Credit Limit
Definition
The maximum amount a business allows a customer to owe at any time on credit terms. Setting and enforcing credit limits controls the risk of bad debts from over-extended customers.
Related Terms in Invoicing & Sales
Credit Control
The process of managing which customers get credit, on what terms, and how overdue amounts are chased. Strong credit control protects cash flow and reduces bad debts.
Unapplied Payment
A payment received but not yet matched to a specific invoice, often because of missing references. Clearing unapplied payments promptly keeps customer balances accurate.
Partial Payment
A payment that settles only part of an invoice, leaving a balance outstanding. It is recorded against the invoice so the remaining amount due is tracked correctly.
Advance Receipt
Money received from a customer before goods or services are delivered. It is recorded as a liability until earned, and in tax systems like GST may carry tax obligations at the time of receipt.
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