Credit Management Detailed PDF

S/4HANA Finance
SAP Credit Management

Customer
SAP Credit Management – Balance risk and
return with a unified global view of your customers
 Cross-enterprise and cross-system

credit evaluation and management
process, including disputes and
dunning information
 Customer scoring based on your

rules, including internal and external
factors
 Easy access to credit information for

your sales team
 Workflow for faster decision-making

once credit limits reached
0.3% The amount of accounts receivable write-offs by the 25% top-performing companies (compared
to 3.1% for the bottom 25%)
Source: ASUG Benchmarks
© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 2

Automated, integrated credit evaluation processes
with SAP Credit Management in S/4HANA
Automatic credit limit checks
Credit limits checks carried out when entering orders, deliveries, good issues
Documented Credit Decisions create a PDF document snapshot with all details for account team
Real-time customer credit exposures

Integration with Accounts Receivable for exposure details and payment behavior key figures
Reporting in Fiori Smart Business analytics
Any system can be connected
Ongoing scoring of customers

Recalculation based on credit events (new orders, payments, changes in external credit ratings, etc)
Time-based workflow triggers for periodic updates
Workflow support for credit limit requests
Traceability
Change documents, various logs, DCDs …
10% Decrease in bad debt write-offs by enforcing global proactive credit management policies
Source: SAP Performance Benchmarking

A comprehensive Portfolio for the CFO
Covering all business areas across all Finance roles
Chief Financial
SAP S/4HANA Finance - delivers functional completeness across all financial roles Officer
Head of Corporate Corporate Head of Finance Chief Compliance

VP of Finance
Reporting Treasurer Operations Officer
Treasury &
Financial Planning & Accounting & Finance Enterprise Risk &
Financial Risk
Analysis Financial Close Operations Compliance Management
Management
Strategy Development and Payments and Bank
Accounting Receivables Management Enterprise Risk Management
Translation Communications
Planning, Budgeting Cash and Liquidity Invoice Management Controls and Compliance
Entity Close
and Forecasting Management Management
Profitability and Cost Debt and Investment International Trade

Corporate Close Travel Management
Management Management Management
Monitoring and Reporting Reporting and Disclosure Financial Risk Management Real Estate Management Fraud Management
Financial Close Governance Commodity Risk Management Financial Shared Services Audit Management

SAP Receivables Management delivers a portfolio of automation
solutions for finance operations
Accounts Receivable – standard process automation
Manage all financial accounting–related aspects of customer accounts
receivable.
Credit Evaluation and Management
Embed proactive credit management in transactional processes and portfolio analysis.
Billing and E-Invoicing

Deploy a customer bill payment portal or an e-billing process.
Dispute Resolution
Clarify and resolve customer payment disputes quickly and efficiently.
Collections Management
Proactively manage customer collections and customer service.

Agenda
An Introduction to SAP Credit Management

Financial Process Integration
User Interfaces
Master Data
Credit Rules Engine
Integration with External Information Providers
Reporting & Mass Change
Changes with S/4HANA
Deployment Options
Summary

Introduction
Challenges in managing credit
 Inconsistency in credit policy: a customer is treated differently in

different business units within the same company; ineffective credit
management in distributed sales systems
 Cross-department collaboration: information needed for credit

decisions is spread out all over the company; iommunication between
sales, credit, and finance departments is very time-consuming
 Treatment of new customers: No credit history available when doing

business with new customers

How can companies improve credit risk?
 Collect internal and external information about the customer

 Evaluate and classify the customer according to this information
 Assign a credit limit according to the risk assessment of the customer
 Collect information about the credit exposure of business transactions
with this customer
 Ongoing monitoring of the credit limit usage

 Hedge business transactions for high risk customers
 Monitor early warning signs
 Plan sales and marketing activities for low risk customers
 Compare credit portfolio with companies’ strategic goals
 Share credit information with sales
* Source: Creditreform
What is SAP Credit Management?
 System to implement a company wide credit policy, even in a distributed

system landscape
 Monitor a customer’s credit exposure in one central system
 Customer scoring using own scoring rules creating new
reports and queries
 Automatically calculate and assign a customer-specific credit limit
 Interface to external credit agencies
 Web-based access to credit information for sales people
 Distribute customer master data via Master Data Management (MDM)
 Strategic credit analysis with predefined reports – centralizes all
information to speed credit decisions
 Improves productivity by automating credit decision process and focusing
on the processing of exceptions

Default probability determines customer treatment
Default Probability
30 %
Cash on delivery
Letter of credit
20 % Advance Payment
Risk Class III

Check by ext. Credit
Agency
10 %
Risk Class II
Invoice
Risk Class I
= Customer
Very Good Very Bad Score

