It is a good practice for a business to monitor the credit limits of customers and suppliers. This helps in managing the receivables and payables of a business in a better way. Credit limit is normally set based on the credibility, volume of transactions, capacity of repayment etc. of the customer and supplier. To ensure better credit management, Tally.ERP 9 provides the Credit Limit option to set the maximum amount of credit that can be allowed to a customer or a supplier. Using this feature, business owners can ensure that no invoice will be generated beyond the set credit limit unless the user has the right to modify the same. Setting up Credit Limit for the party ledgers in Tally.ERP 9 is very simple and effortless. All it takes is enabling the option and setting the limit on the party ledger creation or alteration screen. To enable Credit Limit:

• Go to Gateway of Tally > F11: Accounting Features
• Under ‘Budgets and Scenario Management’, set ‘Yes’ to ‘Maintain Budgets and Controls’

To set Credit Limit for a Single Ledger:

• Go to Gateway of Tally > Accounts Info. > Ledgers > Select ‘Alter’ under ‘Single Ledger’
• Select the required party ledger from the ‘List of Ledgers’

Set the ‘Default Credit Period’ and ‘Credit Limit’ amount as shown: Note: You can also specify the Credit Limit and Credit Period at the time of ledger creation or alteration. To set Credit Limit for multiple party ledgers:

• Go to Gateway of Tally > Accounts Info. > Ledgers > Credit Limits
• Select the required ‘Group’ in ‘List of Groups’ like Sundry Debtors, Sundry Creditors
• On ‘Multi Ledger Limit Alteration’ screen, set the ‘Credit Limit’ for the ledgers as required

• Accept the screen

To demonstrate how Credit Limit effects the transaction, let’s try to pass a Sales Invoice using a ledger called ‘Modern Timbers’ (Sundry Debtors) for an amount of more than `1,00,000 which is the specified credit limit for this ledger. Whenever the invoice is raised beyond this limit, Tally.ERP 9 will display a prompt message saying ’Credit Limit of the selected party exceeded’ as shown: The current balance and the credit limit of the Ledger accounts are displayed in the Order and Invoice entry vouchers (Sales and Purchase) and these show the available limits. In case, you need to pass the transaction beyond the Credit Limit, you can alter the credit limit if you have the right permission. Hence, with Tally.ERP 9, you can easily set credit limits for your party ledgers and take control of your business’s receivables and payables. This in turn reduces risks and improves collection for your business.