Credit management

[Former Member]

Hi all

Please tel me which type of credit check i can apply for a new customer : Simple or static or dynamic

Please tel the reason along with the answer

Thanks regards

Manoj

[Former Member]

Thank you all

[Former Member]

Hi,

for new customers static credit check is ideal because we dont know their financial strength and there is no payment history/buyinghistory for these customers. So, for some time if organization wanted to give credit facility, make the settings like below:

1. group all customers in high risk category and assign credit limit as per company wish.

2. propose statis credit check: in this credit check system calculates everything like from confirmed to open item. so business will be at minimum risk, because customer's credit limit includes everything like confirmed order to open item. So i suggest this type of check to new customers.

hope this will help u

Regards,'

Sadanandam Kasarla

[Former Member]

The decision of activating credit check depends on business requirement but for a new customer you will not sell more in the beginning, so it is better to set static credit check with document value only rather than going for dynamic check. If the sales document value exceeds that amount then the document will be blocked.

[Former Member]

Hi,

The simple credit check compares the payer customer master recordu2019s credit limit to thenet document value plus the value of all open items

You can define a automated credit check for any valid combination of the following data:

1)Credit control area

2)Risk category

3)Document credit group

Static Credit Limit Check

The customer's credit exposure may not exceed the established credit limit. The credit exposure is the total combined value of the following documents:

- Open orders

- Open deliveries

- Open billing documents

- Open items (accounts receivable)

The open order value is the value of the order items which have not yet been delivered. The open delivery value is the value of the delivery items which have not yet been invoiced. The open invoice value is the value of the billing document items which have not yet been forwarded to accounting. The open items represent documents that have been forwarded to accounting but not yet settled by the customer.

Dynamic Credit Limit Check with Credit Horizon

The customer's credit exposure is split into a static part; open items, open billing, and delivery values (see above), and a dynamic part, the open order value. The open order value includes all undelivered or only partially delivered orders. The value is calculated on the shipping date and stored in an information structure according to a time period that you specify (days, weeks, or months). When you define the credit check, you can then specify a particular horizon date in the future (for example: 10 days or 2 months, depending on the periods you specify). For the purposes of evaluating credit, you want the system to ignore all open orders that are due for delivery after the horizon date. The sum of the static and dynamic parts of the check may not exceed the credit limit.

Apart form that we have different checks while defining automatic credit control(OVA8)

1)Maximum Document Value

2)Changes Made to Critical Fields

3)Date of Next Review

4)Overdue Open Items

5)Oldest Open Item

6)Maximum Number of Dunning Levels Allowed

7)User-Defined Checks

Regds......

Sumit

,

[Former Member]

Hi,

Credit Check is maintained as per business requirement.

"The simple credit check compares the payer customer master recordu2019s credit limit to thenet document value plus the value of all open items " - Glynn W (Implementation SAP ERP R/3.

it is obsolete and is not used.

In case of Automatic credit check we are able to differentiate between Customers based on Risk.We can provide a various options in the Automatic credit check like Static as well Dynamic (with Horizon) etc.

Please go thru the site. there are many examples quoted.

Dany

[Former Member]

Hello Manoj,

This entirely depends on the business requirement.

Initially you can go with simple credit check as the customer is new and you dont have a credit history for him or a purchase history.

The major difference between a Dynamic and static credit check is that the dynamic credit check has a horizon date i.e., a date beyond which the documents will not be considered for credit checks but in static credit checks there is no horizon date, hence all the open documents will be considered for credit check. The documents that should be considered for credit check again depends on the update rule that you assign to the credit checks.

The settings for credit check can be done in automatic credit check using OVA8.

You can check this forum for any other clarification on credit manangement. There are instances of very good discussion on this topic.

Thanks

Swami

Edited by: Shivanand Swami on Feb 14, 2009 7:51 AM

[former_member217082]

Hi manoj

If the customer is new then you can go with simple credit check with that customer. As the customer is new and the company doesn't have the data of purchasing . But later on you can maintain automatic credit check for that customer .But for new customers simple or dynamic credit check should be maintained or not depends on the business requirement

Regards

Srinath