Blog · Data quality and reconciliation · Construction and building materials
How a builders' merchant or trade supplier finds the accounts whose purchasing is constrained by their credit limit rather than by demand: headroom from the credit file and the ledger, orders held or refused for credit, the accounts at the limit whose purchase pattern flattened, and the two decisions that follow, a limit review for the good payers and a collections conversation for the rest.
A branch manager sees a good account go flat and assumes a competitor. Credit control sees the same account bumping its limit every month and assumes the branch knows. The two exports joined on the account identifier show a customer who wants to buy more and cannot. This guide sets out headroom, the constrained-account test, and the two lists.
Per account, per month:
Headroom = credit limit − outstanding balance At limit = headroom < threshold share of monthly purchases Constrained = at limit, and purchases flattened since, or orders held for credit Constrained value = prior growth run rate − current run rate, annualised
Account identifiers only.
Σ accounts' outstanding balance = receivables ledger total
An account in the ledger with no credit record is listed; it is usually a cash account, and it is excluded from the headroom measure rather than treated as unlimited.
| Constrained and… | List | Owner | Action |
|---|---|---|---|
| Pays within terms | Limit review | Credit control, with the branch | Raise the limit; value shown |
| Pays late | Collections | Credit control | Terms conversation before any increase |
| Account | Limit | Balance | Headroom | Purchases before | Purchases now | Held orders | Days beyond terms | List |
|---|---|---|---|---|---|---|---|---|
| 2207 | £40,000 | £38,600 | £1,400 | £31,000/mo, growing | £29,000/mo, flat | 4 | 2 | Limit review: £110,000/yr constrained |
| 4471 | £25,000 | £24,900 | £100 | £18,000/mo | £17,500/mo | 7 | 31 | Collections |
| 9034 | £60,000 | £12,000 | £48,000 | £20,000/mo | £11,000/mo | 0 | 0 | Not constrained: a sales question |
Account 2207 is a good payer that has been held at its limit for a quarter and was growing before it. The limit review has a number on it. Account 9034 has plenty of headroom and halved its purchases, which is the branch manager's competitor problem and belongs on a different list.
Credit and sales never joined. Each team sees half of the account.
Held orders not logged. The constraint is invisible until the customer complains or leaves.
All at-limit accounts treated alike. The slow payer gets a limit increase.
Cash accounts as unlimited. They distort the headroom distribution. Exclude and count.
Mapped once, the credit file, the ledger and the held-order log produce headroom, the constrained test and both lists every month. Covirage builds this from the exports as they are. The construction page describes the setup, and the contractor share guide covers the demand-side measure for the accounts that are not constrained.
The credit control or accounts receivable export: account, credit limit, outstanding balance, overdue balance, days beyond terms. Joined to the ledger on the account identifier. No customer names are needed.
Monthly purchases in the three months before headroom fell below the threshold against the three months since. An account that was growing and is now flat at a value close to its limit divided by its payment cycle is constrained. The report shows the two run rates and the limit.
Both, which is why it is usually nobody's. Credit control sees the limit and the balance; sales sees the flat purchases. Joined, they show a customer who would buy more if allowed, and whether allowing it is wise.