Credit Hold

A credit hold is an operational block that prevents new orders from being accepted, released, or shipped to a customer until the credit department clears the account. Holds are typically triggered automatically when a customer exceeds its credit limit, carries invoices past a defined age (for example, anything over 15 days past due), or hits a manual risk flag such as an NSF check or bankruptcy rumor. The hold is the point where credit risk management stops being advisory and actually changes what the company ships.

Holds are the most contested moment in the credit-sales relationship, so the rules need to be mechanical and the communication fast. Good practice defines the trigger conditions in the credit policy, notifies the sales rep and the customer at the moment of the hold with the exact reason and the exact cure (pay these invoices, sign this guarantee), and defines who can release and under what conditions. A release without a cure should be an authorized exception with a name attached, not a quiet override.

Used well, the hold is a collection tool more powerful than any dunning letter: customers who need the next shipment find money for the last one. Used badly, blanket holds on accounts with legitimate disputes or trivial residual balances damage relationships and teach sales to route around the credit department. Segmenting hold logic, tighter for high-risk grades, more tolerant for strategic accounts with escalation instead of auto-hold, keeps the tool credible.