The order was 40% bigger than anything this customer had ever placed. Everyone was delighted. Sales celebrated. Nobody checked the credit limit, because the customer had been reliable for six years.
Ninety days later, £240,000 was outstanding, the customer had stopped answering the phone, and a 35-person wholesaler was having a very uncomfortable conversation with its bank.
It wasn’t one bad decision — it was a missing step
Credit limits existed on paper. They just weren’t enforced anywhere. When a customer exceeded their limit, the system allowed it and sent a polite report to finance at month end, by which point the goods had long since shipped.
There was also no rule about larger-than-usual orders. A customer ordering three times their normal volume is a signal worth investigating — a new contract, a cash flow problem, or a business about to fold. All three look identical at the order screen.
The finance manager described her job at the time as “writing letters nobody answers”. That’s not credit control. That’s archaeology.
What they put in place
Six changes, in this order. None of them were expensive, and all of them annoyed at least one person for the first month.
- A hard credit limit that stops an order at the point of entry, not after shipping
- An automatic hold when a customer reaches 80% of their limit, so there’s a conversation before the wall
- A weekly 20-minute aged debt review with one salesperson in the room, because collections need sales pressure, not just finance letters
- Any new customer’s first three orders over £10,000 require a 30% deposit
- Any order more than double a customer’s largest previous order gets reviewed before confirmation
- A rule that sales commission is paid on cash received, not invoiced
That last one caused the loudest argument and produced the fastest change. Once commission depended on money in the bank, salespeople started making collection calls before finance had to.
Eighteen months later
Days sales outstanding fell from 68 to 41. Bad debt dropped to under £15,000 for the year. And the company took on four new large customers without any drama, because the process told them how to structure each one.
The sales director, who fought the deposit rule hardest, now uses it as a filter for customers worth having.
An ERPNext Consulting review later confirmed the pattern: the tools mattered less than the rule about commission. Incentives shape behaviour faster than policies ever will.
Open your aged debt report today and look at your five largest overdue accounts. If any of them can still place a new order right now without anyone needing to approve it, that’s the gap to close first.