Credit and Receivables Risk Management

MIS 3510, A01 Fall 2012

In this lab exercise you will use the SAP ERP system to explore how information system can
support organizational processes. The focus will be on the processes of customers’ credit
management. Customers of a manufacturer of energy snack bars can use credit the company
offers, so they can purchase products with a delayed payment. The exercise is about setting and
controlling the credit limit, combined with customer orders and associated operations. At the end
of the lab, you are supposed to print out the final output and submit it to your instructor as a
proof that you have completed this lab.

Important! You will use SAP along with many other users. SAP will serve you well if you use
your account and your set of default data. You must use your dataset or you (and others) may
experience problems. Your dataset number appears in the table below. You should use it
whenever you see in instructions a double pound symbol (##) or double zero (00).

Your dataset number is often pasted together with some other piece of data. For example, in
creating an inquiry for West Hills Athletic Club, the instructions will refer to ## West Hills
Athletic Club. You will need to replace the ## with your Data Set Number (e.g., if it is 09, then
you should enter 09 West Hills Athletic Club).

Log in the system

1. Find the following icon on your desktop, and double-click it to launch it.

2. Double click “SAP logon” Icon on your desktop; a list of servers should appear on the
screen. Look for “oxford.” If it isn’t displayed, try if clicking on the folder “Connections”
would make a difference. You will see the following screen:

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3. To log into the server and the SAP system enter:

Client Number: 470

User ID: your user ID is a combination of the symbol FS- and your dataset number; for
example, if your dataset number is 01, your user ID is FS-01. See page 3 for dataset numbers.

Password: SAP4US

Note: the screen will show the password filled, and you cannot delete the content. Simply put
the cursor on the starting position, and type the password. Then click the Green check icon to
log on. Alternative: You can copy the password from the lien above and paste it.

4. Change the password when the system asks you to do so. One idea for the password so you
don’t forget it: Use the default password with the addition of last three digits of your student
ID (e.g., if 567 are the last three digits of a student ID, the user ID is SAP4US567).

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User dataset numbers

Dataset
Student Name Number
Adigun, Oluwaseun A. 01
Andika, Erha M. 02
Babyk, Maryan O. 03
Bain, Kyle H. 04
Danzinger, Nicholas J. 05
Deras, Heidi 06
Dhaliwal, Gagandeep S. 07
Di Geronimo, Beniamino 08
Dupre, Thomas V. 09
Foh, Joshua J. 10
Gauthier, Charles 11
Hekle, Alan J. 12
Hellec, Steven J. 13
Kelly, Christopher A. 14
Kramer, Trevor M. 15
Kuang, Yesheng 16
Lang, Steven I. 17
Li, Hao 18
Murray, Daniel E. 19
Phung, Jessica 20
Prychitko, Derek W. 21
Sus, Steven F. 22
Tran, Dave 23

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Introduction into the Exercise

In this lab exercise, you will perform business of a fictitious Fitter Snacker Company—a
manufacturer of snack bars. Fitter Snacker has two products, the NRG-A bars (“Advanced
Energy”) and NRG-B bars (“Body Building Proteins”). You want to use a Credit Management
function in SAP to better manage accounts receivable. Your goal is to minimize the risk of
customers defaulting, while ensuring that the impact on sales due to credit blocking is
minimized.

As the SAP seamlessly connects business processes, the steps you will take will look like one
large process. In fact, you will run the credit, ordering, delivery, and accounting process,
switching back and forth between processes as the logic of business requires. In particular, you
will do:
Create Risk Category, Set Automatic Credit Control, Set Credit Limit,
Create Sales Order, Review Customer Credit Limit, Create Sales Order over the Credit Limit,
Review & Release Blocked Sales Order, Initiate Delivery, Pick Order and Post Goods Issue,
Create Billing Document, and Post Payment.

There are already some data in the system, accessible via your dataset number. You will enter
and process more data in order to make all this work.

