Basic Configuration setting for Credit Management | SCN

http://scn.sap.com/docs/DOC-28086

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Version 3

created by Mr patchala on May 14, 2012 4:08 PM, last modified by Mr patchala on May 15, 2012 11:42 PM

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Hi friends ,
Here i am trying to explain the configuration steps for credit management and this article is for people who wants the
basic and step by step configuration for credit management
In sap there is two different types of credit controls those are 1) Static 2) Dynamic

In Static check there is no Horizon period, and in dynamic you have horizon period.
Horizon period is the duration of the time. If you maintain horizon period as 2 months, then all the open
documents that are with in this period are taken for credit check, documents beyond that are not for
consideration. in static system will consider the all open document till now.

Configuration settings:
1) Define Risk Category:
SPRO -- > Financial Accounting -- > Account Receivable and Accounts Payable -- > Credit Management -- > Credit
Control Account -- > Define Risk Categories
Go to NEW ENTRIES and create the Risk Category with the combination of Credit Control Area.
Save the record.

2) Define Credit Control Area:

It is the responsible organizational element which takes care of all the credit management activities in a company code.

SPRO --> Enterprise Structure -- > Definition -- > Financial Accounting -- > Define Credit Control Area.
Go to NEW ENTRIES and create the Credit Control Area.

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Note: if you maintain risk category and credit limit in "default data for automatically creating new customers" , it will
automatically apply for new creating customers in future.

3) Assign Company Code to Credit Control Area:

SPRO --> Enterprise Structure -- > Assignment -- > Financial Accounting -- > Assign Company Code to Credit Control
Area.
Select the Company Code and assign the Credit Control Area to the Company Code.
Save the record.
4) Define Credit Groups:
The credit group specifies which subsequent transaction can be blocked for processing, if the credit limits are exceeded.
SPRO -- > Sales & Distribution -- > Basic Functions -- > Credit Management and Risk Management -- > Credit
Management -- > Define Credit Groups.
You can use the default credit groups or create new once.

5) Assign Sales Document and Delivery Document to Credit Group:

SPRO -- > Sales & Distribution -- > Basic Functions -- > Credit Management and Risk Management -- > Credit
Management -- > Assign Sales Document and Delivery Document -- > Credit Limit Check for Order Types.
Select the Sales Document Type and assigned to Check Credit, Credit Group. And save the record.

-- Credit Limit Check for Delivery Types.

-- Select Delivery Document Type and assigned to Delivery Credit Group, Goods Issue Credit Group
-- Save the record.

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6) Maintain Credit Limits for Customer:

Logistics -- > Sales & Distribution -- > Credit Management -- > Master Data -- > FD32- Change.
-- Specify the Customer for whom the credit limits has to be maintained
-- Specify the credit control area of the customer.
-- Select all the views and enter.
a) In the overview screen , from the main menu select Go to -- > Control Area Data -- > Status.

Now you have to give value Credit Limit, Risk Category, Last/ Next Interval Review

Note : for only Dynamic check maintain "Credit horizon date" field
b) From the main menu select Go to -- > Control Area Data -- > Payment History.
On this view the system display the payment history of the customer, provided we check the field Payment History
Recorded in the corresponding customer master.
c) From the main menu select Go to -- > General Data -- > Central Data.
Here we have to specify the Maximum Permitted Credit Limits and Save the record.

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7) Automatic Credit Control:

During the sales document processing, if the credits are exceeded, the system can automatically block the required
transaction for this we need to configure automatic credit control.
SPRO -- > Sales & Distribution -- > Basic Functions -- > Credit Management and Risk Management -- > Credit
Management -- > Define automatic credit control.
We need to define automatic credit control in the combinations of Credit Control Area, Risk Category and Credit
Group.

Note : 1) you can maintain seasonal discount by specifying "credit limit seasonal factor " tab.
2) in checks tab maintain you want to go for static or dynamic check.
3) specify the system reaction if credit limit is exceeded by "Reaction " check box
a) No massage
b) Warning massage
c) Error massage
4) you can block the order/deliver/pgi by specifying "Status/block" field
5) for dynamic control maintain "Horizon" value
6) for static select " open orders""open delivery`s"
Save the Automatic Credit Control Area.
Note: For the system to carry out the credit limit check during the sales document processing, the following settings must
be done.
1. 1) In the definition of corresponding sales document type, we must not specify the value No Credit Limit Check for
the field Check Credit Limit.
2. 2) In the definition of corresponding item category, we must check the field Credit Active.
Hope you like my explanation..
Regards,

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Basic Configuration setting for Credit Management | SCN

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Patchala.

