Credit Hold

What is a credit hold?

A credit hold suspends further services or deliveries to a customer until outstanding balances are resolved. Placing an account on credit hold signals that the relationship cannot continue under current payment terms. It is a more serious step than dunning letters but less final than writing off the balance or referring to collections. Credit holds preserve leverage while the account remains workable.

Implementing credit holds

Define clear triggers: accounts over a certain amount past a certain number of days automatically go on hold. Communicate the policy to clients upfront. When a hold is triggered, notify the client in writing with specific steps to restore service. Require payment of past-due amounts, not just promises, before releasing the hold.

Credit holds for service firms.

Service firms face complications with credit holds. Stopping mid-engagement damages relationships and may create liability. Consider hold policies for new engagements rather than work in progress. Alternatively, require retainer replenishment before continuing work. The goal is protecting your position without abandoning professional obligations.