diff --git a/erpnext/selling/doctype/customer/customer.py b/erpnext/selling/doctype/customer/customer.py
index e29169604e9..18bd4432bdb 100644
--- a/erpnext/selling/doctype/customer/customer.py
+++ b/erpnext/selling/doctype/customer/customer.py
@@ -69,6 +69,7 @@ class Customer(TransactionBase):
 		self.flags.old_lead = self.lead_name
 		validate_party_accounts(self)
 		self.status = get_party_status(self)
+		self.validate_credit_limit_on_change()
 
 	def on_update(self):
 		self.validate_name_with_customer_group()
@@ -125,6 +126,15 @@ class Customer(TransactionBase):
 		if frappe.db.exists("Customer Group", self.name):
 			frappe.throw(_("A Customer Group exists with same name please change the Customer name or rename the Customer Group"), frappe.NameError)
 
+	def validate_credit_limit_on_change(self):
+		customer = frappe.get_doc('Customer', self.name)
+		companies = [c.name for c in frappe.get_all("Company")]
+
+		for company in companies:
+			outstanding_amt = get_customer_outstanding(customer.name, company)
+			if flt(self.credit_limit) < outstanding_amt:
+				frappe.throw(_("New credit limit is less than current outstanding amount for the customer. Credit limit has to be atleast {0}").format(outstanding_amt))
+
 	def delete_customer_address(self):
 		addresses = frappe.db.sql("""select name, lead from `tabAddress`
 			where customer=%s""", (self.name,))