1. Set Updating for Sales Documents

Wherever you see IMG on the screen, IMG is the implementation guide, which is the tool that
adjusts the system to the specific requirements of a company. You will most likely see the IMG
referred to in a path or as an icon, such as the one in the following menu. First, we need to
define how different transactions affect what the customer owes, or the customer’s Total
Commitment.

To do this, in the main menu appearing across the top of the screen click Menu and select SAP
menu. Then, do this:

1. By clicking the arrowhead at start of a line, make selections: Tools Customizing

IMG (Note: You have to aim well at the arrowhead, or your input will not be
recognized)
2. Double-click Execute Project
3. Click on placed in a menu above the table covering the
screen.
4. Make following selections: Enterprise Structure Definition Financial
Accounting Define Credit Control Area (click on the icon)

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Select your credit control area,

then click on the details icon

Select your credit control area, ##FS (remember the ## is your dataset number), then click on
the details icon ( ) to get this screen:

Enter 000012 for Update group. Option: Clicking

the document icon would drop down a list you can
choose from. Selecting is done by a double-click
or a single click and then clicking the Enter icon
(green checkmark).

Enter K1 for FiscalYrVariant

Then click on the save icon

The update group defines how documents in the sales process change the Total Commitment.
With update group 000012:

 Sales orders

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o Increase the open order value

 Deliveries
o Reduce the open order value
o Increase the open delivery value

 Billing documents
o Reduce the open delivery value
o Increase the open billing document value

 Financial accounting documents

o Reduce the open billing document value
o Increase the open items

Click on the back icon ( ) a few times to return to the SAP Reference IMG (
). Confirm data saving if the system asks you to do so.

2. Create Risk Category

The credit risk category will control the credit review process. Different credit risk categories
can be created so that different procedures can be used with different groups of customers.

To create a risk category, you need to be at the screen that ends the procedure above. If not, go
back to the SAP menu by clicking the Back button (a left pointing arrow on a green circle) or the
button right of it (an upward pointing arrow on a yellow circle). Select:

Tools Customizing IMG Execute Project

Click on
Financial Accounting Accounts Receivable and Accounts Payable Credit
Management Credit Control Account Define Risk Categories ( )

This will bring up the following screen:

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Click on the New Entries icon

Click on the New Entries icon, which will bring up the following screen:

Add the entry:

Z## ##FS ## Standard Risk Category
(Don’t forget to insert your dataset number in place of ##).

After entering the data above, the status line at the bottom of the screen should read something
like: Data was saved.
Click on the save icon ( ). Then click on the back icon ( ) few times until you return to the
SAP Reference IMG ( ).

3. Set Automatic Credit Control

With Automatic Credit Control, the SAP system can be configured to perform credit checks to
run at different times during order processing. It is possible to define a system response for each
credit check (for example, a warning message). In the case of a warning message, a block can be
set in the credit status of a document so that further processing cannot continue until the credit
problem is corrected.

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To configure Automatic Credit Control, follow the menu path:

Tools Customizing IMG Execute Project

Click on and then
Sales and Distribution (it is in the middle of the list) Basic Functions Credit
Management/Risk Management Credit Management Define Automatic Credit
Control ( )

These steps will lead you to the following screen:

Click on the New Entries icon

Click on the New Entries icon, which will produce the following screen:

Then make the following entry:

CCA RkC CG Credit control

##FS Z## 01 Standard Credit Check

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Enter
CCA RkC CG Credit control
##FS Z## 01 Standard Credit Check

Then click on enter icon

NOTE: Instead of typing, sometimes you can drop down a list that will contain data you need to
enter. The icon for this list looks like multiple sheets of paper. It appears if you place the cursor
in some data entry field and click the mouse.

Then click on enter icon ( ). The currency value will change to USD:

Currency changes to USD

To define the Automatic Credit Checking procedures, make the following entries:

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Check Dynamic
Enter Reaction C (warning plus the value by which credit limit is exceeded)
Check Status/Block (block further processing)
Enter 2 for Horizon (2 months for dynamic check)

Do not forget to save the data ( ).