Weighing sales and default risks
Sales with client

High
Sales
Possible Actions: Possible Actions:
• Lower sales prices • Reduce business with
• Reduce use of hedging this customer
instruments • Change dunning procedure
• … • Permanent credit
Customer A risk monitoring Customer B
Best Case Client: Customer C Possible Actions:

• Intensify Customer Relationship • Increase sales prices
• Increase use of hedging
instruments
• …
Low
Sales
Customer D
Risk of
High Risk Low Risk
default
Functional overview
Credit Limit Management Credit Information

 Implement a company wide credit policy  Interface to external credit agencies
 Manage a customer credit profile  Input parameters for scoring rules
 Central credit management in a distributed system
landscape Credit Manager Analytics
 Role-based access to credit management information and
Credit Case analysis
 Credit case for structured processing of credit limit
applications
 Track status and result of credit limit applications
Credit Rules Engine

 Categorize customers by scoring rules
 Automatically calculate and assign a customer-
specific credit limit
 Credit check rules
 Model and implement own customer credit score
cards

Credit limit management
Functions
Alert Alert
 Manages the credit profile of a customer
 Monitor credit exposure / limit in a central system Credit
Limit
 Web-Based access to customer‘s credit profile
 Rules Engine for implementing own scoring and limit rules
Credit
 Scalable platform to use in B2B and B2C Scenarios Exposure
January March
 Score customers and vendors February April
Business Benefit
 Implement company wide credit policy
 Early identification of default risk
 Reduce processing costs by automating credit decisions

Credit case
Functions
 Virtual Folder to track credit applications
 A credit case contains
– Major customer master data & credit profile – Orders
– Status – Notes
– Organizational data – Inbox
– Documents
 A credit case can be sent from user to user via SAP Workflow
Business Benefit
 Sales people can enter an application for credit limit change
 Track status of the application
 Inform sales when decision is made

Create limit application (example)
Customer exceeds
credit limit frequently
Sales assistant enters credit limit Send credit case to

application (credit case) financial analyst
Assign credit manager manually / Send workflow item to

automatically financial analyst
Send workflow item to Send back credit case

credit manager with financial data
Need more
information? yes
no
Approve / reject
credit limit application
Change limit in Close credit Send notification to

master data (manually) limit application sales assistant (workflow)

Credit limit request
Reason & Status Amount Fields
Tracking &Tracing

Creating credit limit request – one implementation option
Select Business Partner
Define details
Add note
Add Attachments
Review and save
Confirmation

Documented credit decision
 A sales order which is entered in SD gets credit checked (existing functionality)

 In case of a negative credit check the sales order gets a status “credit block” (existing functionality)
 In this case the system automatically creates a new object called “Documented Credit Decision” (DCD) which
is linked to the credit blocked sales order (new functionality)
 DCDs shall be processed by the credit analyst
 The DCD contains:
– Various attributes such as priority, responsible credit analyst
– A snapshot of the credit account in order to document the exact state of all attributes and values
– The log of the credit check
– Notes & attachments
– An approval process is supported which describes who may approve the credit decision / release the respective sales
orders
 DCDs can also be created for delivery documents (in addition to sales orders)

Documented credit decision: credit check
As usual, the credit check is executed when a sales order* is entered / changed:
The credit analyst in charge of this account (defined in SAP Credit

Management via a business partner relationship) is shown in the popup.
This allows the person who processes the sales order to contact the
credit analyst immediately – especially when processing is time critical.
* Applies for deliveries, too.

Integration to other systems
Functions
 Central credit management in a heterogeneous system landscape
 Import exposure information from various systems
 Perform credit limit check in real-time
 Integrate services from external credit agencies into the credit decision process
 Distribution of customer master data by MDM
Business Benefits
 Minimal effort for connecting SAP and non-SAP Systems and low TCO due to XI
 Seamless integration of external services increases user productivity
 Real-time credit limit check guarantees consistent credit decisions
 Provide customer credit profile to other applications (e.g. CRM)

Credit analysis
Functions
 Company-wide monitoring of credit risk
 Analysis of customer payment and order behavior
 Alert on high risk customers
 Risk structure analysis of the customer base by country /
business unit / customer group
Business Benefits
 Proactive credit management
 Identification of risks before customer becomes insolvent
 Hedging of high risk customers reduces unexpected losses
 Aim marketing and sales activities to low-risk customers
 Drive price policy by a customer risk category

Financial Process Integration
Historically, SAP had 2 solutions for credit management
“FI-AR” Credit Management SAP Credit Management

