sap fi credit management |

Credit Management4.6fi_19.1

Chapter 19Credit Management

• Credit Management is the process of establishing customer credit limits, establishing credit checking policies and monitoring Customers against those criteria. It is configured in both the Financial Accounting (FI) and Sales & Distribution (SD) modules.

• Chapter Objectives– Provide an understanding of how credit limits are set and

maintained for customers.– Provide an understanding of the hierarchical relationships

between Credit Control Area, Company Code, and Customer.

– Identify and understand the functionality of monitoring credit limits for Customers using Automated Credit Checking in FI and SD.


CustomerCustomer CustomerCustomerSales Rep.Sales Rep.

CreditCheck

CustomerCredit Limits

• Accept Order• Accept Order / Block Delivery• Refuse Order

Used to Set and Control Credit Limits for Customers

SalesOrder

CustomerCredit

Information

Check

Credit Management


Credit Control Area Credit Control Area

Client

PepsiCo.

CCAA

Company Code

123Company Code

456

Customer A Customer ACustomer ACustomer B Customer C

Example:

ClientClientCredit Credit

Control Control AreaArea

CompanyCompanyCodeCode CustomerCustomer

CCBB

Company Code

999

Credit Control Area


Step 1: Define a Credit Control Area

Step 2: Assign Company Codes to the Credit Control Area

Defining a Credit Control Area


CCAA < = $ 500,000.00CCCH < = $ 500,000.00

CCAA +CCCH < = $ 2,000,000.00

2 levels of credit limit:2 levels of credit limit:• Globally across all Credit Control AreasGlobally across all Credit Control Areas• Per Credit Control AreaPer Credit Control Area

Example:Customer A Global Limit: $2,000,000.00 Credit Control Area Limit: $500,000.00

PepsiCo.

Customer A Customer A

Client

CCAA

Credit Control Area

CCCH

Credit Control Area

123

Company Code

999

Company Code

Assigning Credit Limits Per Customer


Maximum amount that can be assigned

per Credit Control Area

Maximum sum amountthat can be assigned

across all CreditControl Areas

Highest limit alreadyassigned for an individual Credit

Control Area

Total limit alreadyassigned across allCredit Control Areas

Maintaining Credit Limits Per Customer


Postings:Postings: Increase these amountsIncrease these amountsClearings:Clearings: Decrease these amountsDecrease these amounts

Special G/LTransactions such as down payment

Receivablesfrom sales

Open Sales Orders,

Deliveries andBilling Docs. Total receivables,

Special G/L Trans. and outstanding

order value

Monitoring Credit Limits for Customer


A: WARNING MESSAGE

SALES ORDER TYPE

B: ERROR MESSAGE

C: WARNING MESSAGE WITH DELIVERY BLOCK

D: AUTOMATIC (AUTOMATED CREDIT CHECKING)

STATIC ONLY

STATIC or DYNAMIC

Check Credit Limit (Select One)

Credit Checking


+

OPEN SALES DOCUMENTS

OPEN DELIVERY DOCUMENTS

OPEN BILLING DOCUMENTS

OPEN ITEMS (A/R)

+

+CREDIT

EXPOSURE

Static Credit Check


DynamicComponent

Static Component

OPEN DELIVERY DOCUMENTS

OPEN BILLING DOCUMENTS

OPEN ITEMS (A/R)

OPEN SALES DOCUMENTWITHIN

HORIZON

+

++

Credit Exposure

Dynamic Credit Check


– STATIC CHECK– DYNAMIC CHECK– ON BASIS OF MAXIMUM DOCUMENT VALUE– WHEN CHANGES ARE MADE TO CRITICAL FIELDS– ON DATE OF NEXT INTERNAL REVIEW– ON BASIS OF OVERDUE OPEN ITEMS– AGAINST HIGHEST DUNNING LEVEL

Credit Checks

– WARNING WITH BLOCK

– ERROR

System Reaction

– WARNING

Automated Credit Checking Features


Credit Control Areas (CCA)

EURO EuropeCCCS North America

Risk Categories

RO1 High RiskRO2 Medium RiskRO3 Low Risk

Credit Representative Groups

001 Europe002 North America

Customer : 6

Credit Control Area : EURO

Risk Category : R02

CreditRepresentative Group : 001

Credit Limit : 10,000 USD

Customer Credit ManagementCustomer Credit ManagementAreaArea

Credit RepresentativeCredit Representative

Part Func. Pers.No. MailKB 012 Jones

Automated Credit CheckingConfiguration in FI


01 Sales Order02 Delivery03 Goods Issue

Document Credit Groups

OR...

Sales Document Types= Automated

CheckD

ActiveTANAGN Yes

Item Categories

X

Factors influencing credit:

Credit + Risk + DocumentControl Category Credit Area Group

Automated Credit Checking Configuration in SD


Credit Account Order Credit Value Risk Status

Customer A 351 1000.00 Medium Dynamic ChkCustomer X 567 200.00 High Dynamic ChkCustomer Y 595 50000.00 Low Static Chk

Credit Control Area CCXX Credit Rep Group US

Release the order(s)

Blocked SD Orders

Reviewing and Releasing Credit Holds


Risk Management

Risk Management

Payment Cards

Export Credit

Insurance

Letters of Credit

Credit Management

Manual Checks

Static/Dynamic

Checks+

Sales Order 101

Sold-to #6

Net value $1000

XYZ 10 500

ABC 20 500

Letter of Credit for customer 6

of $600

3. System performs a credit check against remaining $400 of the sales order.

2. The system determines that letters of credit are allowed and finds one for this customer valued at $600.

1. At sales order entry, the sytem determines what types of payment guarantees are allowed for the payer and document type.


A User Exit at the Header Level

Billing View of the Payer Master Record

The Sales Area of the transaction

Company Code of the Sales Organization

Order of checks for determining

the Credit Control Area

First

Last

Credit Control Area Determination Options


Early Warning List

• Creates a report on customers who are likely to become critical

• The Early Warning List derives its information from the A/R Summary. It is necessary to run the A/R Summary on a timely basis to ensure up to date information.

• Management can use the results of these reports to determine a course of action on clients. Automatic actions can also be set in customizing.


SD Creating SD - Documents

SD Creating SD - Documents

FI FI

Report: RFCMCRCV

Non distributed systems: CHECK

a) perfor- mance+

b)

Distributed systems: CHECK

a)

b)perfor- mance?

A/R Summary

Creates

Actual Data

CHECK

Report: RFDKLI42

Report: RFDKLI42

Early

Warning

Listvia RFC

A/R Summary in distributed and non-distributed systems


Preliminary settings are done here.

AR Summary

• It contains all credit information for an account in compact form

• Can be used for SD credit checks both in distributed and non-distributed credit management

• Increases efficiency in non-distributed systems as repeated read of open items is avoided


AR Summary - Aging Settings

A/R Summary aging settings in A/R

A/R Summary aging settings in SD


Credit Management Chapter Summary

• Key Terms– Credit Management – Credit Control Area– Credit Limit– Automated Credit Checking– Static Credit Checking– Dynamic Credit Checking– Risk Category


Credit Management Chapter Summary

• Key Terms– Document Credit Group– Risk Management– Early Warning List– A/R Summary