4. Set Customer Credit Limit

With the configuration of the Automatic Credit Check complete, the credit limit can be
established for ## Health Express. Setting the credit limit for a company involves a change to
Master Data, which is done from the SAP Easy Access menu. Select:

Logistics Sales and Distribution Credit Management Master Data

Change

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This will bring up the following screen:

Click on the customer field, then

click on the search icon

To find customer ## Health Express, click on the customer field, then click on the search icon to
call up the following search window. If search fails it may be because you are not on the
appropriate tab called “Customers (general)”.

Enter your dataset number

(##) for search term, then
click on the enter icon

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After entering ## for the search term and clicking on the enter icon, you should get a list of
customers:

Double-click on ## Health Express to select it

Double-click on ## Health Express to select it, and enter the following:

Confirm that the customer number has

been entered from the Search process
Enter ##FS for Credit control area
Select Status, then click enter.
(Note: Your data are different.)

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After making the entries shown above, you will get the following screen:

Enter 1000 for Credit limit and

Z## for Risk Category, then
click on the save icon.

Message notifying us that we have not

maintained a credit limit for ## Health Express,
which is why we are in this transaction!

Enter 1000 for Credit limit and Z## for Risk Category, then click on the save icon ( ). The
SAP ERP system should now be configured with a credit limit of $1,000 for Health Express.
Next, we need to test the configuration. Click on the back icon ( ) until you reach the SAP
Easy Access screen.

5. Create Sales Order

To test the credit check, first we will create a sales order that will be within the $1,000 credit
limit for ## Health Express. To create the sales order, follow the menu path:

Logistics Sales and Distribution Sales Order Create (double click)

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This will produce the following screen:

Enter:
Order Type OR
Sales organization ##FS
Distribution channel DI
Division SB
Then click on the enter icon

Make the entries above, then click on the enter icon ( ), and the following screen will appear:

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1. This is the customer number SAP

created before – see p. 12. To get SAP
find it see the procedure below. Then
proceed with steps below.
2. Enter PO Number HXP##.
3. Enter ##F110 for material.
4. Enter 2 for Order quantity.
5. Click on the enter icon.

Performing the step above to find the Sold-to-party number, that is, the customer number:
1. Place the cursor in Sold-to-party and click the search button.
2. The next screen should be a tab Customer per sales group. You should see the field Sales
Organization and your user ID displayed in along with “FS” label (##FS).
3. Click the button with arrow pointing down, a list should open up.
4. Find your user ID and double-click it
5. You should be back on the previous screen; click the checkmarks button. This opens up a
screen with customer details. Double-click Health Express.

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You should be back in the window Create Standard Order: Overview. It should have some new
data (e.g., the columns Item, Description, Payment terms, dates). Click the checkmark button (
).

Next, in the uppermost menu, follow the path: EnvironmentPartnerDisplay credit

account:

Follow the top menu and the

Environment item path to
review the credit limit

You should get the following screen:

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Because you have not saved the sales order yet, ## Health Express has all of its $1,000 credit
limit available.

Click on the back icon ( ) to return to the Create Standard Order screen, then click on the
save icon ( ) to save the sales order.

When the sales order has been saved, click on the back icon ( ) until you are back at the SAP
Easy Access screen.

6. Review Customer Credit Limit

Now that the sales order has been saved, it should be reflected in the customer’s available credit.
To check this, follow the menu path:

Logistics Sales and Distribution Credit Management Master Data

Change (double click)

This will bring up the following screen:

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The customer number for ## Health

Express should be displayed.
See that the credit control area is
checked, and then click on the enter
icon

After clicking the enter button ( ) you should get this screen:

Note impact of sales order on customer’s credit

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Note that the sales order has used 59% of ## Health Express’s credit limit. Click on the back
icon ( ) until you are back at the SAP Easy Access screen.

