There are different measures for Limited and Non-Limited Companies. For a Limited Company, the Credit Limit is a measure of its ability to settle potential credit transactions. It should be regarded as a yardstick for the possible level of acceptable credit or the maximum amount one is happy to be owed by the company at any one time, it does not consider a time period.
The following three values are used in the calculation of credit limits:
The average of these three components is then taken as a guide for the credit capacity of the company. The final figure calculated is dependent on the Credit Score and also on industry specific criteria.
Some companies may not have a credit limit attached, this is because they have scored below 15 or and therefore all elements from the balance sheet and cash flow will be negative.
Absence of Credit Scores/Limit
Not all businesses will be scored or have credit limits, this can be due to the following reasons:
No credit score and no credit limit:
No credit limit