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Brian McClair
I
November 20, 2025
12 minutes to read
It’s 8:05 AM on a Thursday. You’re sipping your first coffee, scanning the morning’s credit alerts. Everything seems under control. You spent most of yesterday dealing with a major account, a long-term customer who has fallen on hard times. After multiple broken payment promises and with their balance ballooning past 120 days, you made the tough but necessary call: they’re on a non-negotiable Hard Hold. No more orders, no more shipments, no exceptions until a significant payment is made. You personally logged into the system and flagged the account. It’s done.
Then, an email notification pops up from your ERP: “Shipping Confirmation: Order #8675309 for Global Tech XYZ Inc.”
Your heart sinks. That’s the account. The one on Hard Hold. A $250,000 order just left your warehouse, heading straight to a customer you know can’t—or won’t—pay for it. Your carefully constructed firewall was just bypassed by your own company’s automated workflow. Now, instead of strategically managing risk, you’re scrambling to recall a shipment, a frantic and often futile exercise that involves calls to logistics, the sales team, and a warehouse manager who has already moved on to the next hundred orders.
This isn’t a hypothetical scenario; it’s a terrifyingly common reality for Credit Managers. In the push for efficiency, we’ve embraced automation. But what happens when that automation works against the critical, nuanced judgment of the credit team? What happens when the system designed to help you collect cash actively increases your exposure to bad debt?
This conflict between human intervention and system automation is a source of constant, high-stakes frustration for credit and collections teams. The core of the problem is that automated systems, whether in the ERP or a collections module, are configured for the 95% of standard scenarios. They are built to release orders for good customers, send timed reminders, and follow a predictable cadence. But high risk accounts which live in the other 5%, require a human touch and a manual hold. When the system can't recognizre that stop the fallout is fast and costly.
We hear this directly from credit leaders: their teams are doing the right work, making the right calls, but the technology isn’t configured to uphold their decisions. The result is a system that, at critical moments, cannot be trusted.
This isn't about a minor workflow preference, it's about fundamental risk control. The term "hard hold" implies a final decision made after careful consideration. An automated release that ignores this status is not just an inconvenience, it's a direct threat to the company's assets. It adds new debt to an already uncollectible balance, deepening the financial wound.
The operational fallout is just as damaging. When a failure like this occurs, it triggers a fire drill that pulls multiple teams away from their core functions. The credit team stops everything to mitigate the damage, and trust in the system plummets. This leads to directives born of necessity, where the only solution is to cease operations until the root cause is fixed.
As another manager stated during a crisis moment that it's a last resort, an admission that the process is so broken, the risk of another error is so high, that the only safe move is to stop all related activities. It’s the equivalent of shutting down an entire assembly line because a single safety sensor is faulty. The cost in lost productivity and delayed, legitimate transactions is enormous, but it’s deemed necessary to prevent a catastrophic loss.
How does a company get to this point? It’s rarely a single error. This problem is almost always the result of several systemic issues converging, creating a perfect storm where manual credit decisions are ignored. Let's break down the common culprits.
Legacy ERP systems are the backbone of most B2B transaction processing, but they were often designed for accounting and inventory, not for nuanced credit management. In many ERPs, a "credit hold" is a single, binary flag. It's either on or off. There's no native concept of a type of hold. A temporary hold for a customer slightly over their limit is treated the same as a permanent hard hold for an account on the verge of bankruptcy. Automated order release scripts or batch jobs often just check for the absence of this single flag, or are programmed to clear it once a small payment is received, without understanding the reason for the hold.
The modern AR stack often includes an ERP(s), a CRM, a collections platform, and maybe even a separate order management system. A Credit Manager might place the Hard Hold in the collections platform, which is their primary workspace. But if that status doesn't sync instantly and correctly to the ERP—the system that actually controls warehouse shipments—the hold is useless. This data synchronization is a common point of failure. A broken API connection, a delay in data transfer, or a mismatch in how the two systems define "hold status" can leave the door wide open for an erroneous shipment.
