Credit limits
A credit limit is the most a customer is approved to owe you. One customer has one limit, held in one currency, and every account wired to it draws on the same pot.
The limit does two jobs, and they are not the same job. It is a control when you activate an account, and a measure from then on. Read what the limit stops before you rely on it.
A limit is not a facility. A facility is a committed line for one kind of lending; the credit limit sits above all of them. A customer can hold both, and a draw can consume both at once. See facilities.
Where you find it
Open the customer and select Credit Limit. The panel is on the customer, not on the account — there is no credit-limit view on an individual account.
| Row | What it tells you |
|---|---|
| Amount | The approved limit. |
| Available | The amount less what is used — the headroom. |
| Next Review Date | The date recorded when the limit was last granted or changed. |
| Utilisation | How much of the limit is used right now. |
| Utilisation % | The same figure as a percentage, also shown as a dial. |
Beside the figures is a trend chart with one point per trading day, so you can see the limit and the used amount move against each other over time.
If the customer has no limit the panel says so, and offers Grant Credit Limit.
Granting a limit
- Open the customer and select Credit Limit.
- Select Grant Credit Limit.
- Choose the Currency.
- Enter the Amount.
- Enter the Next Review Date.
- Select Save.
A customer has at most one limit, so Grant Credit Limit disappears once one exists. The currency is fixed for the life of the limit — you cannot switch it later.
Changing a limit
Three actions sit at the top right of the panel.
| Action | What it does |
|---|---|
| Increase | Sets a new, higher amount and a new review date. |
| Decrease | Sets a new, lower amount and a new review date. |
| Freeze | Sets the amount to nil. The customer can draw nothing more. |
Alex holds a 500,000 limit with Woodgrove Bank. An increase to 750,000, a decrease to 300,000, and a freeze to nil are all the same shape of change: a new amount, effective now.
All three ask for a review date, and all three take effect on the current trading day. There is no forward-dated limit change.
Freezing does not unwind anything. It stops the next draw and the next activation. Money already lent stays lent, and the used figure is untouched.
How the used amount is measured
Utilisation is not entered. It follows the money.
flowchart LR
A[Money moves on an account<br/>wired to the limit] --> B[The position the limit<br/>watches changes]
B --> C[The change is converted<br/>to the limit's currency]
C --> D[Used amount goes up<br/>or down by that amount]Three things follow from that shape.
- It is measured after the fact. The used figure is written once the money has already moved.
- Everything on the watched position counts, not just the advance. Fees, the tax on those fees, and capitalised interest all consume the limit.
- Money coming back releases the limit. A repayment reduces the used amount by the same rule that a draw raised it.
A movement in a currency other than the limit’s is converted at that trading day’s rate before it is applied.
A worked example
Alex holds a 500,000 limit and draws 200,000.
| Event | Used | Available |
|---|---|---|
| Limit granted | 0 | 500,000 |
| Alex draws 200,000 | 200,000 | 300,000 |
| Alex repays 50,000 | 150,000 | 350,000 |
Fees count against the limit too
Sam takes a loan of 100,000 with an initiation fee of 1,000. The used amount rises by the whole opening balance — the advance, the fee, and the tax charged on the fee — not by the 100,000 alone. Check the opening balance, not the headline amount, when you are working out whether a deal fits.
What the limit stops, and what it does not
This is the part worth reading twice.
It stops an activation. Where a product is set up to check the limit, the platform refuses to activate an account when either of these is true:
| Situation | What you see |
|---|---|
| The customer has no credit limit | The activation is refused, saying an approved limit is needed first. |
| The opening balance would exceed the headroom | The activation is refused, naming what the activation needs and what is available. |
Nothing is written when an activation is refused this way. Fix the limit, or change the deal, and activate again.
It stops a payout. Where a product is wired to a limit, an operator payout that would take the customer past their headroom is refused before any money moves. A further advance and a readvance are both covered.
| Situation | What you see |
|---|---|
| The customer has no credit limit | The payout is refused, saying an approved limit is needed first. |
| The payout would exceed the headroom | The payout is refused, naming what it needs and what is available. |
A customer with 10,000 available who is paid a further advance of 20,000 sees the payout refused, naming 20,000 asked and 10,000 available. The balance does not move and the used amount does not change.
The check counts the whole operation, not just the amount typed. Where the product adds a fee to the balance, the fee is part of what the payout needs — a 20,000 advance carrying a 1,000 fee needs 21,000 of headroom.
Where a payout needs a second approver, the refusal reaches the clerk who asks for it. Nothing is queued for anybody to approve. Headroom can still fall between a request and its approval, so an approved payout is checked again before it pays.
It still does not stop these. Some movements are measured, never refused:
- Interest and fees charged at end of day push the used amount up with no ceiling.
- A correction posted by an administrator is not limit-checked.
- A payout that does not draw on the wired balance is not limit-checked. See taking money out.
See lending more on an existing account.
Nothing tells you when a customer is already over. A customer can pass their limit through interest and fees, or because the limit was cut. There is no alert, no task, and no over-limit register. The panel is the only place that shows, and only if somebody opens it. Any payout on such an account is refused, however small.
Nothing acts on the review date. It is recorded and displayed. No reminder is raised, and a limit does not lapse or shrink when the date passes. Diary the review yourself.
So: treat the limit as a hard stop when you activate a deal and when an operator pays money out, and as a measurement you have to go and read for everything that happens automatically.
Who has to approve a limit change
Granting, increasing, decreasing, and freezing can all require a second person. Your organisation decides which of them do.
Where a rule applies, an increase from 500,000 to 750,000 is held rather than applied. The panel shows a banner saying an approval is pending, the amount stays at 500,000, and it moves to 750,000 only when a different person approves. The person who asked cannot be the person who approves. See countersign.
What your organisation configures
- Which products draw on the limit. A product is wired to the limit, or it is not. A deposit product normally is not.
- Which balance the limit watches. Each wired product names one position whose movement consumes the limit, so what counts as “used” is a local choice. See position types.
- Whether activation is checked. This is the switch that turns the limit from a measure into a control. A product with the check off records utilisation but never refuses an activation.
- Which customer types show the panel. The Credit Limit panel appears on the customer types that list it.
- Which limit changes need a second approver, and who may give it. See countersign.
Two notes for administrators. First, a product that demands a limit at activation keeps the Credit Limit panel visible even where the capability is switched off, because turning it off would otherwise strand every activation of that product — see switching features on and off. Second, the limit is per customer, not per account: adding a second wired product to an existing customer shares the pot rather than extending it.