How to Put a Customer on Stop Credit

What stop credit means

Stop credit is the point at which you stop supplying a particular customer on credit. Importantly, it does not necessarily mean you stop dealing with them altogether — you can still supply them on a cash or upfront basis if you wish — but you no longer add to the amount they owe you until their account has been brought back into order. It is a line drawn around new credit, not necessarily around the whole relationship.

Think of it as a protective measure rather than a punishment. The aim is simply to stop a deteriorating account from growing any larger while you work out the existing balance, so the problem does not compound. Used promptly, at the first clear signs of trouble, stop credit can be the difference between a debt that stays manageable and one that grows into something genuinely serious.

Set clear triggers

Decide in advance exactly what puts a customer on stop credit, so that when the moment comes the decision is consistent and businesslike rather than emotional or arbitrary. Having written triggers also makes the policy easier to apply fairly across all your customers, and easier to defend if one feels singled out. Common triggers include exceeding the agreed credit limit, an invoice passing a set number of days overdue, a bounced or failed payment, or a payment plan that has broken down.

Over the limit

The customer's balance exceeds the credit limit you agreed with them.

Seriously overdue

An invoice is well past its due date and the customer is not genuinely engaging with you.

Broken promises

A payment has failed, or an agreed payment plan has collapsed.

Whichever triggers you choose, apply them the same way every time.

Notify and stay consistent

Tell the customer in writing that their account has been placed on stop credit, explain plainly why, and set out what they need to do to restore it — usually, clear the overdue balance. A calm, factual message works far better here than an angry one: it keeps the door open for a customer who has simply hit a temporary rough patch, while still being unmistakably firm about the position. The goal is to fix the account, not to win an argument.

Apply the policy consistently across all your customers, not just the ones you find difficult. Selective or emotional enforcement undermines your own position and can sour relationships with customers who feel they have been singled out unfairly. It helps to reference your terms of trade, which should already mention your right to suspend credit, so the action is grounded in something the customer agreed to. This is general information, not legal advice.

Keep trading safely, then lift it

Stop credit need not be the end of the relationship, and often it should not be. You can continue to supply the customer for cash, or for payment upfront, while the overdue amount is being resolved, which keeps some revenue flowing and the relationship intact without adding a cent to your risk. For many customers, that breathing space is exactly what is needed to get back on track.

Lift the stop once the account is genuinely back in order, and seriously consider resetting the customer to tighter terms going forward, so you are not exposed to the same problem again. If, on the other hand, the balance is not paid and the customer simply stops engaging, then it is time to escalate rather than wait — you can refer the debt to Merion on a commission-only basis.