How to set up credit limit locks in Business Central

Every business understands the importance of enforcing credit limits to mitigate risk. To support these controls, Microsoft Dynamics 365 Business Central enables businesses to specify different credit limits by customer. Once a credit limit is specified, it is important to be able to enforce restrictions to stop over credit limit sales orders by providing warnings and implementing an approval process. In this post, we will walk you through how to set up credit limit warnings and credit limit locks for sales orders that exceed a customer’s credit limit and require approval in Business Central.

Set up credit limit warnings in Business Central

When you specify a credit limit for a customer in Business Central, the system automatically calculates if a customer is over or under their outstanding balance. Additionally, Business Central enables you to determine how you want your users to be informed when a customer exceeds their credit limit.

To set up credit limit and overdue balance notifications, follow the steps below:

1. Search for and select Sales & Receivables Setup
2. Under the General section, select the Credit Warnings dropdown
3. Select the warning you wish to receive
   1. Credit Limit – notifies users when a sales order exceeds the customer’s credit limit
   2. Overdue Balance – notifies users when a customer has an overdue balance
   3. Both Warnings – turns on both the Credit Limit and Overdue Balance warnings. This setting is recommended.
   4. No warnings – turns off both the Credit Limit and Overdue Balance warnings

With both warnings activated, users will receive notifications if a sales order exceeds the customer credit limit and if the customer has an overdue balance.

While the increased visibility on a sales order is a good start, Business Central will not restrict users from posting a sales order even if it exceeds the customer’s credit limit. To block sales orders that exceed a customer’s credit limit and implement a credit management process, Rand Group has developed the Credit Manager for Business Central application.

Implement credit controls with Credit Manager

The Credit Manager for Business Central application allows you to implement automatic controls for sales orders that exceed a customer’s credit limit. This application seamlessly integrates with Business Central and gives you centralized access to customer credit information, configurable credit hold controls, automated credit limit actions, and customer credit tracking tools.

Configure automated credit limit actions

Credit Manager extends the Sales & Receivables Setup page with a dedicated Credit Manager FastTab. This is where you configure how the system responds when a customer exceeds their credit limit.

Key settings include:

• Utilization Warning Threshold % – defines the credit utilization percentage at which customers are highlighted in the Customer Credit Tracker
• Enable Auto Action when Credit Limit Exceeded in Document Releasing – turns on automatic actions when a customer exceeds their credit limit during document processing
• Action when Credit Limit Exceeded – defines the action applied automatically. Options are:
  • Do nothing – allows processing to continue without restriction
  • Warning – displays a notification but allows users to continue
  • Apply Documents Release Hold Status – prevents sales documents from being released until the hold is removed
• Email Notification for Limit Exceeded – sends email notifications to configured recipients when a customer’s credit limit is exceeded
• Notification Recipient Email – specifies who receives credit limit notifications. Separate multiple addresses with a semicolon.

Once this setup is complete, the system will automatically apply your chosen action whenever a sales order is processed for a customer who has exceeded their credit limit.

Apply and manage customer credit holds

Credit holds can be applied manually from the Customer Card for situations that require an immediate restriction. To apply a credit hold:

1. Open the Customer Card
2. Select Credit > Apply Credit Hold
3. Select the appropriate Credit Hold Status
4. Enter the Reason
5. Select OK

Available credit hold statuses include:

• Ship – prevents new shipments for the customer
• Invoice – prevents invoicing for the customer
• All – prevents new orders, shipments, and invoices for the customer
• User Warning – No Restriction – displays a warning during sales document processing but allows users to continue
• Documents Release Hold – prevents users from releasing sales documents for the customer

To remove a credit hold, open the Customer Card, go to Credit, and select Unlock Credit Hold.

Set temporary credit limits

Credit Manager also supports temporary credit limits for customers who need a short-term credit increase. This is useful for seasonal buying periods or one-time large orders without permanently changing the customer’s default limit.

To set a temporary credit limit:

1. Open the Customer Card > Credit
2. Select Set Temporary Credit Limit
3. Enter the temporary credit Amount
4. Enter the Valid From and Valid To dates
5. Enter the Reason
6. Select the Authorized By user
7. Select OK

The temporary limit stays active only during the configured validity period. Once it expires, the customer’s default credit limit is restored automatically. You can also expire a temporary limit early by selecting Expire Temporary Credit Limit from the Customer Card.

Track and review customer credit activity

Credit Manager provides reporting tools to help your team stay on top of customer credit across the board.

Customer Credit Tracker gives you a centralized view of customer balances, overdue balances, credit exposure, remaining credit, credit utilization percentages, and credit hold statuses. Customers who exceed your configured utilization threshold are highlighted for easy review. You can access the tracker by searching for it in Business Central or directly from the Customer Card.

Customer Credit Log tracks all credit-related activity in the system, including credit hold applications and removals, temporary credit limit changes, automated credit actions, and the users, dates, and reasons behind each change. This log supports traceability and audit requirements. To access it, open the Customer Card or Customer Credit Tracker and select Customer Credit Log.

Frequently asked questions

Next steps

Credit limits are necessary for managing financial risk. Business Central includes native functionality to set credit limits and notify users when a customer’s limit is exceeded. However, it will not restrict users from releasing or posting a sales order that goes over limit. To increase controls, automate credit actions, and maintain a full audit trail of credit activity, businesses can leverage the Credit Manager app for Business Central by Rand Group.

Rand Group is a dedicated Microsoft Dynamics 365 partner with years of experience implementing, supporting, and extending Business Central to do more for our clients. To learn more about Credit Manager and how to mitigate financial risk, contact Rand Group today.