A credit limit is the most udhaar you are willing to let one customer carry before they clear some of it. Setting a credit limit for a customer takes a few seconds per person, and it means your billing screen can warn you at the counter — before a sale quietly pushes a regular’s khata past what you can afford. This guide shows how to set one, what happens when a bill crosses it, and how to pick a sensible number.
Why a credit limit matters, especially in festival season
Udhaar leaks slowly. One extra bill on credit, then another, and by the end of the month a friendly regular owes far more than you realised. During a festival rush — Navratri into Diwali — footfall and credit both spike, and the person at the counter has no time to check a running total in their head.
A credit limit moves that check out of your head and onto the screen. You decide the ceiling once; the software watches every bill against it.
There is a second reason to care. On a credit sale you usually owe GST now, not when the customer pays. For goods the time of supply is generally the invoice date, so the tax sits on that month’s return even though the cash is still on the customer’s khata (confirm the current rule on cbic.gov.in or with your CA). So unpaid udhaar can cost you twice — the goods are gone and the GST is due. A limit keeps that exposure in check.
How to set a credit limit in Yojika
The limit lives on the party (the customer), not on the bill:
- Open Parties in the sidebar and open the customer (or click New party to add them).
- In the customer’s details, find the Credit limit field.
- Enter the amount you are comfortable letting them owe — say ₹20,000.
- Click Save.
Two special values are worth knowing:
- Leave it blank → no limit. Yojika never warns on this customer. Use this for a fully trusted party or one who always pays cash.
- Set it to ₹0 → block all credit. Any unpaid balance is “over the limit”, so every credit bill warns. Handy for a walk-in you only want to serve on cash.
The limit applies to a named customer. An anonymous walk-in has no party record and so no limit — this is a tool for the regulars whose khata you actually track.
What happens at billing time
Once a customer has a credit limit, Yojika checks each new bill against their outstanding balance as you save it. If the sale would push them past the limit, it shows a Credit limit warning first. You then choose:
- Proceed — save the bill anyway (you know this customer; you’ll allow it).
- Cancel — go back, so you can take part-payment first or trim the order.
It warns, it does not block — the same calm, inline approach Yojika uses for negative stock. The judgement stays with you; the software just makes sure you are never surprised.
Their statement also flags them whenever the outstanding amount is over the limit, so you can spot a stretched customer even when you are not billing them.
A worked example
Suresh is a small contractor who buys on udhaar from a hardware shop in Nagpur, Maharashtra. The shopkeeper sets his credit limit at ₹20,000. Right now Suresh’s unpaid balance is ₹16,500.
Today he picks up cement and fittings — taxable value ₹3,000. It is a sale within Maharashtra, so GST at 18% splits into CGST ₹270 + SGST ₹270 (rate shown as an example — confirm the current rate on cbic.gov.in), and the bill total is:
₹3,000 + ₹270 + ₹270 = ₹3,540
If Suresh takes it all on credit, his new outstanding would be:
₹16,500 + ₹3,540 = ₹20,040
That is over his ₹20,000 limit — by ₹40 — so Yojika shows the Credit limit warning. The shopkeeper now has a real choice: take a small payment to bring it under, split the order, or click Proceed because it’s Suresh and ₹40 is nothing. Either way, nobody found out about the overage a month later.
Choosing a sensible limit
There is no official number — a credit limit is your risk decision, not a GST rule. A few habits that work for small shops:
- Start low for a new face. A small limit, or ₹0 (cash only), until they’ve cleared a few bills on time.
- Set what you could afford to lose. Treat the limit as the worst case if the customer vanished.
- Raise it slowly, on a track record. Good payers earn a higher ceiling; a slow payer’s limit can come down.
- Review after the festival season. That is when balances balloon; it’s the right time to reset limits for the quiet months.
How Yojika helps
Yojika is offline-first GST billing software for Indian small shops, and credit control is built in — not bolted on:
- A credit limit per customer, with a warning at billing time (warn, never block).
- A running outstanding balance and a full statement for every party, so you always know who owes what — see Outstanding balances and statements.
- One-tap payment reminders to nudge a customer whose khata is stretching.
Your customer ledger stays on your own PC — private, offline, yours.
- See what’s included on the features page.
- Download Yojika and try it free for 14 days.
Want the bigger picture on tracking dues? Read how to track your udhaar khata digitally, and pair it with a daily sales report habit so credit never drifts out of sight.
This article is general information, not tax advice. GST rules and rates change — confirm the current position on gst.gov.in or with your CA.