Credit hold in ERP

In plain words

A credit hold works like a shopkeeper who says "clear last month first". The order is not rejected. It waits until someone with authority looks at the customer's dues and decides.

A worked example

Why it matters

• Cost. Goods stop going to customers who are already stretched, before the dues grow.
• Deadline. The check is made when the order is taken, not at collection time.
• Risk. A release is a recorded decision by a named person.

In Kinnow

Every customer in Kinnow can have a credit limit set on their record. When a salesperson creates a sales order that would push the customer's total outstanding above that limit, the order moves to credit-hold status automatically. It stays there until someone with the right authority - typically a credit manager or finance head - reviews and releases it.

The hold is a fixed check: no ambiguity. The check runs at order creation and at any edit that changes the order value. The approver sees the customer's current outstanding, the ageing breakdown, the new order value and the resulting exposure. They release, reject, or ask for a partial payment before dispatch.

Credit holds prevent a common failure mode in distribution and trading businesses: the salesperson dispatches goods to a customer who already owes more than the business is comfortable with, and the outstanding grows until it becomes a problem. The hold makes the risk visible at the point of commitment, not at the point of collection.

More on how the hold works

A held order is not a failed order. It waits, with a hold record, for someone to clear it. If the outstanding figure Kinnow holds is more than a minute old, it reads the live figure from Finance before deciding.

The limit is set on the customer's record, so the check works from it. For the dues behind a hold, see accounts receivable ageing, and for chasing them, dunning. Sales orders also pass amount-based sign-off levels. See Sell.

Questions