45330 Views
Products: sap_erp_sales_and_distribution Topics: enterprise_resource_planning Tags: dynamic, credit_management, static

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(21 ratings)

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39 Comments
Narendra Konnipati May 15, 2012 10:08 AM

Hi patchala, your Document is very nice

Thank you foe sharing this
Naren
Like (4)

Mr patchala May 15, 2012 10:09 PM (in response to Narendra Konnipati)

Thank you naren ....

Regards,
patchala
Like (1)

NITIN Parab Dec 5, 2012 1:52 PM (in response to Mr patchala)

Hi Patchala, your Document is very good.

I have some query about credit management.
1.What is the significance of Risk Category.
2.Will it be possible to bifurcate credit limit into customerwise and product groupwise
e.g. I want to give credit limit for particular customer of Rs.100000/I want to give 15 days credit for A class product and 30 days for B class and 45
days for C class. But the total credit should not exceed particular customer limit
i.e.100000/Will it be possible to configure this with credit management.
3. In one invoice line itemwise payment term will be possible?
Thanks if you can give some details.
regards
Nitin
Like (0)

Phanikumar V May 22, 2013 7:03 AM (in response to NITIN Parab)

Dear Nitin
1-A.Risk category describes what kind of risk going to be involved with this
customer while giving credit.
for example you can give 1,00,000Rs as credit for low risk and just
10,000Rs only for high risk.
2.A. what do you mean by class of the product? I assume that
if you say A-class product then 50% profit on sales, B-class:30% profit and
C-class-10% profit.
Like (0)

Sridhar Vijjhalwar May 15, 2012 11:18 PM

Well Done Patchala... Good work.

Like (1)

Mr patchala May 16, 2012 11:33 AM (in response to Sridhar Vijjhalwar)

Thank you sridhar...

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Like (0)

Venkat Reddy May 15, 2012 11:46 PM

Nice one..
Like (0)

Mr patchala May 16, 2012 11:33 AM (in response to Venkat Reddy)

Thank you Venkat..

Like (0)

BOJJA SIVASANKAR REDDY May 16, 2012 5:53 AM

hi patchala,
its good and nice post , keep it up
regards
reddy
Like (1)

Mr patchala May 16, 2012 11:32 AM (in response to BOJJA SIVASANKAR REDDY)

Thank you bojja.

Like (0)

Phoebe Hu Jun 7, 2012 10:13 AM

Thanks for your sharing.

Like (1)

Navaneetha Krishnan Oct 3, 2012 8:13 AM

Hi Patchala,
Good content and clear screen shots for the subject you have written. No wonder a write up on credit
mngt is coming back as a popular content. There is no dearth of content to be written on Credit
management, one of the most effective of the processes to streamline the Order Management / Delivery
processes and you have incited people to be aware of the basics of the process and inspired some to
build further extension of this.
It could have been wholesome if you had also run some transactions and demonstrate how the
transactions have worked and some OSS notes on this. I think there is also a note which explains about
the configurations, obviously without screen shots.
Thanks for your effort.
Like (2)

PRAVIN KOTADIA Nov 3, 2012 5:14 AM

well done
Like (0)

Ambarish Dhatingan Nov 6, 2012 12:33 PM

Gr8 useful doc ...

Like (0)

Pasca Satria Dwi Wibisono Nov 13, 2012 11:19 AM

good and very usefully

Like (0)

Basis SAP Support Dec 17, 2012 6:42 AM

good job
Like (0)

Simon Peng Jan 21, 2013 9:01 AM

Good material.
Like (0)

Sachin Yadav Feb 21, 2013 11:02 PM

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Good document. Report CHECK_CM (in SE38) can be used to analyze how system carried out credit
check.
Like (0)

Manh Tuan Mar 26, 2013 8:17 AM

Dear
patchala,
Thanks for your share. Can I make a question to you?.
Do you know field user1, user2 & user3 in Define automatic credit control screen are used in which
case?
Like (0)

Venkat Reddy Mar 26, 2013 5:17 PM (in response to Manh Tuan)

I suppose to assign the user exits in them so.

