Define Credit Control area:

IMG Enterprise structure Definition Financial accounting Define Credit

Control area.




Assign Credit control area to company code
IMG Enterprise structure Assignment Financial accounting Assign
Company code to credit control area

Assign Company code to credit control area:

IMG Enterprise structure Assignment Financial accounting Assign
Company code to credit control area


Define risk categories
Risk Category is a Place where we define the Customer Category. Risk Category control all
credit check.


002 High risk Category
003 Medium Risk Category
004 Low Risk Category

IMG Financial Accounting (New) Account Receivable and Accounts
Payable Credit Management Credit control Account Define Risk
categories




Assign sales area to Credit control area:

IMG Enterprise structure Assignment Sales and Distribution Assign
Sales area to Credit Control area





Assign credit control to Customer master:
Here we assign the Credit Control Area in the Customer Master in Billing Tab.

Credit Group
The credit group groups together different business transactions which should
be dealt with in the same manner with regard to the credit check.
You enter the credit groups when you configure the sales document types for
credit management and define the automatic credit check.
IMG Sales and Distribution Basic functions Credit Management/Risk
Management Credit Management Define Credit Groups




Automatic Credit Control:
Here we define the automatic credit control. This matrix define the settings of
the Credit check.

IMG Sales And Distribution Basic Function Credit Management /
Rish Management Credit Management Define Automatic Credit Control.


Based on the Credit Control Area + Risk Category + Credit Group.



In the above screen you may see a column named as Update group.

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.
Update group 000012, updates at:
- 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.



Item check field
Indicates that the system carries out credit checks not only when you save the
document but already when you enter single items or header data.


Reaction Filed:
Is the place where we maintain how the system should react like error ,
warning, message.



Maintain Credit limit for the Customer
Use transaction code FD32 to maintain credit limit for the customer.
In this t code we maintain the credit limit of the customer. Here we can
also maintain other details like address , status which states that customers
actual limit etc.
Payment history tab means the payment made by the customer.

Release Blocked Sales Order/ Deliveries:
- VKM3: sales order
- VKM5: delivery
- VKM4: both
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 this.


Credit Management :
Credit Management is important part in any business. To minimize the credit risk , every
company has certain customer category and based on that the credit limit and the risk associate
with that can be fixed.
The Credit Management is based on a Credit Control Area , customer risk category and the
document type.
The Credit Management basically controls the credit limit to the customer and the dynamic
update with approval.
Credit Control Area is a organization unit. The credit Control Area can be Centralized or Di
centralized.

Centralized : Centralized Credit Control Area is One Credit Control Area which is assigned
with multiple company code.

Di centralized : The Di centralized Credit Control Area is one Credit Control area is assigned
to one company code.

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.
- 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.
Types of Credit Check
- Simple Credit Check
- Automatic Credit Check
o Static
o Dynamic
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 you in the configuration menu.
- Cannot differentiate according to customer
3 ways to Control the Simple Credit Check:
- 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.
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.
A credit check can only occur at 3 places: Credit Group
- Sales order: for high risk customers
- Delivery: for medium risk customers
- Goods Issue: for low risk customers.