Master Data FI-AR Account SAP Business Partner
FI Data FI-AR FI-AR, FI-CA, others
Monitor Credit Exposure Only for simple system-landscape (1xFI, Distributed system-landscape (multiple FI,
1xSD); SAP system only SD and CRM systems); SAP and non-
SAP
Automated Customer Scoring, Rating, Not available Credit Rules Engine
and Limits
External Credit Information Only through partner products Any XML based credit information service
(e.g. D&B)
Workflow Only in SD Any credit event, documented credit
decisions, credit limit requests
Analysis Customer fact sheet Fiori Smart Business / HANA Live;

OLAP/OLTP (incl. BW Content)
“Single-system credit checks “Cross-system credit checks against

against a limit you determine” calculated ratings and limits”
Credit management – business process
Business Credit Information Business Value

Value Potentials Sales Department Credit Management
Benefits Provider Benefits Potentials
Reduce bad Reduce risk of bad Reduce response From 10 to 20%

debt risk 20 - 50%* debt Enter sales order time reduced time to
collect credit
Focus on reliable Check credit limit information and to
and profitable enter the data in
customers the system*
Block sales order
Faster credit- Provide up-to-date
worthiness check Check customer credit credit information
fact sheet
Accelerate the Provide ext. credit
process of information,
*Discussions with customers
checking customer e.g. credit scoring
credit limit Update internal
customer credit rating
From 20 to 40% Optimize inter-
quicker access to department Calculate new credit
information* collaboration limit
Identify the overall

Release sales order
credit risk of your
company
Deliver sales order

Enterprise services embed credit checks in other systems and keep
exposures updated
Sales Representative Credit Manager A/R Accountant
Sales and Distribution Credit Management Payment and Clearing
SAP NetWeaver
Create Deliver
Sales
order order
Post Post
Financials
invoice payment
Credit
Execute Update customer’s Update customer’s Update customer’s
Manage-
credit check credit exposure open items payment behavior
ment
Seamless order-to-cash Enterprise Services
integration

Real-time processing and integration
 Credit limits checks carried out when entering orders,

Automatic credit worthiness deliveries, good issues
checks  Any system can be connected to SAP Credit Management
 Any system can be connected to SAP Credit Management

 Immediate exposure updates
Up-to-date credit exposure for all
 Integration with Accounts Receivable
customers
– Exposure
– Payment behavior key figures
 Scores are always updated in real-time

Permanent customer scoring
 Recalculation of scoring event-driven
Traceability  Change documents, various logs, …

Automatic credit limit checks in SD
 Synchronous credit limit check when creating new sales order, delivery or the goods issue, and the
result of the credit check can lead to an automatic block of the order
 Credit check rule assigned in the credit profile drives which credit checks have to be applied, this
may include:
– Dynamic/static credit limit check
– Check for collateral, credit insurance
– Check for the maximum dunning level
– Check for the oldest open item
– Check for an order block set centrally by credit management
– Check for key figures for the customer’s Payment behavior (e.g. DSO)
 Status overview screen in the SD order using report UKM_LOGS_DISPLAY to see detailed credit
check log

Liability update from FI-AR
 Report on customer open items from FI-AR, for example,

– Business Partner
– Credit Segment
– Amount
– Due Date
 Customer open items are exported on frequent base by running report UKM_TRANSFER_ITEMS -
Transfer open items

Payment behavior summary (FI summary) update from FI-AR
 Summary of the most important financial key figures of a customer, for example,
– Dunning Level
– Dunning Amount
– Last Payment / Date
– Oldest Open Item
– Payment Behavior Index (e.g. DSO)
 Payment behavior summary (FI Summary) is exported on frequent base by running report
UKM_TRANSFER_VECTOR

User Interface
Credit manager role
A Credit Manager will usually have to fulfill tasks and duties in the following business
processes:
 Blocked Sales Orders
– Checking the list of sales orders that are blocked due to a failed credit limit check
– Reviewing the order details and check credit exposure
– Decision making –release or reject blocked orders
 Credit Limit Requests
– Receiving credit limit applications for existing or new customers
– Reviewing details of credit limit request
– Decision making – reject, approve credit limits or forward the request to other processor
 Business Partner Maintenance
– Receiving notifications via workflow on business partner maintenance
– Checking master data and performing requested changes to business partner master data, e.g. setting payment terms
– Decision making – block or unblock customers

Visualization options depend on release version
Older releases make use of Work Centers or Netweaver Business Client

Each Work Center represents a
certain
area of activity:
 Worklist
 Processing of credit limit requests
 Processing of blocked sales orders
 Processing of blocked customers

Newer releases use the documented credit decision: detail view (I)
The layout of the DCD is highly

configurable, but can contain:
Info about processor, priority,

categorization, status,…
Info about customer, sales

document and amounts,…
Timestamps, users,…
Possibility to enter notes.

