Stop Credit Checklist
Place a clean, well-communicated credit hold on an overdue account so you limit exposure without blindsiding a customer who may still pay.
What this checklist covers
- Decide when a credit hold is justified
- Apply the hold cleanly across your systems
- Communicate the hold professionally
- Set the conditions for lifting it
- Avoid the disputes a clumsy hold causes
5 min
Before you start
A credit hold limits your exposure but can also disrupt a customer relationship, so apply it deliberately. Confirm the grounds first.
- Check the account is genuinely overdue beyond your agreed terms.
- Confirm there is no unresolved dispute that explains the non-payment.
- Review your own terms or credit policy for what triggers a hold.
- Decide whether the hold blocks new orders, work, or both.
Holding a customer who is simply disputing a faulty invoice creates ill will and may be unjustified, so be sure the debt is clear-cut.
Apply the hold
A hold is only effective if it is applied consistently and everyone who needs to know is informed.
- Flag the account on hold in your accounting and order systems.
- Notify internal teams — sales, dispatch, service — so no new credit slips through.
- Pause any pending orders or scheduled work tied to the account.
- Record the date the hold was applied and the reason.
- Decide whether existing commitments will still be honoured or paused.
A hold that the warehouse never hears about is no hold at all, so make the internal communication airtight.
Communicate and set release terms
Tell the customer clearly and set out exactly how the hold is lifted, so it acts as motivation rather than a nasty surprise.
- Inform the customer in writing that the account is on hold and why.
- State the outstanding amount and what must happen for the hold to be lifted.
- Make clear that clearing the overdue balance restores normal terms.
- Give a named contact for them to arrange payment.
If the debt stays unpaid despite the hold, a free debt appraisal can guide your next move.
Common mistakes
Credit holds backfire when they are inconsistent or poorly explained. Avoid these.
- Applying the hold in accounts but letting sales keep taking orders.
- Holding an account over a genuinely disputed invoice.
- Failing to tell the customer, so they discover it at the worst moment.
- Giving no clear path to lift the hold, so it just festers.
- Forgetting to release the hold once the debt is cleared, harming the relationship.
Clean, communicated and reversible is what makes a credit hold work for you.
Key takeaways
- Apply a credit hold only on a clear, undisputed overdue account.
- Flag it consistently across all systems and teams.
- Tell the customer in writing and set clear release terms.
- Release the hold promptly once the debt is paid.
Frequently asked questions
Can I refuse to supply a customer who owes money?
Generally you can decline to extend further credit in line with your terms, especially where the account is overdue. Existing contractual commitments may still bind you, so check what you have already agreed before pausing supply.
Should I tell the customer about the credit hold?
Yes. A clear written notice explaining the hold and how to lift it is both fairer and more effective. A hold the customer only discovers when an order is refused causes more friction and may prompt a complaint.
When should I lift a credit hold?
As soon as the overdue balance is cleared, unless your policy requires more. Releasing promptly signals good faith and helps repair the relationship. Forgetting to lift it once paid is a common and avoidable own goal.
Work the checklist, then get paid
Use the free Invoice Generator, then let Merion recover anything that goes unpaid — commission-only.