In standard product there is provision for Warning only (Sales & Receivable Setup >> Credit Warnings)
If you are a developer, then to block the processing, you should make changes in Codeunit 312 (Cust-Check Cr. Limit)'s SalesLineCheck Function or in Form 343 (Check Credit Limit).
If your finance folks works hard enough to check all customers’ Outstanding Balance and Cr Limit then set the customer card’s “Blocked” option to “all”, then no new sales order can be created against the “blocked” customers.
But in real world, it is hard for the finance poeple to check Cr Limit for all cusotmer daily… And, I did not aware Nav provide functions to check the Cr Limit and set “blocked” option… If you have programmer can write a form or report to check Cr Limit for all customers, and use Job Scheduler to run the form or report daily, then Nav can automatically block the customers who are over credit.