Certain notes (ex.: details of
failed credit checks) are
generated by the system

Documented credit decision: detail view (II)
Possibility to switch between notes area and view on linked objects

(sales document, snap shots, attached documents, related
documented credit decisions)
The snapshot is a PDF form. It shows the state of all

relevant attributes of the credit account at the point of
time when the credit check was executed. For each
re-check an additional snapshot is created. When the
sales document is released, a snapshot is created,
too.
Consequently at a later point of time, the details as to

why a credit check was negative and under what
circumstances a sales document was released by the
credit analyst can be clearly and easily audited.

In releases before SAP HANA, Xcelsius dashboards visualize BW
data
This dashboard helps you to analyze / answer

following questions:
 What is the credit exposure to customers of various risk classes?
 What is the average credit limit utilization of customers of various
risk classes?
 How do these figures look by country?
 How do these figures look by organizational entity (= credit
segment)?
Based on this insight, following action might be taken

(examples):
 Take provisions for anticipation credit default.
 Take measures to reduce overall credit exposure in critical risk
classes if respective exposure appears to be too high.
 Try to optimize customer portfolio considering risk profile.
With SAP HANA, Fiori analytics provide real-time insight without
data replication
 Cross-enterprise and cross-

system credit evaluation and
management process, including
disputes and dunning information
 Customer scoring based on your

rules, including internal and
external factors
 Easy access to credit information

for your sales team
 Workflow for faster decision-

making once credit limits reached

Master Data
Master data in SAP Credit Management
 Credit data is is stored in SAP Business Partner. It consists of the

credit profile data and credit segment data.
 The credit profile is used for the central storage of customer data
relevant for risk assessment (scoring, risk class, external rating,
credit check rule).
 Credit segments can map various areas of a company (such as
sales area, countries, company codes). They are used for area-
specific administration of credit limits (and their utilization) and to
store information on the payment behavior of the customer. The
corresponding credit segment data is used for credit checking when
the order is created or on delivery within a company area.
 By using relationships you have the possibility of creating customer
hierarchy.

Steps for distributing master data
1
Harmonize Customizing of
Business Partners and Customers
2
Customize Master Data
Synchronization
3
Activate Business Partner Role
for Credit Management

Business partner in SAP Credit Management
Scoring Rule:
Rules that define how

a customer is scored
(e.g. industry, D&B,
legal form, country)
Credit Check Rule: External Rating from D&B
Rules that define how a customer is

credit checked (e.g. static / dynamic
check, oldest open item …)

Concept of credit segments
CreditProfile
Credit Profile Customer: 4711
Exposure HQ: 100.000€
Exposure BU1: 30.000€
Exposure BU2: 20.000€
0000 Total Exposure: 150.000€
Main Credit Segment
Limit: 160.000€
Exposure: 30.000€
0001
BU1 Credit Segment Limit: 35.000€
Exposure: 20.000€
0002
Limit: 30.000€
BU2 Credit Segment
Customizing: Credit Segment 0001 + 0002

Contribute to Main Credit Exposure

Relationships
Higher-level credit management account of …
Business Partner 4711 Total Credit Exposure:

Segment 0000 3.100.000 €
Credit Exp.: 1.000.000 €
Is the higher level
credit Business Partner 4712 Total Credit Exposure:
management Segment 0000 2.100.000 €
account of … Credit Exp.: 1.500.000 €
Is the higher level
credit
management
account of … Business Partner 4713 Total Credit Exposure:
Segment 0000 700.000 €
Credit Exp.: 700.000 €

Credit Rules Engine
Credit rules engine
 Create a scoring formula and credit limit formula by using the

formula editor. Parameters (for example, business partner data) and
functions are used as input parameters.
 One scoring formula and several credit limit formulas (for each credit
segment) are assigned to the rule for scoring and credit limit
calculation, which is assigned to each customer in the credit profile.
The risk class is determined directly from the score.
 In customizing, specific score ranges which do not overlap are
assigned to each risk class. For the check rule, the system
determines the steps which are taken to check the creditworthiness of
a customer when a sales order is created. This may include the static
check of the credit limit or acheck of the highest dunning level.
 Customer-specific process chains in SAP Credit Management can be
defined through events which trigger follow-up actions

Credit rules engine
Application
(e.g. Dispute) Credit Management
ext. / int. Credit Credit

External Rules Credit Check
Credit Decision
Provider Engine Workflow Support
Information
Credit
Credit Limit / Check
Rules
Scoring
Application
Credit (e.g. CRM, SD,
SAP Credit Limit Control FI)
Limit
Business Mgmt. Credit Credit Limit Check /
Partner Limit Open Items
Definition
Credit Analysis
Credit Management Portal

Sales Credit Financial
Calculate internal credit scoring (existing customer)
Customer Sales
Birth Date Profession Dunning Payments
Address Volume
Region Age Group Profession Score Sales Volume Score SV

