.
- Determine whether additional credit can be extended.
Questions & Answers
- What is customer credit usage?
Customer credit usage is the amount currently outstanding from a customer compared to the credit limit approved for that customer. - How does credit usage differ from a credit limit?
A credit limit is the maximum amount of credit approved for a customer. Credit usage is the amount currently outstanding from that customer. Comparing the two helps businesses understand how much of the approved credit has already been utilised. - Should credit usage be reviewed only for overdue customers?
No. Credit risk is influenced by both the amount of credit currently utilised and the age of outstanding balances. Reviewing credit usage helps identify customers approaching their limits even when invoices are not yet overdue.
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