Your biggest customer owes you R340,000. They've never not paid. They just pay late — 60, 75, sometimes 90 days. And every month you send another R60,000 of goods, because turning down work from your best account feels mad.
Here's the uncomfortable way to look at it: you are running an unsecured, interest-free loan book. You didn't apply for a banking licence, you don't charge interest, you have no security, and your single biggest borrower is one bad quarter away from taking your business down with them.
Selling on account is lending money
The moment you hand over goods and agree to be paid in 30 days, you've lent the customer the value of that invoice. It's a loan in everything but name. The difference is that a bank checks whether the borrower can repay, sets a ceiling, charges for the risk and stops lending when the ceiling is hit. Most small businesses do none of those four things.
This is why profitable businesses go under. Profit is an opinion about a period; cash is a fact about a bank account. You can invoice R4 million, show a healthy margin, and still not make salaries in March — because R900,000 of that profit is sitting in other people's businesses being used as their working capital.
Two numbers, not one
Real credit control needs two separate decisions, and mixing them up is where people go wrong.
- Terms — when they must pay. 30 days from statement, 14 days from invoice, cash on delivery.
- A limit — how much they may owe you at any one moment, across every unpaid invoice.
Terms without a limit protect nothing. A customer on 30-day terms who keeps ordering can owe you three months of turnover and still be "within terms" on each individual invoice. The limit is what caps your total exposure, and it's the number most small businesses have never written down.
Setting the limit
There's no formula, but there are sensible anchors. Start conservative and let good behaviour earn increases.
- What you can afford to lose. The blunt one, and the most important. If this customer never paid another cent, would you survive it? That number is your ceiling, whatever else the analysis says.
- One month of their normal buying. A fair starting point for a new account on 30-day terms. If they order R40,000 a month, R40,000 is a reasonable opening limit.
- Concentration. No single customer should be able to owe you more than about 20–25% of your debtors book. When one does, their cash-flow problem becomes your cash-flow problem.
- What you actually know about them. A CIPC search costs almost nothing. So does asking for two trade references and phoning them. So does asking a new account for a deposit on the first order.
Then review it. A limit set when a customer was new and buying R10,000 a month is not the right limit three years later — in either direction.
"They always pay eventually"
This sentence has probably killed more South African small businesses than any competitor ever did. It's usually true, and it's usually irrelevant.
Eventually doesn't pay your suppliers on the 30th. Eventually doesn't cover PAYE and VAT on the 7th and the 25th. Eventually doesn't stop you drawing down an overdraft at 13% to fund a customer who pays you at 0%.
And there's a nastier problem hiding in it. A customer who takes 90 days is not a slow payer — they're a business with a cash-flow problem, and you are funding it. The day their problem becomes terminal, you're an unsecured creditor at the back of a long queue, holding an invoice for everything you shipped them during the slide. The customers who cost businesses the most are almost never the ones who refused to pay. They're the ones who always paid, right up until they didn't.
When to stop supplying
Stopping supply feels like the nuclear option. It isn't — it's the ordinary, boring control that stops a manageable problem becoming an unrecoverable one. Some triggers worth agreeing with yourself in advance, while you're calm:
- They're over their limit and the next order would push them further.
- An invoice is more than 30 days past due with no payment plan in writing.
- A payment bounced, or a promised payment date came and went twice.
- They've gone quiet — stopped answering the phone about the account while still placing orders.
Two things make this survivable. First, say it early and say it in writing: "we can release this order as soon as the account is under R150,000." That's a business rule, not an insult, and most customers respect it. Second, decide before you're emotional about it. The worst credit decisions get made at 4pm on a Friday when a good customer wants one more delivery.
Sometimes you'll override your own rule — because the delivery is what gets you paid, or because you've spoken to their finance director and you believe them. That's fine. Overriding a limit knowingly is a business decision. Not knowing you'd blown through it is an accident.
Make the system do the remembering
Nobody can hold twelve customers' balances in their head while quoting. The rule only works if it's enforced where the decision gets made — at the moment somebody raises the invoice.
360books puts a credit limit and an on-hold switch on every customer, then checks both at the moment you issue an invoice, not when you draft one. Go over and it shows you the real numbers — what they owe, what the limit is, what this invoice adds — with a Supply anyway option, because the owner should decide, knowingly. There's also a proper age analysis, automatic reminders on overdue invoices, and a Customer 360 view of who pays and who promises. Try it on the live demo.