... 0 – 100 0
ATL <20 Student 17 Credit Information
101 – 300 5
NYC 20-30 Student 18
Score C: 17 Score D: 3 301 – 1000 10
...
...
CreditRules
Credit Rules Engine
Engine Dunning Score DU
Credit Agency I Mapped Score A: 0 0
AAA 1 3
AAA = 50
IF (Black List Entry exists): ...
IF=(Black
S 0 List Entry exists): Paym. (days after Due) Score PY
Credit Agency II Mapped Score B: S=0
ELSE 0 0
B+ S = (2*A + 3*B + 5*C + 5*D) / 15
ELSE <5 4
B+ = 30
S = (2*A + 3*B + 5*C) / 10 <10 8
<20 15
...
Black List  Score D = SV – DU – PY = 3
Int.
Int.Scoring
Scoring SS==19.3
27.5
Formula editor
Scoring Steps Formula

• Scoring for Industry Industry = “IT” AND
Add 10 Points to the Score
Country = US
• Scoring for Credit Group
Add 15 Points to the Score
• Check negative List Parameters Functions

Termination of evaluation
Partner Ext. Rating
• Scoring for Ext. Rating Industry Age
Final Score = 25 Risk Class Annual Sales
Credit Group GRADE2RANK
Country STRING2NUM
Exception
Condition
Substitution

Scoring formula
 The scoring rules define the way a customer is scored – the result is a
score
 You define the scoring rules in the formula editor by using the following
input parameters
– SAP Business Partner – Master Data
(preconfigured field selection)
– Input parameters can be enhanced via BAdI implementation
– Result of the scoring formula:
o Score (numeric or alphanumeric)
o “Valid to” data
o Risk class determined
– A valuation log is available to clarify the results

Credit limit formula
 The credit limit formula determines how the credit limit proposed by the
system is calculated
 You define the credit limit formula in the formula editor by using
following input parameters:
– SAP Business Partner – Master Data
(preconfigured field selection)
– Input parameters can be enhanced via BAdI implementation
– Result of the credit limit data:
o Credit limit (numeric or alphanumeric)
o “Valid to” data
– A credit limit formula can be assigned for each rating procedure and credit segment
– A calculation log is available to explain the credit
limit proposal

Credit checking rules
 The check rule determines the steps that are taken to check the credit
worthiness of a customer when a sales order is created, and leads to a
credit decision about the order
 Available credit checks:
– Dynamic/static credit limit check
– Check for collateral, credit insurance
– Check for the Maximum dunning level
– Check for the oldest open item
– Check for an order block set centrally by credit management
– Check for key figures for the customer’s payment behavior (e.g. DSO)

Credit eventing
Credit Management Credit Events

 Credit limit exceeded
 Credit master data changed
Credit Credit
Limit Limit
SAP Workflow  Scoring changed
Mgmt. Control  Credit limit changed
 Ext. rating changed
master
data credit limit
changed check Follow-up Activities
Credit Eventing Trigger int. workflow
 e.g. call customer
 e.g. request cash/ down
payment
 Trigger ext. applications
 Lock customer account
 Disable service
Application
(e.g. CRM, SD)
Billing FI  Create bill

External Information Providers
Integration with external information providers
Import credit reports for business partners
External
SAP Credit
EHP1
Process updates of credit reports for a business partner Information
Management (business partner monitoring by provider)
Provider
EHP1
Search for business partners, determine unique identifier
(like DUNS number)
 Real-time XML integration of external information providers has been available

since ERP 2004
 The integration scenario is extended: Original XML Document is stored
in the document management
– Search for business partner’s unique identifier system that is
– Process monitoring updates used by the SAP Business Partner

Searching for the external ID
1. 2.
The search for an external ID can be triggered

directly out of the business partner maintenance in

SAP Consulting offers a packaged service for integrating external
information providers

Reporting and Mass Changes
Native reporting
Ad hoc reporting in SAP Credit Management

 Various reporting and analysis options are available in SAP Credit Management, such as creating warning lists, analyzing
liability data for one or more customers, or logging the last order-related credit check for a customer
 Various mass changes are available in SAP Credit Management, such as calculating the creditworthiness, risk class, or
credit limit for the first time for a number of customers

Report UKM_MASS_DSP1
UKM_MASS_DSP1 – Report for Credit Profile Data:

 Reports credit related customer master data
 Risk Class, Score, Scoring Rules (Rating Procedure), Validity date
Rules, Score, Risk class, Validity date

Report UKM_MASS_DSP2
UKM_MASS_DSP2 – Report for Credit Segment Data:

 Credit Limit (current /calculated) + validity date
 Blocked Customers in SAP Credit Management
 Customers to monitor
 Resubmission Date
 Assigned Credit Analyst
 Plus all UKM_MASS_DSP1 Fields e.g. 80% for early warning list

