Credit management

[Former Member]

Hi,

PLZ explain abt Customer Credit management and how itss work.

regards,

pavan.

[Former Member]

Hi,

see This with example.

The credit management is one of the critical basic function provided by SAP R/3 SD module. This function involves integration between SD and FI

Steps in Customising.

1. Define the credit control area

2. assign the company code and sales areas to credit control area

3. define the risk categories for business partners (customers)

4. define the transaction groups and assign to the sales, delivery document

5. setup the automatic credit control by using static/dynamic methods

Ist POSSIBILITY

2ND POSSIBILITY

One company code can be assigned to only one credit control area

Credit Control Area:-

Definition : The credit control area is an organizational element defined in financial accounting. The credit control area has the following responsibilities.

1. To define the credit policy across the business

2. to define credit limit for customers/customer groups

3. take appropriate action with regard to system messages when the limits exceeding the transaction.

Menu path :

Imgu2026 enterprise structure u2026 definition u2026 select financial accounting u2026 define credit control area

Select new entries

Create credit control area u2013 Ex: VVVV

Select click on details button

INRu2026 update u2013 000012

Bacj

Select assignement

Select financial accounting

Select assign company code to credit control area

Position and select your company code

Ex : V000

Company code Credit control

V000 VVVV

Save.

Now under assignment sales and distribution

Select assign sales area to credit control area

Position and select sales area:

Sales areas Credit control areas

V000vdv1 VVVV

Assign similarly all sales areas and save.

Define the risk categories for customers

Menu path :

Imgu2026 financial accounting u2026 accounts receivables and accounts payables u2026 select credit management u2026 select credit control accountu2026 define risk categories.

Risk category Credit control Name

V1 VVVV LOW RISK CATEGORY

V2 VVVV MEDIUM RISK CATEGORY

V3 VVVV HIGH RISK CATEGORY

Customisation at the transaction level

Sales order

Delivery PGI

During the above transactions system checks the credit limit and based on automatic credit limit and based on automatic credit control setting system will take appropriate controls and issues messages if credit limit exceeds

Define the credit groups :

SAP provides 2 methods of credit check

1. simple credit check

2. automatic a.static credit limit check b.dynamic credit check

simple credit check is only used for system integrate check but otherwise never used in implementation.

Img u2026 sd.. basic functions u2026 credit management/risk management u2026 select credit management u2026 define credit groups.

Select new entries

CG (Credit Group) Document credit group

VX Order group

Vy Delivery group

Vz PGI group

Back

Assign sales documents and delivery documents click u2013 credit limit check for order types

Position and select your sales document type

ZVOR D VX

Save.

D = Automatic credit control

Back

Select assign credit limit check for delivery type

Select delivery doc type u2013 ZLF

Dlytype Description Dly cre.group GI credit group

ZLF VL std. delivery VY VZ

Update group u2013 000012

Customer u2013 BHEL

Credit limit : 1000000

S.No. Date Order Value Open order Open delivery Open billing document Account Receivables

1 31.10.06 30010 200000 200000

2 31.11.06 30075 300000 500000

3. Delivery created 30010 delivery doc. 800301 200000

300000

200000

4. 5.11.06 Created billing doc for delivery doc

200000

5. 8.11.06 2nd order 30075 dly doc 800305 -300000 300000 200000

How does the static credit limit work?

During the static credit limit check the system will add the present transaction value at the order (ex Rs.100000/-) to the

A) open order values u2013 Rs.300000/-

B) Open dly values u2013 Rs.200000/-

C) Open billing document values Ex : Rs.100000/-

D) Open A/R values Ex : Rs.200000/-

System credit limit is Rs.8.5 lakhs --- Rs.900000/- actual)

System messages : static credit limit exceeds by Rs.50000/-

Back

DEFINE AUTOMATIC CREDIT CONTROL

(Please do not make new entries instead select any combination having 1000 credit control and copy and then change the parameters suit your requirement)

After copying enter your credit control area risk category and credit group

Example

Credit Control Risk Credit

VVVV V1 VX Low risk orders

VVVV V2 VX Medium risk oder

In setting up the automatic credit control we combine the credit credit control ares risk factor and credit group.

