Credit Limit Table for Risk Assessment
Credit Limit and Conditions Table
The following table is a non-specific example. Most companies end up using the ‘feel good’ factor: this is OK, but when opening a new account or having a cash customer move over to credit, you must use a system to control your immediate financial deficit of funds (credit period allowed) and future funding capability (sales force exuberance with lines of credit).
Use with:
* Credit Limits * Underwriting Authorities * Reporting Structure’ for further control
See table below for details:
See table below for details:
| CATEGORIES | A = LOW RISK | B = AVERAGE | C = HIGH RISK |
| CREDIT LIMIT Figures: Published Accounts |
15% Net Worth 30% Working Capital |
10% Net Worth 20% Working Capital |
5% Net Worth 10% Working Capital |
| MAXIMUM 1ST ORDER |
As Above |
The Lower of the Above or (say) £15k |
The Lower of the Above or (say) £7.5k |
| DELIVERIES & CUSTOMER SERVICE |
Top Priority |
Priority over High Risk |
Priority after Low and High Risk |
| STOP LIST |
No Stops – Immediately Resolve Problems |
When (say) 35 Days Overdue |
When (say) 14 Days Overdue |
| IF ‘ON STOP’ AND SERVICE/GOODS WANTED BY PAYMENT OF CHEQUE |
No Delays |
Refer to Credit Manager |
Clear Funds – 10 Working Days |
| CUSTOMER PURCHASING AUTHORITY |
Customer’s Purchasing Department |
As Approved Credit Application Authority |
Managing Director Only |
| CREDIT REFERENCE CHECK |
Annual |
Bi-Annual: If Always Within Credit Limit |
Minimum: Quarterly |
| MINIMUM COMPANY AUTHORITY FOR ANY LIMIT AND/OR CATEGORY NOT LISTED ABOVE |
Your Credit Supervisor |
Your Credit Manager |
Your Credit Manager and/or Finance Director if (say) over £2.5k |
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