Introduction to Credit Limit
- Credit Limit in Tally Prime is a feature that allows you to control and manage the amount of credit extended to your customers. It ensures that customers do not exceed a predefined credit value when making purchases.
Importance of Setting Credit Limits
- Prevents over-crediting customers.
- Maintains cash flow.
- Reduces bad debts.
- Keeps control over customer balances.
- Encourages timely payment from customers.
Features of Credit Limit in Tally Prime
- User-defined limits.
- Credit Days and Credit Amount options.
- Warning or blocking options.
- Customizable per ledger.
- Works with outstanding tracking.
Pre-requisites for Setting Credit Limit
- Before setting credit limits:
- Activate Outstanding Management.
- Enable Bill-wise entry in customer ledgers.
- Configure Sales Voucher with Pre-closure of credit feature.
How to Enable Credit Limit Feature
- Go to F11: Features → Accounting Features.
- Enable: Maintain Bill-wise Details – Yes.
- In F12: Configuration, set “Use Credit Limit” to Yes.
Credit Limit vs Credit Period
| Criteria | Credit Limit | Credit Period |
|---|---|---|
| Definition | Amount limit on credit | Time limit for payment |
| Applied On | Ledger-wise | Voucher-wise |
| Example | ₹50,000 limit | 30 Days from Invoice |
Types of Credit Limits in Tally Prime
- Credit Amount Limit: Maximum amount a customer can owe.
- Credit Days: Number of days allowed before payment is due.
- You can use one or both together depending on business policy.
Setting Credit Limit for a Ledger
- Go to Gateway of Tally → Alter → Ledger → (Select Customer Ledger).
- Set:
- Maintain balances bill by bill: Yes.
- Credit Period: e.g., 30 Days.
- Credit Limit: e.g., ₹50,000.
Example:
- If you set a limit of ₹50,000, the system will warn/block when a sales invoice increases the total due beyond ₹50,000.
Credit Period in Tally Prime
- Allows specifying the number of days allowed for credit.
Example:
- If Credit Period = 30 days, the payment must be made within 30 days from invoice date.
Credit Days Based on Bill-by-Bill
- You can assign due dates for each invoice. Tally automatically tracks based on:
- Invoice Date
- Credit Days (e.g., 30 days)
- Due Date auto-generated
Restricting Sales Beyond Credit Limit
- You can configure Tally to:
- Just warn the user, or
- Completely restrict sales if the credit limit is breached.
- This helps prevent accidental over-crediting.
Warning vs Blocking on Credit Limit
- Warning Only: Allows user to override and continue.
- Strict Blocking: Sales entry cannot be saved if limit is breached.
- Configured via:
- Gateway → F12: Voucher Configuration → Set Exceeding Credit Limit options.
Impact on Sales Voucher
- If a customer has reached their credit limit:
- Tally shows a pop-up alert.
- Blocks voucher (if strict mode enabled).
- Encourages user to recover dues before proceeding.
Example: Setting Credit Limit
- Let’s say:
- Customer: XYZ Traders
- Credit Limit: ₹30,000
- Outstanding: ₹28,000
- If a new invoice of ₹5,000 is created:
- Total outstanding = ₹33,000
- Tally will show a Credit Limit Exceeded message.
- If strict restriction is on, invoice cannot be saved.
Viewing Credit Limit Report
- To view credit balances:
- Go to Gateway → Display More Reports → Statement of Accounts → Outstanding → Receivables.
- This shows credit usage vs limit.
Altering Credit Limit in Ledger
- Steps:
- Gateway → Alter → Ledger
- Edit the Credit Limit amount as per revised policy.
- Tally reflects new settings immediately.
Deactivating Credit Limit
- To remove the limit:
- Go to ledger.
- Set Credit Limit to Blank or Zero.
- Tally will not show warnings or blocks.
Using Credit Limit for Outstanding Management
- The feature helps in:
- Controlling receivables.
- Prompting sales teams to collect dues.
- Tracking overdue accounts.
Effect of Credit Limit on Receivables
- Receivables are automatically compared with credit limit.
- If it exceeds:
- Alerts are shown.
- Payments are encouraged.
Difference Between Credit Limit and Outstanding
| Credit Limit | Outstanding |
|---|---|
| Predefined control | Actual due from customer |
| Used for blocking | Used for reporting |
Multi-Currency and Credit Limit
- When working with multiple currencies:
- Credit Limit applies to Base Currency.
- Tally converts foreign currency into base before checking limit.
Security Control for Credit Limit
- You can restrict users from changing credit limits:
- Use Tally User Roles.
- Set permissions under Security Control.
Troubleshooting Common Issues
- Credit limit not working? → Check F12 config.
- Warning not appearing? → Check ledger setup.
- Wrong outstanding shown? → Ensure bill-wise is enabled.
Benefits to Business
- Prevents over-selling.
- Encourages timely payments.
- Protects business cash flow.
- Helps in decision-making on new sales.
Summary and Best Practices
- Always enable Bill-wise tracking.
- Use realistic limits based on customer history.
- Regularly update limits.
- Monitor using Receivables Reports.
- Train staff to respond to credit limit warnings properly.
Conclusion
- Tally Prime's Credit Limit feature is a powerful tool to manage credit risk, maintain financial discipline, and ensure better cash flow in your business. Proper setup and monitoring can protect your business from bad debts and improve overall operational control.
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