What Is Credit Control?
Credit control is the set of policies and procedures a business uses to manage the credit it extends to customers — deciding who gets credit and how much, setting payment terms, monitoring balances, and collecting on time. Its goal is simple: sell on credit without turning sales into bad debt.
What credit control is and why it matters
Extending credit is a competitive necessity in most B2B markets, but every credit sale is an unsecured loan to the customer. Credit control manages that risk across the whole customer lifecycle: checking creditworthiness before terms are granted, setting credit limits and payment terms that match the risk, watching balances against limits as orders come in, following up the moment invoices go overdue, and escalating — hold on new orders, formal demand, debt recovery — when they stay unpaid. Businesses with weak credit control discover the cost late, as a wall of aged receivables and write-offs; businesses with strong credit control price the risk upfront and collect predictably.
A worked example
A distributor takes on a new retail customer. Credit control runs a credit check, sets a $20,000 limit on Net 30 terms, and notes a review date in six months. The customer trades smoothly for a while, then an invoice goes 15 days overdue while new orders push the balance to $19,500. The credit controller pauses further shipments, calls the customer, and agrees a payment before releasing the next order. The overdue invoice is paid within the week — the limit and the hold turned a potential $20,000 exposure into a routine conversation.
How firms handle it today
Credit control is usually a person with a spreadsheet: reviewing the aging report, deciding who to chase, sending reminder emails, and keeping notes on promises to pay. Policy exists on paper, but consistency depends entirely on workload — which is why overdue balances grow in busy months.
How OCTA Flow relates to credit control
OCTA Flow makes the follow-up side of credit control systematic: reminders go out on schedule across channels, escalation happens on defined triggers rather than memory, and every customer interaction is logged — so policy is applied consistently, not just when someone has time.
Related terms
- Accounts receivable
- Bad debt
- Aging report
- Dunning
- Credit limit
FAQ
What does credit control include?
Credit checks, setting limits and payment terms, monitoring customer balances, chasing overdue invoices, and escalating persistent non-payment.
What's the difference between credit control and collections?
Collections is the chasing of overdue invoices; credit control is the broader discipline that also decides who gets credit and how much, before any invoice exists.
Why is credit control important for cash flow?
Because credit sales only become cash when collected — credit control shortens that gap and prevents receivables from decaying into bad debt.
See how firms automate credit control → start an OCTA Flow trial.