7. Create Sales Order over the Credit Limit

If ## Health Express orders another 2 cases of NRG-B bars, this should trigger the Automatic
Credit Check logic as it would cause ## Health Express to exceed its credit limit. To check this,
create another sales order as in Step 5. To do this, follow the menu path:

Logistics Sales and Distribution Sales Order Create

The screen may already be filled. If not, enter the following:

Order Type: OR
Sales organization: ##FS
Distribution channel: DI
Division: SB
Then click on the enter icon ( ):

The following screen should appear:

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1. Enter the customer

number or Search for it
2. Enter PO Number as
HXP##A
3. Enter ##F110 for material
4. Enter 2 for Order quantity
5. Click the enter icon.

Enter the data shown above and click on the save icon ( ). The following message will pop-up:

This is a result of the settings we made for Automatic Credit Control in Step 3. We set the
reaction to C, which meant that we would get a warning message with the amount by which the
order exceeds the credit limit. Because we specified a warning message, we can save the sales
order, but it will be blocked from further processing until the credit limit problem is resolved.

Had we specified an error message for the reaction, the order could not have been saved. Click
on the enter icon ( ) on the message to save the order, then click on the back icon ( ) until you
are back at the SAP Easy Access screen.

8. Review Customer Credit Limit Again

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Now another sales order has been saved, we should check how it affects the customer’s available
credit. The menu path for credit management is:

Logistics Sales and Distribution Credit Management Master Data

Change

After confirming the customer details, you can review ## Health Express’s credit: Click on
overview and then Enter button. The output screen is below.

Note that the amount of credit used has not changed! While we saved the second order for ##
Health Express, it is blocked. Since blocked orders cannot be processed further, the SAP system
does not count them against the customer’s credit limit.

9. Review and Release the Blocked Sales Order

Usually an important task in credit management is to review all blocked orders and decide how
they should be handled. In a reasonably large company, this might be a task performed every
few hours.

To review the blocked sales order, follow the menu path:

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Logistics Sales and Distribution Credit Management Exceptions Blocked

SD documents

This will produce the following screen:

Credit control area ##FS and the account

number for ## Health Express should be
entered by default. If not, enter your dataset
number and 286 for Credit Account. Click on
the execute icon to list the blocked sales
order

You should get the following report (a wide, wide table ):

Select blocked sales order, click on release (the icon with

a green flag on it), and then click on the save icon.

After releasing the blocked order and saving the change, you should get this output:

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Use the back icon ( ) until you are back at the SAP Easy Access screen, and then recheck the
credit limit using the menu path:

Logistics Sales and Distribution Credit Management Master Data

Change

This will produce the following screen:

The customer number 286 for Health

Express should be displayed. Confirm
the credit control area (it should have
your dataset number), and then:
1. check the box Status
2. click the enter icon

The just-released sales order is now reflected in the Customer’s credit limit status as shown on
the screen below. Note that the order total is over $1000.

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Click the back icon ( ) few times until you are back at the SAP Easy Access screen.
10. Initiate Delivery
As a sales order is processed, its changing status is visible in Credit Management. To see this,
we will process one of the sales orders further. To initiate a delivery for one of ## Health
Express’s sales orders, follow the menu path:

Logistics Sales and Distribution Shipping and Transportation Outbound

Delivery Create Single Document With reference to Sales Order

This will produce the following screen:

Enter ##SP for shipping point,

and either use the default order or
search for a ## Health Express
sales order, then click on enter

After submitting the screen above, you will get the following screen:

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Click on the save icon to create the delivery

The screen above indicated that SAP is ready to create the operation, and saving the screen will
initiate delivery. A message to inform you on this should appear at the bottom of the screen once
you save the screen.

Use the back icon ( ) until you are at the SAP Easy Access screen, then check ## Health
Express’s credit status using the menu path:

Logistics Sales and Distribution Credit Management Master Data

Change

Verify the default data, then click on the enter icon ( ). It appears that the status is unchanged,
but use the pull-down menu path:

ExtrasSales value

This will produce the warning message at the bottom of the screen:

Click on the enter icon ( ) to see more details on the sales value:

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The sales value is made

up of an open sales order
and an open delivery

Note that the sales value of $1,180 is made up of an open sales order and an open delivery. Click
on the enter icon ( ) to close this window, then use the back icon ( ) until you are at the SAP
Easy Access screen.

