Customer credit limits: outsource the checks, keep the call

Key takeaways

A customer credit limit decision sets how much a customer can owe you at once. An outsourced credit team can run credit checks, gather references, monitor accounts and chase overdue invoices. The decision to grant, raise or stop credit should stay with a named person in the business, because it balances sales against the risk of not being paid.

• Keep: granting, raising and stopping credit.
• Outsource: credit checks, monitoring and chasing.
• Set a written credit policy with limits by risk level.
• You can charge 8% over base rate on late B2B invoices.

Why should credit decisions stay in the business?

Because a credit limit is a loan to your customer. It affects your cash, your risk if they fail and your relationship if you stop supplying. Sales teams want higher limits; a provider may want to protect its collection rate. The business must weigh both against its own risk appetite.

• Which business processes should you never outsource?
• Risk appetite: a decision no provider can make for you

What credit work can be outsourced?

The information and follow-up around each decision.

• Running credit reference checks on new customers.
• Checking Companies House filings and accounts.
• Monitoring accounts against their limits.
• Sending reminders and chasing overdue invoices.
• Preparing a monthly aged debt report.

• Outsourced invoicing and credit control in the UK
• Order-to-cash process: shorten the road from sale to cash

What should a credit policy say?

Your standard payment terms, how new customers are checked, starting limits by risk level, who can approve higher limits, when supply stops, and when interest or compensation is charged under the Late Payment of Commercial Debts legislation. A written policy lets an outsourced team act consistently.

• Writing off bad debt: a decision you keep
• A decision rights matrix for outsourced work

When should a provider escalate?

When an order would take a customer over its limit, when a customer misses a promised payment, when a credit check shows a deterioration, or when a key account falls overdue. Each needs a business decision, not an automatic response.

• Escalation paths for outsourced teams: fast, not chaotic

What does this look like in practice?

A pattern we see: no written limits, so every order is accepted until a large customer stops paying. With limits set by the owner and monitoring outsourced, over-limit orders reach a manager before they ship.

• See client work
• BPO Solutions for UK businesses

Credit limit checklist

• Write a credit policy with standard terms.
• Set starting limits by risk level.
• Name who can approve higher limits.
• Outsource checks, monitoring and chasing.
• Review aged debt and limits monthly.

• Discount approval: who can change your prices?
• Writing off bad debt: a decision you keep

Next step

List your ten largest customers and their current balances. If you do not know their limits, set them this month.