Companies often have multiple automated workflows running simultaneously. For example:
The credit team places a manual hard hold, expecting it to stop Workflow B. However, the customer might make a small, automated payment in response to a message from Workflow A. This payment might trigger a rule in the ERP to automatically remove the credit hold, allowing Workflow B to release the order. The two automated systems, working as designed but without awareness of each other or the manual override, have conspired to undermine the Credit Manager's decision.
This is the human element. The team that configured the order release automation may not have fully understood the credit team's manual intervention processes. They may have built the rules based on a standard operating procedure that didn't account for exceptional cases like a hard hold. There was no handoff or collaborative design session to define the "rules of engagement" between automated processes and manual overrides. The process documentation is either missing or outdated, and the institutional knowledge of why a hard hold is sacred resides only with the credit team, not with the IT or operations teams who manage the automation.
As a business grows, manual workarounds that used to be effective become liabilities. A small company might manage high-risk accounts with a spreadsheet or a daily stand-up meeting. The credit manager could literally walk over to the warehouse manager and say, "Do not ship anything to Global Tech XYZ Inc." But that doesn't scale. When you have thousands of customers, multiple warehouses, and remote teams, you must rely on the system. If the system can't be configured to reliably enforce these critical holds, growth only amplifies the risk. Each new customer and new order adds another potential point of failure.
Solving this problem requires moving beyond simple fixes and implementing a robust framework that respects both automation and manual expertise. Rather than choosing one over the other, it's about making them work in unison. Here are the key pillars of a system that works.
First, you must move beyond the single, binary "credit hold" flag. Work with your IT and operations teams to establish a clear hierarchy of hold statuses within your core systems. This creates the nuance that automation often lacks.
For the hard hold to be effective, it must be the ultimate source of truth. This requires establishing a clear protocol that all systems and teams must follow.
To eliminate data inconsistencies, you must designate one system as the master record for a customer's credit status. Typically, this should be your ERP, as it governs the financial transactions. Your collections platform, CRM, and other tools should read from the ERP's hold status and write back requests for changes, but they should not be able to independently change a hold status that conflicts with the master record. This hub-and-spoke model, with the ERP at the center, ensures that when a hard hold is applied in the master system, every satellite system respects it. However, depending on the type of credit, AR, or collections platform you use, and its maturity level, doing this might be costly, time-consuming, and might not solve any of the challenges the team is seeing.
Fixing the leaky bucket of automated credit holds is more than just an operational tweak. It has a profound impact on the financial health and stability of the business.
Moving from a state of reactive panic to proactive control requires a deliberate, focused effort. Use this playbook to start the conversation and drive change within your organization.
1. Audit Your Current Holds: Do you have a clear, documented definition of what a "credit hold" means? Is it a single status or a hierarchy?
2. Map Your Workflows: Whiteboard the entire order-to-cash process. Identify every system and every automated rule that touches a customer's credit status. Where are the potential points of conflict?
3. Identify the Master Record: Formally declare which system (likely the ERP) is the single source of truth for credit holds.
4. Meet with IT and Operations: Schedule a meeting with the owners of the ERP and order management systems. Present the "Hierarchy of Holds" framework and discuss what it would take to implement a non-automatable "Hard Hold" flag.
5. Review User Permissions: Who can place and remove credit holds today? Solidify the permissions to ensure only designated credit team members can apply or remove a Hard Hold.
1. Not all holds are created equal. A nuanced hierarchy is essential for allowing automation to handle the simple cases while protecting the business from the complex ones.
2. Manual override must be supreme. Human judgment is your most valuable risk management tool. Your systems must be configured to respect it, not circumvent it.
3. This is a cross-functional problem. The solution requires collaboration between Credit, IT, and Operations. You cannot solve it from within the credit department alone.
1. When was the last time an order was shipped to a customer that should have been on hold? What was the root cause?
2. If I place a Hard Hold on an account right now, in which systems does that status appear? How long does it take to sync?
3. Can a customer payment automatically remove a credit hold? If so, can we change that rule for specific hold types?
By taking these steps, you can reassert control over your collections process, ensuring that automation serves as a powerful tool for efficiency, not an accidental source of risk. You can build a system where a hard hold means what it says: a full, complete, and unbreakable stop. If you'd like a quick assessment of how your current process stacks up, reach out we're here to help.
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