Like (0)

Manh Tuan Mar 26, 2013 6:36 PM (in response to Venkat Reddy)

Dear Venkat,
Can you tell me which user exit in this case?
Thanks
Manh Tuan
Like (0)

venu gopal reddy Mar 27, 2013 1:55 AM (in response to Manh Tuan)

Dear check this links

https://scn.sap.com/message/7507276
all the best
Like (0)

Sachin Yadav Mar 26, 2013 11:44 PM (in response to Manh Tuan)

The user exits can be coded in below includes:

LVKMPFZ1: USER_CREDIT_CHECK1
LVKMPFZ2: USER_CREDIT_CHECK2
LVKMPFZ3: USER_CREDIT_CHECK3
These are used in case you can not achieve the credit management business requirement
with already existing credit check options in the automatic credit check.
Like (0)

venu gopal reddy Mar 27, 2013 4:12 AM (in response to Sachin Yadav)

Dear sachn yadave

Can you tell me exact when users use this as per my understand with out our help
by assigning in ova8 they use it but any way can u explain how they do plz
Like (0)

venu gopal reddy Mar 27, 2013 4:24 AM (in response to Sachin Yadav)

Dear sachin yadav

What i am asking is ,, some time already given programs wont work in some
business requerments then we use this .. ok i understood theriatically but could you
give real time business process where we use
thank you so much dear
Like (1)

Zhang Bobby Apr 27, 2013 3:30 AM

Nice .very useful to me ,

Like (0)

Srinivas Kari Jun 10, 2013 2:42 PM

Very good. Nice screenshots.

Like (0)

Ramchandra Joshi Jun 21, 2013 11:36 AM

Thank you for sharing the document...

its helpful

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Like (0)

Manufaturing Business Aug 28, 2013 12:59 PM

Hi Patchala,
Good and Nice article written by you and useful to beginners like me.
Regards,
Vishnu
Like (1)

Dharmarajan Seetharaman Aug 30, 2013 5:07 PM

Dear Patchala,
I am a student so far I haven't created or configured credit management process but I have created
other transactions..... Thanks for the presentation it really helps me to understand..... I have one
question can you please tell me is it possible to bypass the credit control process. In other words
intentionally skipping credit check process...
Like (0)

Phanikumar V Sep 7, 2013 11:25 AM (in response to Dharmarajan Seetharaman)

Then you should not assign credit control area and payment guarantee procedure to your
customers and in VOV8-please give blank in check credit limit field in general control tab--for
skipping intentionally credit management...
Phanikumar
Like (0)

Naresh Krishnamoorthy Sep 5, 2013 1:38 PM

Very Useful...Many Thanks.

Best Regards,
Naresh K.
Like (0)

Arjun N Oct 22, 2013 12:12 PM

Very Useful..
Many thanks.
Arjun.
Like (0)

Philip Mwikya Feb 10, 2014 10:29 AM

Great work Venkat. Very helpful

Like (0)

Karteek k Jun 11, 2014 8:20 AM

Nice document.. good explanation.. when i was unable to understand about credit management i found
your document and its really awesome document.
thank you very much !!
Like (0)

madhu kumar Nov 6, 2014 3:55 AM

Hi Patchala,
very informative and useful blog !!!!!
Thank you very much for sharing !!!!!!!
Like (0)

SR Kumar Nov 6, 2014 5:15 AM

Hi,
You have not mentioned the sub-total "A" in Pricing Procedure without which the Credit check at Sales
order will not take place.
Thanks for the share.
SRK
Like (0)

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Aziz Dohadwala Nov 6, 2014 8:30 AM

Hi Patchala,
Thank you for sharing. Clear, concise and very helpful with the screenshots. Appreciate the input.
Regards,
Aziz
Like (0)

Rizki S. Nov 12, 2014 6:02 AM

nice share.. its very useful for me with the screenshots.

Many thanks Mr Patchala
Like (0)

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