Credit Limit
The maximum outstanding amount a distributor permits a retailer to accumulate before new orders are blocked until payment is received.
Full definition
A credit limit is the ceiling on how much unpaid exposure a distributor is willing to carry for a specific retailer. It is set based on the retailer's historical purchase volume, payment track record, and the distributor's own working capital capacity. In Indian FMCG distribution, credit limits for kirana stores typically range from Rs 10,000 to Rs 1,00,000 depending on outlet size, while modern trade accounts may carry limits of Rs 5-25 lakh.
Credit limit enforcement is where most manual distribution operations fail. A salesperson under pressure to hit targets will push orders even when the retailer's outstanding has breached the limit — essentially extending unsanctioned credit with the distributor's money. This is the number one cause of bad debt in the Indian distribution ecosystem.
Automated enforcement through an order management system eliminates this problem entirely. When the DSR tries to book a new order on the mobile app, the system checks current outstanding against the credit limit in real time and blocks the order if there is no headroom — unless a supervisor explicitly approves an override.
Real-world example
A Dabur distributor in Jaipur sets a Rs 50,000 credit limit for a high-volume grocery store. When the store's outstanding hits Rs 48,000, the DSR's app flags that only Rs 2,000 of new orders can be placed.
Where it applies
Applicable industries
This term is relevant across the following SpireStock-supported industries.
How SpireStock handles it
Related SpireStock features
The concepts described above are implemented end-to-end in these product modules.
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