Credit limits for Shopify B2B customers
Shopify lets you give a company Net 30. It does not let you say how much it can owe. Terms Due adds a credit limit to every company and checks it on every order.
50,000
UK businesses the FSB estimates close each year because of late payment
FSB, Time to Act
30%
Share of payments that small firms say arrive late
FSB, Time to Act
1 to 2 months
Of typical orders: the usual starting limit for a buyer on Net 30 terms
Why a limit matters
Payment terms decide when a buyer pays. A credit limit decides how much risk you carry while you wait. Without one, a buyer on Net 30 can place order after order before the first invoice is even due, and a slow payer can end up owing several months of stock before anyone on your side notices.
The problem is not dishonest buyers. It is ordinary ones whose cash flow wobbles. A cafe that orders every week and pays every month is fine until a quiet quarter, and by the time the first invoice is late they have three more open. A limit turns that into a small, early conversation instead of a large, late one.
Shopify's native B2B does not compare what a company already owes with a limit before an order goes through. Terms Due does, at checkout, every time, using the live balance of every unpaid order on terms.
Without a limit, and with one
Shopify B2B on its own
- A company on terms can order as often as it likes, for as much as it likes.
- Nobody sees the running total until someone exports orders to a spreadsheet.
- The first sign of trouble is an overdue invoice, by which time more stock has shipped.
- Stopping a buyer means editing their company settings by hand and remembering to put them back.
With Terms Due
- Every company has a limit, either the default you set or one you choose for them.
- The open balance is kept live from Shopify orders and payments.
- Each order on terms is checked against limit minus balance before checkout completes.
- Over the limit means a clear message and a pay link, or a flag for you to review, depending on your setting.
How limits work in Terms Due
- Per company. Set a limit on each Shopify B2B company. New companies pick up a default you choose, so nobody trades without one.
- Live exposure. The balance is every unpaid order on terms plus the order in the cart, so the check reflects what the buyer will owe if the order goes through.
- Soft or hard. Warn the buyer and flag the order for review, or block checkout until the balance comes down.
- Headroom on show. Buyers can see their limit, balance and available credit on their pay-now page, so they are not surprised at checkout.
- Change any time. Raise a limit for a busy season or drop it to zero to move a buyer onto pay-upfront without touching their Shopify payment terms.
- Zero means cash. A limit of zero lets the company keep its catalog and prices but pay in full at checkout until you lift it.
Worked example
A limit doing its job
Northgate Deli Co has a $6,000 limit on Net 30. They have two open invoices, $2,900 and $2,400, neither yet due. On Friday they add $1,900 of stock to the cart and choose to pay on terms.
Terms Due adds the cart to the open balance and compares it with the limit. The order would take them to $7,200, which is $1,200 over. With a hard limit, checkout stops and the buyer sees the amount over the limit and a link to pay. They settle the $2,900 invoice on the pay-now page, go back to the cart and the order goes through. With a soft limit, the order is placed and lands in your attention list instead.
| Credit limit | $6,000 |
|---|---|
| Open balance before the order | $5,300 |
| Order in the cart | $1,900 |
| Would-be balance | $7,200 |
| Amount over the limit | $1,200 |
Choosing a starting limit
A limit should cover the orders a buyer places between being invoiced and paying, and not much more. These are sensible starting points; the full method is in our guide to setting credit limits.
| Buyer | Starting limit | Review |
|---|---|---|
| New account, no references | First order paid upfront, then one month of expected orders | After three on-time payments |
| New account with good trade references | One to two months of expected orders | After three on-time payments |
| Established account, always on time | Two months of orders, more in season | Quarterly |
| Established account that has been late | One month of orders, hard block | Monthly until the pattern changes |
| Large account on Net 60 | Two to three months of orders, backed by a credit report | Quarterly, and whenever filed accounts change |
Setting it up
Choose a default
In Settings, pick the limit every new company starts on. Many merchants set it low so that new buyers have to earn more.
Set limits per company
Open any company in Terms Due and type the limit. The app shows the current balance beside it, so you can see at once whether the company is already close.
Pick soft or hard
Decide whether going over the limit blocks the order or flags it. You can choose a hard block for some companies and a soft warning for others.
Tell your buyers
Put the limit in your trade terms and your welcome email. Buyers who know a limit exists plan around it; buyers who discover it at checkout phone you.
Soft limits, hard limits and when to use each
A hard limit is right for new accounts, for buyers who have been late before, and for any account where the limit is the only thing standing between you and a loss you could not absorb. Checkout stops, the buyer is told why, and the next step is a payment.
A soft limit suits long-standing buyers you would rather not block in the middle of their busy season. The order goes through and appears in your attention list with the amount over the limit, so you can decide whether to call, raise the limit or let it ride. Either way the decision is made on purpose rather than by default.
Whichever you choose, the limit only applies to orders placed on payment terms. A buyer who pays in full at checkout is never stopped.
Questions
Does Shopify have credit limits for B2B?
Shopify B2B has payment terms and, on some setups, the option to require a deposit, but it does not check a company's outstanding balance against a credit limit at checkout. Terms Due adds that check.
What happens when a buyer goes over the limit?
Depending on your setting, checkout is blocked with a message showing the amount over the limit and a link to pay, or the order goes through and is flagged for you to review.
Can a buyer pay by card to get around the limit?
Yes. The limit only applies to orders placed on payment terms. A buyer who pays in full at checkout is not blocked, because there is nothing to owe.
Does the limit include orders that are not yet due?
Yes. Exposure is everything unpaid, whether it is due next week or overdue. A buyer with three current invoices has used that much of their limit.
Can I set different limits for different locations of the same company?
Limits are set per company, so all of a company's locations share one. If a buyer wants separate accounts for separate sites, create them as separate companies in Shopify.
What if I do not want any limit for a trusted buyer?
Set a limit higher than they will ever reach. Every company has a limit so the aging report and exposure figures stay complete, but it can be as generous as you like.
Related
Credit holds
Put Shopify B2B companies on credit hold automatically when an invoice is overdue or they pass their limit. New orders are blocked at checkout until they pay.
Read moreSetting credit limits
How to decide credit limits and payment terms for wholesale buyers: order value, trade references, credit checks, starting limits and when to review.
Read moreAging report
A live accounts receivable aging report for Shopify B2B: every open invoice in current, 1-30, 31-60, 61-90 and 90+ day buckets, by buyer, with CSV export.
Read moreStop chasing wholesale invoices by hand
Install Terms Due, set a credit limit for each buyer and let the app hold, remind and collect.
Install on Shopify