Credit release using VKM3 or Vkm5

[Former Member]

Hi

I would like to know What credit release is. How to process credit release and what are all the configuration.

Thanks and Regards.

Subhash

[Former Member · Accepted solution]

Hello,

The credit can be blocked at the order level, delivery level and goods issue level according the the settings maintianed. If the sales order is blocked because of credit you msy release the same through VKM3.

If the credit block applied to a delivery, you will not be able to do PGI, so you need to release the credit block from the delivery through VKM5.

Prase

[Former Member · Accepted solution]

Hi

Thanks for your reply. I would like to know what type of settings that are possible. How to proceed with customization and the menu path.

Thanks and Regards.

Subhash

[former_member204513 · Accepted solution]

Dear Subhash,

If you activate or if you do the settings related to creditmanagement system will block the sales orders or deliveries with the credit block.

If the documents have credit block system will not allow them to susequent documents to remove those blocks VK3 and VKM5 transaction will be used.

To do the configuration settings about credit management

Credit management

Purpose

Outstanding or uncollectible receivables can spoil the success of the company greatly. Credit Management enables you to minimize the credit risk yourself by specifying a specific credit limit for your customers. Thus you can take the financial pulse of a customer or group of customers, identify early warning signs, and enhance your credit-related decision-making. This is particularly useful if your customers are in financially unstable industries or companies, or if you conduct business with countries that are politically unstable or that employ a restrictive exchange rate policy.

Integration

If you are using the Accounts Receivable (FI-AR) component to manage your accounting and an external system for sales processing, Credit Management enables you to issue a credit limit for each customer. Every time you post an invoice (created in FI-AR), the system then checks whether the invoice amount exceeds the credit limit. Information functions such as the sales summary or early warning list help you to monitor the customeru2019s credit situation.

If you are using both the Accounts Receivable (FI-AR) component to manage your accounting and the Sales and Distribution (SD) component for sales processing, you can also use Credit Management to issue credit limits for your customers. You can make settings in Customizing to decide the scope of the check and at what stage in the process (for example, order entry, delivery or goods issue) a credit limit should take place. General information functions are also available for use with credit checks.

How To Do Configuration For Credit Management

Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between. An organizational unit that represents the area where customer credit is awarded and monitored. This organizational unit can either be a single or several company codes, if credit control is performed across several company codes. One credit control area contains credit control information for each customer. For example, if your credit management is centralized, you can define one credit control area for all of your company codes. If, on the other hand, your credit policy requires decentralized credit management, you can define credit control areas for each company code or each group of company codes. 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.

1. 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:

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

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 status must be set (field "Status/block").

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 update and credit check. You can find the used pricing procedure of the order under "Item -> Condition -> Analysis". Pricing procedure: Line with subtotal = 'A':

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.

Difference Between Simple and Automatic Credit Check Types In automatic check, difference between static and dynamic checks.

SIMPLE CREDIT CHECK : Tr.Code - FD32 It Considers the Doc.Value + Open Items. Doc.Value : Sales Order Has been saved but not delivered Open Item : Sales Order has been saved , Delivered, Billed & Transfered to FI, but not received the payment from the customer. Eg: Customer Credit Limit is Rs.1,00,000/- Suppose Doc.Value + Open Item Value is Rs.1,10,000/- Here credit limit exceeds then system reacts. Options : A) Warning Message B) Error Message (Sales Order won't be saved) C) Error Message with Delivery Block

AUTOMATIC CREDIT CHECK : Give extra credit facilities to the particular customer. STATIC CREDIT LIMIT DETERMINATION :Checking Group + Risk Catageory + Credit Control Area. A) Credit Checking Groups : Types of Checking Groups. 01) Sales 02) Deliveries 03) Goods Issue At all the above 3 levels orders can be blocked. B) Risk Catageory : Based on the risk catageories company decide how much credit has to give to the customer. HIGH RISK (0001) : LOW CREDIT LOW RISK (0002) : MORE CREDIT MEDIUM RISK(0003) : Average Credit Static Credit Check it checks all these doc value & check with the credit limit 1) Open Doc.Value / Sales Order Value : Which is save but not delievered 2) Open Delivery Doc.Value : Which is delivered but not billed 3) Open Billing Doc.Value : Which is billed but not posted to FI 4) Open Item : Which is transfered to FI but not received from the customer. DYNAMIC CREDIT CHECK : 1) Open Doc 2) Open Delivery 3) Open Billing 4) Open Items 5) Horizon Period = Eg.3Months Here the System will not consider the above 1,2,3& 4 values for the lost 3 months Then assign the Sales Doc & Del Documents. Sales Doc.Type(OR) + credit Check(0) + Credit Group (01)

Credit Limit Check for Delivery Type : Del.Type (LF) + Del Credit Group (02) + Goods Issue Credit Group (03)

I hope this will help you,

Regards,

Murali.

Edited by: Murali Mohan.Tallapaneni on Nov 17, 2008 10:12 AM

[Former Member]

Hi

I just have a small query. If my credit check is set at order level and my order is for 15000 INR and i have received only 10000 INR from the customer, how to ensure that the delivery is made only to the extent of 10000 INR only. Is there any way to partially release a sales order. How to map the above scenario.

Regards

Sachin

[Former Member]

Hello,

Each customer is given certain amount of Credit limit .Lets say a Customer C1 has been given a credit limit of 10k and say his order value is 11K then it will be blocked ,as our friend said it can be maintained at sales order level delivery level.....uausally it will be maintained at sales order level.....

Then it needs to be approved by the credit department to proceed further, this authorization to release will be given only to people from credit department.

thank you .