Welcome to SAP SD Training Credit management Overview

AGENDA
Introduction to SAP R/3 Credit Management Concepts Credit Control Area Concepts of Update group

Different Types of Credit Check

Dynamic Credit Check Configuration

Introduction to SAP R/3 Credit Management Concepts

A time period can be defined in SAP, within which a

customer is suppose to pay up his accounts. This time period is defined via the payment term defined in the customer master record. SAP has developed a complex credit management solution that enables the maintenance of set credit limits per customer as well as the system responses in case the credit limit is exceeded.
Customer Credit details are maintained individually credit control area wise. T-Code FD32

Features of the System

You can define automatic credit limit checks according to a range of criteria and in line with your companys requirements & at what point the system carries out these checks (order, delivery, goods issue, and so on). Critical credit situation alerts the Credit Representative as soon as order processing starts. Automatically notified of critical credit situations via internal mail. Credit Management you can work in distributed systems(central FI and non-central S&D).

Credit Control Area [OB45]

CCA

Company Code 1
Sales 1 Organisation

Company Code 2

Company Code 3

Sales 3 Organisation

Sales 4 Organisation

Sales Organisation

..Credit Control Area continued

The credit control area is an organizational unit that specifies and checks a credit limit for customers . A credit control area can include one or more company codes. It is not possible to assign a company code to more than one cr. control area. Within a credit control area, the credit limits must be specified in the same currency. Credit and Risk Mgmt takes place in the CCA. For centralized credit management, you can define one CCA area for all of your CoCds. For decentralized credit management, you can define CCA for each CoCd or each group of CoCds. In the credit control area configuration important fields are Currency, Update group, Risk Category and Credit limit. This fields will be discussed in details in the following slides

CCA Configuration

Function of update Group in CCA

Credit Check happens by comparing the Credit Limit specified in the Customer Credit Information with the value of open sales order, open deliveries and open billing. The Credit Update Group controls when the values of open sales orders, deliveries, and billing documents are updated in the standard info structure. You can specify the following update groups for updating credit-related statistics: Update group 000012 Sales order Increases open order value from delivery-relevant schedule lines Delivery Reduces open order value from delivery-relevant schedule lines 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

..Function of update Group in CCA

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

Update Group Continued

If a document cannot be processed with the update group you specify, the system determines the next possible update it can carry out. For example , you select Update group 000012 which, at delivery, reduces the open order value and increases the open delivery value. Assume that one item in the order is not relevant for delivery. In this case, the system automatically determines Update group 000018 for this item. Update group 000018 increases the open delivery value for the order item. The system uses the confirmed quantity of delivery-relevant schedule lines to update the order value.

Standard Info structures Updates

Updates
S067 S066

Open deliveries Open sales Order

Open Billing

Deriving the Credit Control Area

CCAr can be derived in four ways (sequence): Company code Sales area: can be assigned to a CCAr in Customizing. Customer master (payers Sales Area segment) User exit EXIT_SAPFV45K_001

You can use this user exit to derive the CCAr from all the fields in the Sales Order header.
In the last 3 options, the CCAr must also be assigned to the CoCd.

Automatic Credit Control Combinations

(Credit Control Area)

CCA 1

CCA 2

(Credit Group)

(Risk Category)

Credit Control 1

Credit Control 2

Credit Control 3

Credit Control 4

Credit Control 5

Different Types of Credit Checks

Credit Check

Simple Credit Check

Automatic Credit Check

Dynamic Credit Check

Static Credit Check

Simple Credit Check

A simple credit limit check can be carried out when sales documents are created or changed.
The check is carried out within one credit control area. When changing a document , the check is repeated if changes regarding quantity or value are made. A sales document belongs to one credit control area depending on the allocation of the sales organization to a company code. The SAP System checks the credit limit which was granted to the customer in this credit control area. During the check, the SAP System totals the receivables, the open items from special G/L transactions and the net value of the sales order for every item of a sales document. The total is compared with the credit limit. If the limit is exceeded, the system responds in the way defined by you in the configuration menu.

Simple Credit Check

A Credit Check occurs in 3 places: 1. Sales order 2. Delivery 3. Goods Issue The response can either be 1. Error 2. Warning 3. Delivery Block

Simple Credit Check [OVAK]

Automatic Credit Check

Introduction : Credit check can be configured differently for different document types and different Customer Groups. This is required because all customers are not same , some can be trusted and some cannot , again different document types are for different business process , so different credit principles should be applicable. In Simple credit check the checking is similar for all customers and documents in the credit control area.

In automatic credit check , to create different credit controls different combinations are created by the Combination of CCA+Credit Group + Risk Category

Credit Group
Credit Group : The credit group groups together different business transactions which should be dealt with in the same manner with regard to the credit check.
You enter the credit groups when you configure the sales document types for credit management and define the automatic credit check. Default settings : The following credit groups are contained in the standard SAP R/3 System: 01 = credit group for sales order 02 = credit group for delivery 03 = credit group for goods issue

Risk Category
A customer can be classified as a High risk, Medium risk or Low risk customer. This is maintained in the Customer Credit details

Credit Control
Credit Control [OVA8] is determined by the combination of Credit Control Area [OB45] , Document Credit Group [OVA6] and Customer Risk category [OB01] .

Configuration of credit control

Types of Credit Checks

1. Static Credit Limit Check 2. Dynamic Credit Limit Check with Credit Horizon 3. 4. 5. 6. 7. Maximum Document Value Changes Made to Critical Fields Date of Next Review Overdue Open Items Oldest Open Item

8. Maximum Number of Dunning Levels Allowed 9. User-Defined Checks

Customer Credit Management [FD32]

We can assign various credit settings in relation to Cust Master Record here. The Customer Credit Master is divided into 5 views:

Overview: of the credit settings in relation to the

Customer including his Credit limit Credit exposure % of the credit limit used Payment data & Risk category

Address: as in the Customer Master Record Contd

.Customer Credit Management

Central Data: shows the Total Credit Limit the
customer can receive across all CCArs as well as the maximum limit he can receive in one CCAr. Here the selections of interest are: Current credit limit assigned maximum individual credit limit Last Information Maximum individual credit limit gives the following details: Total amount Individual limit Currency

.Customer Credit Management

Status: shows the Customers actual individual details
in a particular CCAr. This includes: Credit limit Credit exposure % of the credit limit used Risk category & Whether he is blocked due to credit or not.

Payment History: payments made by the Customer in

a particular CCAr where a CoCd is assigned.

Resetting Credit Limits

You need to reset credit limits if you have: Assigned a CoCd to a new control area Changed the assignment of CoCd to control areas Changed the currency of a control area Altered the classification of a difference reason code from disputed to non-disputed (or vice versa).

Subsequent Functions in Credit Checks

Using the credit status, you can block the following functions during order processing 1. Creating material reservations 2. Creating purchase requisitions 3. Creating production orders/planned orders 4. Creating delivery due indices 5. Printing order confirmations 6. Creating deliveries

 Subsequent Functions in Credit Checks

In Shipping you can use the credit status to block the following functions: 1. Picking 2. Packing 3. Posting goods issue 4. Printing delivery notes 5. For particularly important or urgent credit problems, you can use output control to specify that electronic mail messages are automatically sent to the appropriate credit representative.