Every distributor has a credit limit field somewhere. Far fewer can honestly say the limit changes what happens on the road. The account is at £4,800 against a £4,000 limit, and this morning a van delivered another £600 of stock — because the order was taken by phone three days ago, the balance moved on Tuesday, and the driver had no way of knowing any of it. Multiply that by a customer base and credit control for distributors becomes something the ledger reports on rather than something the operation enforces.
This article maps the specific points where credit exposure escapes control in a route-based operation — they are more mechanical than most credit-policy discussions admit — and sets out an enforcement ladder that works at the speed of a delivery round rather than the speed of a month-end review.
Exposure is bigger than the ledger balance
The number most credit conversations use is the sales-ledger balance. The operational number — call it committed credit exposure, to keep it distinct from accounting receivables — is wider:
Each extra term is stock or money already committed to the customer that the ledger has not caught up with. In a same-day or next-day operation those pipeline terms can easily be a meaningful slice of the limit — which is why an account can pass a credit check at order entry and still be comfortably over the limit by the time the van arrives.
The five points where control breaks
Walk one order through a typical disconnected operation and the leak points name themselves:
- Order entry without a live balance. The order arrives by phone, email or a rep's notebook. Whoever takes it either cannot see the account position or sees yesterday's. The order is accepted on relationship, not on numbers.
- The lag between order and delivery. Even where the balance was checked at entry, two or three days pass before fulfilment. Other orders land, a payment bounces, a credit note is disputed — the position the check approved no longer exists.
- The doorstep decision made blind. The driver is the last person who can stop stock changing hands, and typically the least informed: no balance, no limit, no instruction beyond the delivery note. Handing over the goods is the default.
- Slow posting of collections and van sales. Cash collected on Monday's round that reaches the ledger on Wednesday makes the account look worse than it is — and, more dangerously, sales made on the round that post late make it look better than it is.
- A limit without a policy. The limit exists, but nothing defines what happens at 80%, at 100%, at 120%. With no agreed ladder, every breach becomes a one-off negotiation between sales, who want the drop made, and finance, who find out afterwards.
An enforcement ladder that matches route speed
A workable policy defines, in advance, what each exposure band triggers — so no individual breach needs a meeting. One pattern many operations adapt (the thresholds are yours to set):
| Position | Standing action | Who acts |
|---|---|---|
| Under 80% of limit | Trade normally | — |
| 80–100% of limit | Orders accepted; account flagged; statement and reminder sent; rep told before next visit | Credit control |
| At or over limit | New orders held for approval; existing deliveries reviewed before dispatch; payment on delivery offered as one route to keep supply going (some customers or contracts will need prepayment or other approval arrangements) | Named approver |
| Materially over, or promise broken | Account on hold with a recorded reason; drivers see the stop; releases are deliberate, dated decisions | Owner / FD |
Two design rules make the ladder hold. First, the doorstep must inherit the decision: whatever the office decided has to be visible to the driver as an instruction, or the ladder ends at the depot gate. Second, the ladder needs same-day data: collections and van sales posted as they happen, so the position being enforced is today's, not Tuesday's. A stop policy built on stale balances punishes the wrong customers and misses the right ones.
It is also worth separating the two questions a breach raises. “Do we deliver today?” is an operational call the ladder should govern consistently — with named approval where the policy calls for it. “Is the limit right?” is a commercial call — reviewed on payment history and aging, on a schedule, not on the morning a van is loaded.
Where RouteMagic fits
RouteMagic closes the gap between the ledger and the round by putting every order channel on one pipeline with credit limits and approvals applied at order entry — telesales, portal, rep and driver orders are checked against the same live account position. Customer status handles the ladder's upper rungs: an account moved to On Hold carries a mandatory reason and can carry a scheduled status change that executes automatically on a future date, and the status follows the customer onto the driver's device, so the doorstep inherits the office's decision instead of guessing. Payments collected at the door post against the invoice the same day, keeping the position current, and aging reports and statements — with dunning messages that escalate by aging bucket — carry the routine chasing so credit control's attention goes to the exceptions. The result is not a harsher credit policy; it is the policy you already have, actually enforced at the speed the operation runs.
Conclusion
Over-limit deliveries are rarely a discipline problem. They are a plumbing problem: the balance lives in one system, the order in another, the driver in neither, and the cash posts two days late. Fix the plumbing and much of the drama goes with it — orders are checked against a live position at entry, the doorstep inherits a clear instruction, and the escalation ladder runs on standing rules instead of morning arguments. The commercial judgement stays where it belongs, with a named person deciding when a limit itself should move. If you want a place to start this week, take your ten largest balances and compute committed exposure — posted balance plus everything delivered-unposted or approved-but-not-yet-delivered, counted once — then compare it with the limit. The gap between the number you manage and the number you are committed to is a persuasive place to start.