11. Pick Order and Post Goods Issue

To further process the sales order, we can perform the picking and post the goods issue in one
step. To do this, follow the menu path:

Logistics Sales and Distribution Shipping and Transportation Outbound

Delivery Change Single Document

This will produce the following screen:

The delivery number should be

entered automatically and it may be
different than the shown. If not, use
the search icon to find it.
Then click on the enter icon
Verify that the delivery number is entered, and then click on the enter icon ( ) to get the
following screen:

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1. Click on the Picking tab

2. Enter 300 for SLoc (storage location)
3. Enter 2 for Picked Qty
4. Click on the Post goods issue icon.

At the end of the above procedure, a message should appear at the bottom of the screen saying
that the outbound delivery has been saved. Get back to SAP Easy Menu.

12. Create Billing Document

The sales order process using credit continues. Now you will create an invoice. Follow the menu
path:
Logistics Sales and Distribution Billing Billing Document Process Billing
Due List

This will produce the following screen:

Enter Sales Organization ##FS

Click on DisplayBillList

The next screen is:

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Click on block at end of line to select, and then click on Collective billing document

You should get:

Use the back icon ( ) until you are at the SAP Easy Access screen, and then check ## Health
Express’s credit status using the menu path:

Logistics Sales and Distribution Credit Management Master Data

Change

This will produce the following screen:

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The customer number for ## Health

Express should be entered as a default
value by the SAP system. Confirm the
credit control area and status setting,
and then click on the enter icon.

The processed sales order is now reflected in the Customer’s credit limit status as a receivable:

The processed sales

order is now in the
receivables category

13. Post Payment from the Customer

When you receive payment from the customer, it should free up some of the credit limit. To test
this, post payment from the customer by following the menu path:

Accounting Financial Accounting Accounts Receivable Document Entry

Incoming Payments

This will produce the following screen:

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1. Enter today’s date for document date

2. Make sure ##FS is entered for company
code, and USD is entered for the
Currency/rate
3. Enter 100000 for Account under bank data
4. Enter 590 for Amount
5. Enter 286 for Account
6. Click on Process Open Items

This will produce the following screen:

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Double-click on the USD Gross amount

until the Not assigned quantity is zero.
This assigns the payment to the open
invoice. Click on the save icon

After clicking the save icon ( ) to post the payment there should be an appropriate message at
the bottom of the screen.

Click on the back icon ( ), which will produce the following pop-up window:

Click Yes

Click Yes, and you will return to the SAP Easy Access screen.

Check ## Health Express’s credit status one last time  and select the menu path:

Logistics Sales and Distribution Credit Management Master Data

Change

This will produce the following screen:

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1. The customer number for ## Health

Express should be entered as a default
or type in 286.
2. Enter your dataset number in the
credit control area.
3. Check box Status.
4. Click on the enter icon.

The payment removes the receivable from the customer’s credit status:

Note that paying the invoice has cleared the Receivables item and adjusted the credit limit used.

To generate a report on this customer, follow the pull-down menu path:

EnvironmentReportingCredit overview

This will produce the following screen:

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Click on the execute icon to generate the overview report

Click on the execute icon ( ) to generate the overview report:

To complete this assignment, you need to print out a copy of this report and hand it in. To do
this, click on the print icon ( ) and you will get the following screen:

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Click on the Enter (continue) icon

After clicking on the continue icon, you should be back on the Document flow screen and a
message like the following should be displayed at the bottom of the screen:

Alternatively, once you get your final output (a brief table), copy the screen and paste it into a
new Microsoft Word file (use Ctrl+PrtScn keys). Type in:
 Your full name
 Your student ID
 Your log in userID

Print out the Word file and give it to your instructor as the proof that you completed this lab.

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