I found this information in the Sage Knowledgebase:

Customers cannot be changed to Inactive for the following reasons:

If repetitive invoices, finance charges, invoices, and cash receipts exist for the customer.

If the customer is a bill-to customer for a sold-to customer.

If Accounts Payable from Accounts Receivable clearing entries exist for the customer.

If the customer is Internet enabled for eBusiness Manager.

If jobs, billings, and estimates exist for the customer in Job Cost.

If projected demands exists for the customer in Material Requirements Planning.

If receipts and returns exist for the customer in Return Merchandise Authorization.

If sales orders and invoices exist for the customer in Sales Order.

An inactive customer cannot be used in some data entry windows. A message appears stating that the customer is inactive and cannot be used. For a list of data entry windows, see the Display Inactive Customers in ALE Lookups field in Company Maintenance.

Thank you for replying.     Okay but the job is completed and closed two years ago.  We create "Jobs" for our customers to keep track of costing when a customer has a special project. this customer is out of business but you are saying I can never make them inactive because we used the job cost module??  they have no open invoices. no credits a zero balance.

Try purging the Jobs for that one customer. Then make them inactive.

Are you closing your periods in Job Cost?  Do you have Retain Job Cost History set to Y in the Job Cost options?  You need to purge this Job Cost to your Job Cost History, then it won't be considered in the criteria anymore.