If you do not set credit limits, you can still make invoices and give credit periods at the time of invoicing. However, that may not be desirable, especially in a decentralized environment. Therefore, to minimise errors during invoicing, you might prefer to set these important terms beforehand.
To set credit limits:
Go to F11 Features > Accounting Features > Set Maintain Budgets and Controls to Yes
Go to Gateway of Tally> Accounts Info> Ledgers> Credit Limits (under Multiple Ledgers)
Select the group of ledgers from the List of Groups for which to set credit terms. The Multi Ledger Limit Alteration screen is displayed. The list of ledger accounts is displayed. You can set credit limits for both amounts and periods here.
Credit Limit
Specify the amount of credit limit against the ledger account in this field. You can set the amount limits in foreign currency if you wish, for customers who are usually invoiced in foreign currency.
Credit Period
Credit Periods are in days only and are calculated from the effective date. If a separate effective date field appears in your voucher, the credit period is from the effective date, which might differ from the voucher date. If the voucher date is the only date field in the voucher, then it is also the effective date and the credit period is from this date.