Lapasar
Finance & Payments

Credit Limit

A credit limit is the maximum amount a supplier will allow a buyer to owe on credit terms at any one time.

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When a supplier grants credit, it caps its exposure by setting a credit limit based on the buyer's financial strength, payment history and the value of expected business. Orders that would push the outstanding balance above the limit are held or require payment before they proceed.

For buyers, understanding the credit limit matters for planning larger purchases — a limit that is too low can block orders, while a good payment record can support a request to raise it. Suppliers review limits periodically as trading history and the buyer's financial position change.

Frequently asked questions

What is a credit limit?
A credit limit is the maximum a supplier lets a buyer owe on credit at one time, set according to the buyer's financial strength and payment history.
How can a buyer increase its credit limit?
Usually by building a strong payment record and providing financial information; the supplier reassesses the buyer's creditworthiness before raising the limit.

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