The credit limit policy in the contact settings takes three values: ignored, warn, block. All three are defensible, and the right choice depends on the shape of your customer base.
With block, no document can be saved for a customer over their limit. That works for businesses dealing with many small dealers who want collection risk managed centrally. With warn, the record goes through but the person making the sale sees the situation; if you work with a small number of customers you have known for years, that is usually enough.
When setting a limit, it helps to know what risk covers. Total risk is not just the open account balance: customer cheques in the portfolio, out for collection, held as collateral or in clearing are included, as are endorsed cheques that have not yet matured. Cheques that have been collected, returned or bounced are not. The Risk Report puts those over the limit at the top and shows usage as a percentage.