Logo Credit Management tools
FR | EN
Tools, tutorials, methods and services
To know how to get paid by your clients

Zoom on the credit limit calculation online tool

Date: - Author:
The credit limit represents the maximum amount of outstanding credit you agree to give to a customer. It is based on the business need as well as the financial capabilities of the company.

Credit limit toolKey indicator to control the financial risk of your business, the credit limit sets a maximum amount of outstanding receivables that you agree to grant to each of your customers.

It has a warning role if the outstanding amount reaches or exceeds the limit set, which must lead to action to reduce this outstanding amount: reduction of the payment term, obtaining downpayments or additional guarantees (credit insurance, bank guarantees, ...).

To be really used in the company and to make it understood by the sales managers, it is imperative that it be defined in a coherent way.
To do so, it must take into account both the need for outstandings induced by the volume of business to come with the customer, as well as its financial situation (analysis of the balance sheet and the income statement).

Without defined credit limits, it is possible to let a customer's outstanding amount increase disproportionately with its ability to pay you. In this case, you risk unpaid over a high amount, which can be dramatic for your business..
Without defined credit limits, it is possible to let a customer's outstanding amount increase disproportionately with its ability to pay you. In this case, you risk unpaid over a high amount, which can be dramatic for your business.
See our credit limit tutorial as well as the online calculation tool that allows you to define a consistent amount based on the business need and financial criteria.



Comment this page


Your name:
Your comment:
Your email (not published) :
What is the result of 10 6 ?

Articles on the same topic

Credit Management
What is Credit Management? How to measure its performance in Credit Management with the DSO and the rate of late payments

Credit Notation
Credit scoring tool which evaluates businesses solvency, the credit notation is also an innovative financial analysis tool

Set up the credit limit
Set up the credit limit of your customers with this very innovative tool based on credit assessment

Credit insurance overdue declaration
How to declare an outstanding to the credit insurance

Credit insurance
Credit insurance advantages and different types of credit insurance

DSO calculation
DSO calculation tool (daily Sales Outstanding). DSO is the most used credit management key performance indicator

Overdue ratio calculation
Overdue % or % current calculation tool. This credit management key performance indicator shows the collection efficiency

Bad debts ratio calculation
Bad debts ratio calculation tool is a key performance indicator in credit management

Strategy in Credit Management
How to define a strategy for Credit Management to achieve the financial goals of your business?

Productivity and credit management

The letter of credit
Operation mode of the letter of credit which should not be confused with the documentary credit or standby letter of credit

Credit Management policy
Why do we need a credit management procedure to manage credit risks and cash of a business? How to build it, share it and apply it in its company? Template of procedure included.

The documentary credit
What is the documentary credit? What are the advantages and disadvantages of different types of documentary credit? How to implement?

The credit analysis
What is credit analysis and how does it help to prevent the risk of unpaid invoices in the company?

The letter of credit standby
The letter of credit standby advantages and disavantages. The L/C standby is a payment guarantee provided by a bank.

Credit management organization

Credit risk, who decide
Arbitration between commercial and financial stakes, the sales focus against the company's sustainability, the decision to validate a credit risk is sensitive and strategic. Who should decide?

Credit risk management in My DSO Manager

CFO and credit management

Valuate the cost of credit
How to value the financial cost of the accounts receivable? Business manager will find here a pragmatic and realistic solution that will be helpfull to set utp the credit management strategy


My DSO Manager
Subscribe
Not yet registered? The subscription allows downloading and unlimited use of all files of Credit Management tools.
User reviews

This is a very instructive site for risk takers and risk managers.

Social networks
Find Credit Management tools on your favorite social networks