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Credit Management

Sales & Distribution

Credit Management
Credit Management enables you to minimize the credit risk yourself by specifying a specific credit limit for your customers. You can take the financial pulse of a customer or group of customers, identify early warning signs, and enhance your credit-related decision-making. creditdecisionCredit control area is basic organizational unit that represents the area where customer credit is awarded and monitored.

Credit Management

Credit Management
Decentralized

Credit Management
Credit limit check in Order

CREDIT CONTROL BASICS


There are only three places where a credit check can occur- the occursales order, delivery and at goods issue. Documents blocked for credit by selecting Logistics SD Credit Mgmt SD Documents All ( T code VKM3). Once the document is released, you can continue processing it even though the credit limit check failed. You can use program RVKRED08 to recheck all documents blocked for credit. For example, if a customer pays his account, you want to recheck all his documents. Some documents can now be released because of the payment received. It is a good idea to schedule a background job using this program so that blocked documents are checked on regular basis. This will keep the blocked documents up to date with any changes to the account or to sales documents, such as a payment being made. If a large sales order that was holding up the credit limit is cancelled, other blocked documents can use the value that is freed up by the cancellation.

Credit Management
Transactions used in Credit Management:Management:Sales Transactions: VKM4 -All documents for release VKM3 -Sales document documents for release VKM5 -Delivery documents for release VKM2 -Released Finance transactions: FD10N - Customer balance display FBL5N - Customer line item display F-28 - Reset customers credit limit F.31 - Overview: customer's financial analysis or line items. F.33 - Brief overview F.32 - Missing credit data FCV3 - Early warning list FDK43 - Master data list. S_ALR_87012215 - Displays changes to credit management. S_ALR_87012218 - Credit master sheet

Credit Management
Credit Overview is used for reporting credit limit and exposure for various customers in CCA. T. code F.31

CONFIGURATIONCONFIGURATION- 1
Credit limits and credit exposure are managed at both credit control area and customer level. You set up credit control areas and other data related to credit management in Customizing for Financial Accounting. The implementation guide is under Enterprise Structure -> Definition or Assignment -> Financial Accounting and then Maintain credit control area. You assign customers to specific credit control areas and specify the appropriate credit limits in the customer master record. Settings for determining the credit control area of a document. The settings of items 1 - 4 are taken into account according to their priority. The credit control area found is stored in field VBAK-KKBER. VBAK1. Transaction OB38 Check which credit control area is assigned to the company code. Company code: Credit control area: 2. Transaction OVFL Check which credit control area is assigned to the sales area. Sales area: Credit control area:

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3. Transaction XD02 or VD02 Check which credit control area is assigned to the payer. Payer: Credit control area: 4. Transaction SE37 Is user exit EXIT_SAPV45K_001 being used? 5. Transaction OBZK For the settings under items 2 - 4, field "All company codes" must be marked in Transaction OB45, or the credit control area must be entered under the relevant company code in table T001CM of the credit control areas allowed. Company code: Credit control areas allowed: 6. Settings for the credit checks

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7. Transaction OVAK Which settings do exist for the sales document type used? Sales document: Check credit: Credit group: 8. Transaction OVAD Which settings do exist for the delivery type used? Delivery type: Credit group for delivery: Credit group for goods issue: 9. Transaction OB01 Credit management/Change risk category Definition of the risk category for each credit control area. This risk category can be assigned to a credit account by using Transaction FD32. 10. Transaction OVA8 Here, the individual credit checks for key fields o credit control area o risk category o credit group are set. Take these key fields from the above settings and go to the detail screen. In particular, check whether fields "Reaction" and "Status/block" are set correctly. To carry out follow-up actions in case of a credit block, the credit check followstatus must be set (field "Status/block").

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11. Transaction FD32 Credit master data for the payer of the relevant document. Credit account: Credit limit: Risk category: Currency: 12. Settings for updating the credit values Update of the credit values is required for the limit check (static or dynamic credit limit check). 13. Transaction OVA7 Update of the credit value is active for the corresponding item type if the check box is marked. This field corresponds to field "Active receivable" in Transaction VOV7. Item type: Active receivable: 14. Transaction V/08, Pricing In the pricing procedure used for pricing, subtotal "A" must be entered in a line for determining the credit value (mark the pricing procedure and doubleclick on "Control"). Usually, the net value plus taxes is used. This way the system is determined to use this subtotal for credit pricing. The credit price is stored in field VBAP-CMPRE and used for VBAPupdate and credit check. You can find the used pricing procedure of the order under "Item -> Condition -> Analysis". Pricing procedure: Line with subtotal = 'A':

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15. Transaction OB45 Which update group (field "Update") do you use in the relevant credit control area? The default setting is "12". If you use another update group, check whether this is fine with you. If you open an OSS message, please tell us the alternative update group. Credit control area: Update: 16. Transaction OMO1 Which kind of update did you choose for structure S066? In any case, "Synchronous update (1)" has to be chosen as the kind of update. All other settings will lead to errors.