Report UKM_MALUS_DSP
UKM_MALUS_DSP – Report for Credit Limit Utilization

 Credit Exposure (%)
 Credit Limit Still Available / Amount by which credit limit exceeded (absolute)
 Customer Credit Group
 Credit Analyst or Group
 Resubmission Date
 Blocked Customer in SAP Credit Management

Report UKM_VECTORS
UKM_VECTORS – Payment Behavior KPIs

 Total Sales Volume in last 12 months
 Gross Total of Cleared Items with Cash Discount Not Taken
 Gross Total of Cleared Items without Cash Discount Loss
 Average Arrears with cash discount payments
 Average Arrears without cash discount payments

Report UKM_COMMITMENTS
UKM_COMMITMENTS – Display / Correction of Commitment Data

(Credit Exposure)
 Display of commitments, for example, by commitment type or credit horizon
 Detail view of commitment items (e.g. open items, open orders )
 Due date of open items and open orders
Navigation

Report UKM_BP_DISPLAY
UKM_BP_DISPLAY – Report for Master Data List

 Display of general and credit specific business partner master data
 Display of due or overdue items on a key data in a due and overdue selection grid
Reporting: Credit Limits and Exposure Due Date analysis & Payment Behavior Data

Report UKM_LOGS_DISPLAY
UKM_LOGS_DISPLAY – Protocol for incorrect credit checks and

liability updates
 Display of all conducted steps of the order-related credit check including the result of
each step
 Display of all errors that occurred during the exposure update (e.g. customer not yet created in the system) Application log
can be archived or deleted
 Protocols can be deleted or archived

Report UKM_MASS_SHOW
UKM_MASS_SHOW
 Display of extracts written by mass updates
Read extracts of credit data

Mass Changes
UKM_MASS_UPD4
 For defining the rule (check rule) in the credit management data of the business partner
UKM_MASS_UPD3
 For updating the credit limit for each credit segment
UKM_MASS_UPD2
 For updating the score of the business partner
UKM_MASS_UPD1
 For updating the external credit information for the business partner

UKM_MASS_UPD3
Update the credit limit for each segment

Changes with S/4
SAP Credit Management and SD in S/4HANA system
Simplification for a single-system landscape (1511 and higher)
Architecture – one solution Elimination of data redundancy

S/4HANA  No commitment updates are sent from FI-AR to SAP Credit
Management
 Instead, a HANA view reads the AR exposure in real-time
on the fly when exposure is required in SAP Credit
SD FI
Management
 For credit-worthiness checks
SAP HANA
 Customer reporting
Message Orchestration Web services for data updates

 SD commitments/exposures (sales orders, deliveries,  Web services with generic proxies replace PI requirement
billing documents) are updated in same LUW (Logical  Lower TCO, reduced configuration effort (no configuration in
Unit of Work) as the create / update for SD documents SOAMANAGER transaction)
 No XML messages / web services are used  For credit-worthiness checks
 No aggregates (table UKM_TOTALS not updated)  For Documented Credit Decision (DCD) creation if sales
 Lower TCO, less configuration order is blocked
 For credit vector / payment behavior updates
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 70
Historically, SAP had 2 solutions for credit management
“FI-AR” Credit Management SAP Credit Management

Master Data FI-AR Account SAP Business Partner
FI Data FI-AR FI-AR, FI-CA, others
Monitor Credit Exposure Only for simple system-landscape (1xFI, Distributed system-landscape (multiple FI,
1xSD); SAP system only SD and CRM systems); SAP and non-
SAP
and Limits
External Credit Information Only through partner products Any XML based credit information service
(e.g. D&B)
Workflow Only in SD Any credit event, documented credit
Analysis Customer fact sheet Fiori Smart Business / HANA Live;