Whetever controls selected for this combination will ensure an automatic credit control for that particular transaction. You can use only one of the methods either static credits or dynamic credit limits check for one combination.

After changing the credit control area, risk category and credit group check the box static.

Select reaction u201CCu201D if u201CCu201D activates the status block and also activate open order values and open delivery save.

To check the customization working do the following in easy access

a) Maintain credit control area in customer master (Sold to party) under sales area billing tab.

b) Maintain credit limit for customers

Menu path :

SAP menu u2026 logistics u2026 sd u2026 credit management u2026 master data u2026 select FD32 (Change)

Enter customer number u2026

Enter credit control area

Check all overview boxes

Continue

Click on forward button to 3rd screen

Total amount : Rs.800000/-(in case of group of companies)

Individual limit u2013 Rs.500000

Currency u2013 INR

Total amount : sum total of limits for all Credit control areas (if exists)

Individual limit : the particular credit control area of company code

Click forward button (Top left)

Credit limit u2026 less then the earlier

Ex : Rs.900000/- or enter Rs.1000000/-

Risk category- VI

Create an order

Click on status button top left/customer summary button

Also try on first button top left

Once create an order the update group will automatically update all the open transaction values.

Menu Path :

The status of open transaction can be find out to the sales summary or using transaction code.

SAP Menuu2026 accounting financial accounting u2026 account receivables u2026 credit management u2026 credit management information systemu2026 SALR

Credit Master sheet.

Best regards,

venkatasamy.y

[Former Member]

Hi,

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.

Tips by : Kapilaa

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.

Credit Management

With an increased number of companies running into financial difficulties, credit management within a sales organization is an important tool to manage the risk of loss of receivables. Additionally offering unique credit terms may be the only way to win a buyer from the competition. Therefore a company should not eliminate the credit risk, but rather manage the risk. To make fast and efficient credit decisions, a credit manager needs internal and external credit information, coming from different systems throughout the whole company.

SAP Credit Management checks a incoming sales order against a customer's credit limit. Due to an insufficient credit limit the order will be blocked and the credit manager can reevaluate the customers credit worthiness. The credit manager updates the credit scoring of the customer by requesting online information from an external credit information provider. The update of the scoring reveals that the creditworthiness of the customer has improved, so the credit manager can set up a higher credit limit and releases the blocked sales order.

SAP Credit Management supports the credit manager to streamline the whole process of credit check. The credit information which he needs to make the right credit decision is delivered by the credit management system and it is fully integrated into the application and the credit manager workplace. The direct integration with external credit information providers reduces the response time for online request and helps to make the decision process faster.

Credit decisions can be automated based on credit rules, so the credit manager can concentrate on the processing of exceptions. This streamlines the processing of credit checks and therefore reduces transaction costs. Due to the tight integration to other applications (e.g. CRM) the credit limit check can be processed much quicker, since all necessary information is transferred to the credit management system. Once the credit exposure information is stored in the credit management you can easily identify the overall credit risk for your company. Additionally you can classify your customers into risk classes and so concentrate your sales and marketing-activities on reliable and profitable customers.

Regards,

PM

[Manoj_Mahajan78]

Hi..

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.

Regds

MM

[Former Member]

Hi,

Pavan

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 Static and Dynamic Credit Check

Tell me the difference between Static and Dynamic Credit Checks.

What is the difference between the Open Order Value used in Static check and the one used in Dynamic Check?

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.

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

Thanks

[Former Member]

Hi

Dear pavan reddy

Please search in the forum using the search options you will find more information.

Already there are lot of threads on credit management

In the search field enter the description of what you want

regards

prashanth