CONFIGURATIONCONFIGURATION- 6
Customizing for Credit Control Define Credit Control Area SPRO > Enterprise Structure > Definition > Financial Accounting > Define Credit Control Area

CONFIGURATIONCONFIGURATION- 7
Assigning Company Codes to a Credit Control Area SPRO > Enterprise Structure > Assignment > Financial Accounting > Assign Company Code to Credit Control Area

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Assigning Sales Area to a Credit Control Area SPRO > Enterprise Structure > Assignment > Sales and Distribution > Assign Sales Area to Credit Control Area

Types of credit check


The system can use many different automatic credit management checks such as: A static check A dynamic check A check on the total document value A critical field check A next review date check A check on open items A check on oldest open item A check on highest permitted dunning level

Simple credit check


The simple credit check compares the payer customer master record's credit limit to the net document value plus the value of all open items. In case the value of the document and open items is more than the credit limit: System may respond with a warning message in the sales order [OR] Warning message and a delivery block [OR] Error message, which will cause the document not to be saved. This setting for a simple credit check is set at the document type level: SPRO > Sales and Distribution > Basic Functions > Credit Management/Risk Management > Simple Credit Limit Check We can assign the credit limit check to the sales document type, using the options: A - Run simple credit limit check and warning message B - Run simple credit limit check and error message C - Run simple credit limit check and delivery block

Automatic credit management-1 managementIt is used to carry out the different credit checks including the static and dynamic checks. For this, we separate the sales document types, the delivery document types, and goods issue into specific credit groups. Defining Customer Risk Category (FI) SPRO > Financial Accounting > Accounts Receivable and Accounts Payable > Credit Management > Credit Control Account > Define Risk Categories Example: If we have 5 risk categories and 2 document credit groups, we have 10 credit management strategies to configure.

Automatic credit management-2 managementDefining Credit Groups SPRO > Sales and Distribution > Basic Functions > Credit Management/Risk Management > Credit Management > Define Credit Groups

We need to assign a value in the pricing procedure that defines the amount used for credit check. For this, subtotal A must be entered in the control data of Pricing Procedure. The credit price is stored in field VBAP-CMPRE and is used for the update and the credit check. VBAP-

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Automatic credit management-4 managementAssigning Sales Documents and Delivery Documents SPRO > Sales and Distribution > Basic Functions > Credit Management/Risk Management > Credit Management > Assign Sales Documents and Delivery Documents > Credit Limit Check for Order Types > Credit Limit Check for Delivery Types

Automatic credit management-5 managementDefining Automatic Credit Control The control of the automatic credit management is based on the combination of the risk category and the document credit group. SPRO > Sales and Distribution > Basic Functions > Credit Management/Risk Management > Credit Management > Define Automatic Credit Control

Automatic credit management-6 managementStatic Credit Limit Check: CREDIT LIMIT = Open Sales Orders + Open Deliveries (Not Yet Invoiced) + Open Billing Documents (Not Yet Passed On To Accounting) + Billing Documents (Passed On To Accounting, But not yet paid by the customer) Dynamic Credit Check: CREDIT LIMIT = Open Sales Orders Not Yet Delivered + Open Deliveries (Not Yet Invoiced) + Open Billing Documents (Not Yet Passed On To Accounting) + Billing Documents (Passed On To Accounting, But Not Yet Paid By The Customer) In addition to this, the dynamic check has attached time period (called the CREDIT HORIZON). This controls that the system excludes the sales orders in the total of outstanding items that are due for delivery outside the credit horizon. We may also require additional checks to be performed: 1. Credit check when the maximum document value is exceeded 2. Credit check when changing critical fields 3. Credit check at the time of the next internal check 4. Credit check on the basis of overdue open items 5. Credit check on the basis of oldest open items 6. Credit check against the maximum allowed dunning levels 7. Customer specific credit checks

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Automatic credit management-8 managementEach automatic credit control must be assigned an update group. This is done while defining Credit Control Area. We can have the following Update groups: Update group 000012 Sales Order, Increases open order value from delivery-relevant schedule lines deliveryDelivery, Reduces open order value from delivery-relevant schedule lines, Increases deliveryopen delivery value Billing Document, Reduces open delivery value, Increases open billing document value, Financial Accounting Document, Reduces open billing document value, Increases open items Update group 000015 Delivery,Increases open delivery value, Increases open billing document value Financial Accounting Document, Reduces open billing document value, Increases open items Update group 000018 Sales Order, Increases open delivery value Billing Document, Reduces open delivery value, Increases open billing document value Financial Accounting Document, Reduces open billing document value, Increases open items

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Automatic credit management-10 managementCustomer Credit Management Maintaining credit limit for a customer. SAP Menu > Accounting > Financial Accounting > Customers > Credit Management > Master Data > Change FD32