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Commercial ControlSales & Customers

Tightening credit without damaging customer relationships

Bring debtors and credit policy under control while protecting sound commercial relationships.

8 questions answered

Questions answered on this page

01Why are customers taking longer to pay?
02How much overdue debt should a merchant tolerate?
03How do I improve credit control without upsetting good customers?
04How do I stop customers continually exceeding their credit limits?
05When should we stop supplying a customer who owes us money?
06How can I reduce debtor days?
07How do I know whether our credit policy is too loose?
08Are we giving too much credit to win sales?

Why are customers taking longer to pay?

Customers may pay later because their own cash position has weakened, but merchant behaviour can also contribute. Invoices, credits or proof of delivery may be inaccurate or slow, statements may not reach the right person and disputes may remain unresolved. Sales and branch teams sometimes agree informal extensions without updating credit control. Customers also learn which limits and terms are genuinely enforced. Separate external financial risk from avoidable internal delay. Analyse overdue debt by customer, reason, branch and age, then resolve errors quickly and challenge repeated behaviour consistently. A rising debtor position is not only a finance issue. It can reveal weak onboarding, unclear terms, poor administration, service failure or commercial decisions that have not been made visible.

How much overdue debt should a merchant tolerate?

There is no single acceptable percentage for every merchant. The right tolerance depends on customer quality, contract terms, concentration, margin, security, dispute status and the business’s own cash capacity. What matters is whether overdue debt is understood, actively owned and within agreed risk boundaries. Separate genuine short administrative delays from persistent broken promises, disputes and worsening credit risk. Set thresholds that trigger action by value, age and customer exposure, then review exceptions rather than allowing them to become a second policy. Tolerance becomes dangerous when the business cannot explain why debt is overdue, who owns the next step or what would cause supply to change. Overdue debt should be a conscious risk decision, not an accidental source of customer finance.

How do I improve credit control without upsetting good customers?

Good credit control is clear, early and consistent. Agree terms before trading, invoice accurately and contact the right person before a problem becomes old debt. When payment is late, discuss the facts and any genuine dispute promptly rather than beginning with confrontation. Involve the salesperson or branch manager where their relationship can help, but keep one agreed message and owner. Strong customers normally value reliable administration and fair treatment; avoiding the conversation can damage the relationship later when exposure becomes serious. Explain that credit supports the trading relationship but has boundaries. Consistent action protects both parties because expectations are understood and surprises are reduced.

How do I stop customers continually exceeding their credit limits?

Treat the limit as a real decision boundary rather than a number the system displays and people routinely override. Make current exposure visible before further supply is agreed, including outstanding invoices, unbilled deliveries and committed orders where relevant. Define who can approve an exception, the evidence required and how long it lasts. Repeated breaches should trigger a wider review of the limit, payment behaviour, trading pattern and commercial value of the account. Avoid solving every breach with a temporary increase, because that teaches the customer and internal teams that the limit is optional. Where the account is sound and has genuinely grown, a properly assessed higher limit may be right. The decision should be deliberate and documented.

When should we stop supplying a customer who owes us money?

Stop or restrict supply when the financial exposure and payment behaviour exceed the risk the business has agreed to carry, subject to any contractual or legal obligations. Warning signs include broken promises, worsening overdue balances, repeated limit breaches, unresolved concerns about solvency and requests for more supply without credible payment. Check that invoices and disputes are accurate before acting, and make the decision through the authorised commercial and credit process. Consider cash terms, partial release or payment plans only where they reduce risk and are properly controlled. Do not leave a branch or salesperson to make a high-risk decision alone at the counter. A pause in supply can be uncomfortable, but continuing without a credible route to payment may turn a difficult conversation into a preventable loss.

How can I reduce debtor days?

Reduce debtor days by improving the whole order-to-cash process, not only increasing collection calls. Set suitable terms and limits at account opening, capture accurate customer details, invoice promptly, retain proof of delivery and resolve credits or disputes quickly. Segment accounts by value and risk so effort is directed where it matters. Contact customers before due dates where appropriate, follow up consistently and record promises. Make branch and sales teams responsible for helping prevent and resolve the commercial causes of delay, while credit control owns the collection process. Track reasons for overdue debt as well as the total. Sustainable improvement comes when fewer invoices become problematic in the first place and agreed action follows quickly when they do.

How do I know whether our credit policy is too loose?

A policy may be too loose if limits and terms are routinely exceeded, exceptions are common, overdue debt grows faster than sales or high-risk customers continue receiving supply without review. Look for differences between the written policy and actual decisions at branch and sales level. Check whether credit assessment reflects current exposure, customer concentration and payment behaviour. A loose policy can also be hidden by strong sales growth, because debtor value rises before losses appear. The answer is not automatically tighter terms for everyone. Segment the risk, identify where controls are bypassed and make authority clear. A sound policy supports profitable trade while defining when evidence, approval or a change in supply is required.

Are we giving too much credit to win sales?

Possibly, if credit is being used as an unpriced sales concession. Compare the limit and terms with the customer’s financial strength, payment record, gross profit, strategic value and total exposure. Check whether longer terms or repeated exceptions were included in the commercial decision or added later to secure or retain volume. Sales gained through excessive credit can consume cash and create a loss if the customer fails. Credit should be part of the offer, not treated as free. Give salespeople enough understanding to discuss terms confidently and involve credit control early in material opportunities. The aim is not to reject good business. It is to ensure the return justifies the risk and working capital committed.

What you may be seeing

Overdue balances grow while sales, branch and credit teams hold different explanations for the same accounts.
Credit limits are overridden repeatedly and temporary exceptions have no end date or review owner.
Disputes, credits and missing proof of delivery remain open long enough to delay otherwise valid payment.
Salespeople promise extended terms or continued supply before credit exposure has been assessed.
Customers receive inconsistent messages depending on whether they speak to the branch, salesperson or credit controller.

What good looks like

Strong merchant credit control supports trading relationships without allowing customer pressure or internal inconsistency to dictate risk. Terms and limits reflect current evidence, invoices and delivery records are reliable, and disputes are resolved quickly. Credit, sales and branch teams understand their responsibilities and present one clear message to the customer. Exceptions are authorised, documented and reviewed rather than quietly renewed. Managers can distinguish a valuable customer experiencing a genuine short-term issue from a pattern that threatens cash and profit. Collection remains professional and proportionate, but the business is prepared to restrict supply when exposure moves beyond agreed limits.

What may be happening underneath

Account opening: Terms, limits, contacts and invoicing requirements were not established clearly before trading began.
Order to cash: Delivery evidence, invoicing, credits and dispute resolution create preventable reasons for delayed payment.
Decision rights: Branches, sales and credit control do not share clear authority for exceptions, supply decisions and escalation.
Commercial incentives: Turnover is rewarded more strongly than cash collection, risk and the quality of the sale.
Customer risk: Limits and terms have not kept pace with changes in exposure, payment behaviour or financial condition.
Consistency: Customers have learned that stated limits, terms and promises are not followed through reliably.

Questions worth asking

01How much overdue debt is caused by customer risk and how much by our own process failures?
02Which customers repeatedly exceed limits or break promises, and what decision follows from that evidence?
03Can branch, sales and credit teams explain the same authority and escalation rules?
04Where are payment terms or credit exceptions being used to win sales without pricing the risk?
05What would cause us to restrict supply, and are we prepared to apply that rule consistently?

Where to go next

Protect cash without weakening good customer relationships. BGC credit control resources help merchant leaders clarify ownership, strengthen payment discipline and make better decisions about limits, terms and continued supply.

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