“Single-system credit checks “Cross-system credit checks against

against a limit you determine” calculated ratings and limits”
Beginning with S/4HANA 1511, FI-AR credit checks will be
performed by base edition of SAP Credit Management*
Basic S/4HANA Credit Management
– technical foundation is SAP SAP Credit Management
Credit Management
Master Data SAP Business Partner SAP Business Partner
FI Data SAP Business Partner FI-AR, FI-CA, others
Monitor Credit Exposure Distributed system-landscape (multiple FI, Distributed system-landscape (multiple FI,
SD and CRM systems); SAP and non- SD and CRM systems); SAP and non-
SAP SAP
and Limits
External Credit Information Not available in standard Any XML-based credit information
(e.g. D&B) service
Workflow Documented credit decisions Any credit event, documented credit
Analysis Fiori Smart Business / HANA Live Fiori Smart Business / HANA Live;
*No additional license required for this basic functionality; if additional functionality required (scorecards, automatic determination of limits, workflow,
integration of external credit information, customers must license SAP Credit Management
Migration is required from FI-AR credit management to new
S/4HANA Credit Management
Technical implications SAP migration reports* Benefits to SAP Customers
Transaction FD32 (“customer Migrate credit accounts from FD32 Easier upgrade from basic credit
credit master”) will not work to UKM_BP (business partner) management functionality to advanced
anymore automated credit management
processes
Deleted tables include S066 / configuration is automatically HANA-based reporting and analytics
S067 created based on existing FI-AR
credit configuration data Future Fiori apps for Credit
Management**
Customers wanting credit checks Credit exposure in FSCM is re-
in S/4HANA must migrate to SAP build Principle of one: unified SAP solution
Credit Management means improvements can focus on
single product
Documented Credit Decision
*Planned for inclusion in 1511 release
(DCD) created for credit blocked
sales orders
**planned functionality
Enhancements made to SAP Credit Management in S/4HANA OP
1511
Orchestration simplification
1 Exposures updated with SD documents without web services, XML – lowering TCO and implementation complexity
Streamlining
2 Elimination of data redundancy and configuration steps
Delightful user experience

3 Fiori award-winning user experience with Smart Business analytical reporting

1
Orchestration of messaging
SAP Credit Management before S/4HANA OP 1511
SAP Credit Management was technically decoupled

from SAP ERP
 XML messages are exchanged to update credit
commitments (exposure) or to do credit worthiness checks
 This can be facilitated with SAP NetWeaver PI (XI) or WS-

RM (since EHP 5 for ERP6.0)
This decoupling allowed for a high degree of

flexibility in deployment scenarios; however, the
messaging orchestration added technical complexity

1
Orchestration simplification
SAP Credit Management in SAP S/4HANA Finance OP 1511
One-system landscape: SAP Credit Management and SD in S/4HANA system

SD commitments/exposures (sales orders, deliveries, billing
S/4HANA
documents) are updated in same LUW (Logical Unit of Work) as
SAP Credit Management the create / update for SD documents
SD FI No XML messages / web services are used
No aggregates (table UKM_TOTALS not updated)

SAP HANA
Lower TCO, less configuration
Mixed-system landscapes
SD FI Technology
S/4HANA S/4HANA Finance Migration to SAP Credit Management required; connectivity via PI or WS-RM
S/4HANA ERP
ERP S/4HANA Finance Use FI-AR Credit Management or SAP Credit Management; connectivity via PI or WS-RM
ERP ERP

2
Streamlining
SAP Credit Management in SAP S/4HANA Finance OP 1511
Elimination of data redundancy*

 No commitment updates are sent from FI-AR to SAP Credit Management
 Instead, a HANA view reads the AR exposure in real-time on the fly when exposure is required in SAP Credit
Management
– For credit-worthiness checks
– Customer reporting
Use of web-services with generic proxies*

 Lower TCO and reduced configuration effort and lower TCO; no configuration is needed through the
SOAMANAGER transaction in this case
– For credit-worthiness checks
– For Documented Credit Decision (DCD) creation if sales order is blocked
– For credit vector / payment behavior updates

3
Delightful user experience
SAP Credit Management in SAP S/4HANA Finance
Credit worklists bring tasks to the user

 Blocked credit orders for quick review, unblocking
 Time-based resubmissions, periodic evaluations of customer’s creditworthiness
 Processing of requests for new/extended credit limit lines
Analytics focus your attention
 Smart Business analytics for credit limit utilization
 Jump into credit controller customer cockpit to take action
Credit Worklist Credit Cockpit

Deployment Options
Architecture
Business
SAP PI
SAP PI
Sales Accounting
(FI-AR/FI-CA)
SAP Business Warehouse
SAP Credit
Management
SAP PI
Distribution
Integration Credit Analysis
Credit Case
SAP PI
SAP CRM
SAP Enterprise
Credit Limit
Portal
Management
Credit Manager
Customer
Real Time Portal

Non-SAP
System Ext. Credit
Information System
Information Flow e.g. D&B
System Requirements (FI-AR)
Required Optional
Credit BP Credit
Manager Manager
Portal Portal
BW
Credit
Content
Information 7.02
SD / FI ECC 5.0 , R/3 4.7, 4.6C

ECC 6.0
Integration + PI 2004.1
FINBASIS 6.0
Application PI Content
NW‘04 Netweaver 2004s System Usage Usage Usage

Type PI Type BI Type EP

Deployment Options – One System
One System Scenario
SAP Credit Management 6.0

(part of ECC 6.0)
SAP EP 7.0 SAP BW 7.0

SAP ERP 6.0
(ECC 6.0)
optional
SAP NetWeaver 2004s

(SAP Web AS 7.0 ABAP) *
* Includes SAP Exchange Infrastructure, BW 7.0 and EP 7.0

