Credit Management Configaration

Added by yanamadala venkataswamy, last edited by yanamadala venkataswamy on Dec 26, 2008 CREDIT MANAGEMENT A credit limit may be a customer's credit limit, which is the permitted limit of value of open items, such as invoices not yet paid, plus the value of open sales orders. o o The credit limit is the total combined value of the following documents: Net value of sales order Open Sales order: order created, but not delivered Open deliveries: delivered, but not invoiced Open billing doc: value of billing doc, which has not yet been forwarded to accounting Open items: forwarded to accounting, but not settled. Simple Credit Check Automatic Credit Check Static Dynamic

Types of Credit Check

Simple Credit Check: SPRO- IMG- SD- Basic Functions- Credit Mgmt/ Risk Mgmt- Simple Credit Check- Assign Credit Check to Doc Types. Based on sales doc types It will check all the above-mentioned docs & if the credit limit exceeds, the system responds in the way defined by Cannot differentiate according to customer A: warning B: error message: the doc cannot be saved C: warning message with delivery block: the doc can be saved but is automatically blocked for delivery.

you in the configuration menu. 3 ways to Control the Simple Credit Check:

Automatic Credit Check: This credit mgmt control is maintained by using the automatic credit control functionality. The automatic credit control divides the sales doc types, the delivery doc types, & goods issue into specific credit groups. It also uses the customer's risk category as assigned to the CMD of the payer & assigns an outcome proc to the combination of the above 2 objects, i.e. the credit group & customer risk category along with the credit control area. The definition of customer's risk category is carried out in the fin accounting module. A customer's risk category is a grouping category that controls the credit check when automatic credit control takes place. Thus one can assign high-risk customers to risk category for e.g. A01, medium risk to B01 and low risk to C01. Automatic credit check divides customers in to 3 categories: High-risk customers, Low risk customers & Medium risk customers. Sales order: for high risk customers Delivery: for medium risk customers Goods Issue: for low risk customers

A credit check can only occur at 3 places: Credit Group

Credit Control Area (CCA): highest organizational element in credit management. A credit control area is an organizational unit that is comprised of one or more company codes. A company code can have no more than one credit control area. Defined by FI. Menu Path to create Credit Control Area: OB45: FI people. SPRO- IMG- Enterprise Stru- Definition- Fin Accounting- Define Credit Control Area

Credit Control Area 0001 1000

Description Credit control area 0001 Credit control area Europe

Menu Path to Assign Company Code to Credit Control Area: OB38: FI people. SPRO- IMG- Ent Stru- Assignment- Fin Accounting- Assign Comp Code to CCA It is possible to assign Credit Control Area to a Sales Area. This is more specific assignment than the assignment to Company Code. Company code Company name City Credit Control Area Over write CCA

Menu Path for Defining Risk Categories: OB01: FI people SPRO- IMG- Fin Accounting- Account Receivables & Payables- Credit Mgmt- Credit Control Account- Define Risk Categories. Risk Category 001 002 003 CCA 4500 4500 4500 Name Low risk Medium risk High risk

Menu Path for defining Credit Groups: OVA6 SPRO- IMG- SD- Basic Function- Credit Mgmt/ Risk Mgmt- Credit Mgmt: o o Define Credit Groups: OVA6 Assign Credit Groups to Sales Doc's & Delivery Doc's Credit Limit check for Order Types: OVAK Credit Limit check for Delivery Types: OVAD Define Automatic Credit Control: OVA8 Define Credit Croups: OVA6 One merely creates a credit group for each differentiation in the doc type. You enter the credit groups when you configure the sales doc types for credit management & define the automatic credit check. The following credit groups are contained in the standard R/3 system: 01: credit group for sales order 02: credit group for delivery 03: credit group for goods issue Doc Credit Group Credit group for sales order Credit group for delivery Credit group for goods issue

CG (Credit Group) 01 02 03

Assign Sales Documents & Delivery Documents: Sales Doc Type OR Std Order Delivery Type Descp Del Credit Group GI Credit Group D 01 Descp Check Credit Credit Group

LF

Delivery

02

03

automatic credit check should be carried out. Specify a Credit Group Specify a Credit Group for the Delivery Type for which you want to Specify a Goods Issue Credit Group for the Delivery Type for which a SIMPLE CREDIT CHECK CANNOT BE ASSIGNED TO

carry out a credit check credit check is to be carried out for goods issue. DOCUMENTS. Define Automatic Credit Control: One can now assign settings to the combination of the Credit Control Area, the Customer Risk Category & the Credit Group. CCA 4500 4500 4500 4500 4500 4500 4500 4500 4500 Risk Cat 001 001 001 002 002 002 003 003 003 Credit Group 01 02 03 01 02 03 01 02 03 Credit Control Low risk sales orders Low risk deliveries Low risk goods issue Medium risk sales orders Medium risk deliveries Medium risk goods issue High risk sales orders High risk deliveries High risk goods issue

Select line item and go to details, you can decide whether to do Static or Dynamic Credit Check. Credit Horizon can also assigned here. Additional function checks can be performed here: A credit check when the maximum document value is exceeded. A credit check when changing critical fields.

The risk category assignment occurs in the same place as the customer's credit limit, which is the customers credit management screen. That is, the risk category is assigned to the customer by the Finance in transaction code FD32. The customer credit master record is divided in to 5 views: Overview Screen: gives an overview of credit settings in relation to the customer, including his credit limit, credit Address: view gives the customers address details as they appear in CMD Central Data: is a view that shows the total credit limit the customer can receive across all credit control areas as Status: view shows the customer's actual individual details according to particular CCA being investigated. This Payment history: view displays the payments made by the customer for a particular credit control area where a exposure, the %tage of credit limit used, his payment data & his risk category.

well as the maximum limit he can receive in one credit control area. includes his credit limit, percentage used, credit exposure, risk category, whether he is blocked due to credit or not. comp code is assigned. Static Credit Check Net Doc Value Open Order Dynamic Credit Check Net Doc Value Open Order

Open Delivery Open Billing Open Item Compares the total combined values of the above-mentioned documents to credit limit.

Open Delivery Open Billing Open Item Plus credit horizon. Compares the values of the following documents to credit limit + credit horizon.

Credit horizon has an attached time period that states that the system is not to include sales orders in the total of outstanding items created after that specified period i.e. for the purpose of evaluating credit, you want the system to ignore all open orders that are due for delivery after the horizon date. Maintained for low & medium risk customers. Update Groups Basically it is a info structure where system stores all the data about credit limit. The credit relevant data is updated in a info structure, where it is accessed & updated. Thus each automatic credit control must be assigned an update group. Update Group 000012 Update Group 000015: delivery & billing Update Group 000018: sales order, delivery & billing. Sales doc: increased order value Delivery: decreased order value & increased delivery value Billing: decreased delivery value & increased billing amount Invoice: decreased billing amount & increased open item value. VKM3: sales order VKM5: delivery VKM4: both

Update group 000012, updates at:

Release Blocked Sales Order/ Deliveries:

One can see the offending document. Note on the right hand side, the 'Status Field'. This shows the check, the doc failed. If this field is empty, the doc did not fail a credit check, even though it may be in the list of SD documents that are "required to be released". To release the doc, one indicates the doc to be released and then clicks on the 'Release Button'. The result is the offending doc entry, highlighted green. One then proceeds to save, after which you are informed the doc number has been released. Net value with sub total 'A', in pricing proc, will be the basis for credit limit.