How to use the Customer Credit Limit Calculator
- Enter expected annual purchases and terms.
- Enter typical lateness and choose a risk tier.
- Add a cap if needed and read the limit.
How it works
Expected exposure = Annual purchases ÷ 365 × (Payment terms + Typical days late). Suggested limit = Exposure × Risk buffer, optionally capped.
Worked example
1,200,000 a year on 30-day terms and 10 days late: exposure about 131,507; medium risk (1.2×) gives a limit of about 157,808.
Good to know
This is a heuristic, not a credit decision.
Combine with credit bureau data, financial statements and references.
Review limits regularly as behavior changes.
Frequently asked questions
Estimate exposure from purchases and terms, add a risk buffer and cap it by financial capacity.
The amount a customer is expected to owe at any time.
At least annually, or after payment behavior changes.
Results are estimates for information only and are not accounting, financial or legal advice.