Deployment Options – Two Systems
One System Scenario Two System Scenario
SAP ERP 6.0

SAP Credit Management 6.0 (ECC 6.0)
(ECC 6.0) or
SAP ERP 2004
(ECC 5.0)
XI or
SAP R/3 Enterprise
SAP NetWeaver 2004s or
(SAP Web AS 7.0 ABAP and Java) SAP R/3 4.6C
or
SAP FI-CA (min. 4.64)
SAP EP 7.0 SAP BW 7.0 optional

Summary
SAP Credit Management – Business Benefits
 Control credit risk via real-time credit allocation and ongoing monitoring
 Make faster credit decisions
 Reduce transaction costs by automating the credit application process
 Link dunning & dispute information to the credit decision process
 Reduce effective DSO by reducing payment delays and bad debt
 Increase revenues with risk-free accounts (decreased rate of credit
refusals)
 Improve customer relationship by concentrating service on profitable
customers
 Meet compliance regulations (SOX 404, 409)
 Benefit from better refinancing offerings (Basel II)
 Make use of a well-defined process for credit limit applications

SAP Credit Management – Summary
Customer Challenges
 Takes too long to evaluate credit
 Inconsistent methods and policies
 No global view of exposure
 Evaluations hold up sales orders
SAP Functionality
Benefits
 Analyze risk and set policy quickly
 Faster credit decisions
 Consistent evaluation and policy
 Lower costs and resource demands
 Global view of credit exposure
 Reduce bad debt write-offs
 Automatically update exposure throughout customer
lifecycle  Reduce sales order delays

© 2015 SAP SE or an SAP affiliate company. All rights reserved.
Style guide for LoB Finance presentations
S/4HANA Finance decks
 ! Rarely use photos, prefer illustrations
(exceptions: First slide in deck and keynote presentations only SAP approved pictures)
 Less is more (don’t use full sentences, always try to use only bullets), plenty of white space, don’t overload slides
More explanations as sentences in speaker notes
 Avoid using to much black and yellow, use as well secondary colors to get a fresh look (see examples later in this
deck)
 Add a call to action on last page. For external use add vanity URL to solution (example: www.sap.com/finance )
 For newest vanity URLs see next slide
 Use max. 3 Screenshots per slide and don’t size them to small (no stamps please ;-) ).
 Frame screenshots with iPad or Computer Screen.
 Never change ration of screenshots
 Create screenshots only in 16:9 or iPad ratio (Clean Desktop before shooting, hide Windows Toolbar, …)
 Please add speaker notes to the internal version, remove speaker notes for external version!
 File:Inspect presentation
 Use Filename without spaces (space disturb building links)

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S/4HANA Finance

SAP Credit Management

 Cross-enterprise and cross-system

 Customer scoring based on your

 Easy access to credit information for

 Workflow for faster decision-making

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 2

Real-time customer credit exposures

Ongoing scoring of customers

Source: SAP Performance Benchmarking

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 3

Head of Corporate Corporate Head of Finance Chief Compliance

Profitability and Cost Debt and Investment International Trade

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 4

Billing and E-Invoicing

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 5

An Introduction to SAP Credit Management

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 6

 Inconsistency in credit policy: a customer is treated differently in

 Cross-department collaboration: information needed for credit

 Treatment of new customers: No credit history available when doing

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 8

 Collect internal and external information about the customer

 Ongoing monitoring of the credit limit usage

 System to implement a company wide credit policy, even in a distributed

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 10

Risk Class III

Very Good Very Bad Score

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 11

Sales with client

Best Case Client: Customer C Possible Actions:

Credit Limit Management Credit Information

Credit Rules Engine

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 13

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 14

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 15

Sales assistant enters credit limit Send credit case to

Assign credit manager manually / Send workflow item to

Send workflow item to Send back credit case

Change limit in Close credit Send notification to

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 16

Reason & Status Amount Fields

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 17

Review and save

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 18

 A sales order which is entered in SD gets credit checked (existing functionality)

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 19

The credit analyst in charge of this account (defined in SAP Credit

* Applies for deliveries, too.

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 21

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 22

“FI-AR” Credit Management SAP Credit Management

Analysis Customer fact sheet Fiori Smart Business / HANA Live;

“Single-system credit checks “Cross-system credit checks against

Business Credit Information Business Value

Reduce bad Reduce risk of bad Reduce response From 10 to 20%

Identify the overall

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 25

Sales Representative Credit Manager A/R Accountant

Sales and Distribution Credit Management Payment and Clearing

© 2015 SAP SE or an SAP affiliate company. All rights reserved. Internal 26

 Credit limits checks carried out when entering orders,

 Any system can be connected to SAP Credit Management