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Advantages of Sharing Information
About Credit Limits with Customers
by Michael C. Dennis M.B.A., C.B.F.

Some companies tell customers their credit limit. Many do not. The question of whether or not to do so is a topic about which reasonable and intelligent credit professionals have honest disagreements. These are some of the reasons to do so:

• By doing so, the credit department has the opportunity explain what would be required to increase the line

• By addressing this issue proactively the credit department is able to deflect criticism that it is passive-aggressive with customers

• If the customer responds with new information, it may be possible to increase the original credit limit

• The creditor can discuss options and alternatives, or explain how frequently the credit department will re-evaluate its decision

• Sharing the credit limit makes it less likely the creditor and the customer will be placed in the uncomfortable position of having to reject an order based on credit limit considerations.