Setting credit limit in tally erp 9

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Credit Limit refers to the monetary limit agreed upon mutually by the seller and the buyer for trading purposes. Credit Limits can be specified for any Ledger account falling under the groupsSundry Debtors and Sundry Creditors. Ledger Accounts created under Sundry Creditors are also allowed for defining Credit Limits for the reason that there may be two-way trade between the parties i.e., you may sell to a Sundry Creditor and buy from a Sundry Debtor Accounts.

Setting Credit Limits

You can set credit limits for ledgers accounts grouped under Sundry Debtors and Sundry Creditors at the time of ledger creation or from the alteration screen or also at the time of invoicing.

To enable credit limits feature

  • Go to F11 Features > Accounting Features.

  • Enable the option Maintain budgets and controls.

Enable the option Maintain budgets and controls

To set credit limits for single ledger

  1. Go to Gateway of Tally > Accounts Info. > Ledgers > Create or Alter

  2. Select the required party ledger from the list of ledgers to set credit terms.

The Ledger Creation screen appears as shown below:

Setting credit limits for sundry creditors

  1. Set the required credit limit.

  2. Enable the option Override Credit limit using post-dated transactions, if required.

To set credit limits for multiple ledgers

  1. Go to Gateway of Tally > Accounts Info. > Ledgers > Credit Limits

Accounts Info. > Ledgers > Credit Limits

  1. Select the required group of ledgers from the List of Groups to set credit terms.

The Multi Ledger Limit Alteration screen appears as shown below. The list of ledger accounts under the selected group is displayed.

setting credit limits for multi ledger alteration

Set Credit Limit, Credit Period, and Check For Credit Dates During Voucher Entry in the Multi Ledger Limit Alteration screen.

Credit Limit:Set this option to Yes, to get a warning message when the party ledger selected in a transaction has exceeded the credit period, and outstanding bills are not cleared.Specify the amount of credit limit against the ledger account in this field. You can set the amount limits in foreign currency if required, for ledgers involving forex transactions.

Credit period:  can be either specified in number of days or the due date and are calculated from the voucher date or invoice date or the effective date, as applicable.If only voucher date exists, it is considered as the effective date for calculation for Credit Days. If effective date is specified in the voucher, it is considered for calculation of due date.

To view this report for a different group

  • Press Ctrl+F4.

  • Change the group in the Select Group screen.

Exceeding Credit Limits

During invoice or order entry, if the credit amount limit is exceeded, at the accepting the voucher, Tally.ERP 9 prompts an error message displaying the amount exceeding the credit limit specified. You can however,

  1. Enter a lower value (within the prescribed credit limit) to complete the entry ; or

  2. Abandon the current entry and obtain authorization to increase the credit amount limit in the Multi Ledger Limit Alteration screen.

This feature helps in restricting Invoicing for the customers or parties exceeding the prescribed credit limits and thereby facilitating better and effective control of the outstanding.

amount exceeding the credit limit

 

Significance of Setting Credit Limits

The significance of setting credit limits is that during voucher entry (or invoicing), the credit terms are automatically defaulted based on the configuration made in the ledger master.

The current balance and the credit limit of the Ledger accounts are displayed in the Order and Invoice entry vouchers to ascertain the amount permitted or acceptable.

The current balance and the credit limit of the Ledger accounts are displayed

 

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