about sales value??

[Former Member]

Dear all expert, Suppose a customer has $ 2,000 in "open orders", $3,000 in "open delivery" and $ 8,000 in "open bill document". for a total sales value" of $13,000. The credit department has jst heard that the customer has gone bankrupt as of this mornign. what is the total of the sales value for which the credit daprtment can eliminate risk? what is the total of sales valuse for which the customer might default? please explain in details. thank you. lokisandra

Edited by: lokisandra on Aug 9, 2009 5:45 PM

[Former Member · Accepted solution]

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> Dear all expert,

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> Suppose a customer has $ 2,000 in "open orders", $3,000 in "open delivery" and $ 8,000 in "open bill document". for a total sales value" of $13,000. The credit department has jst heard that the customer has gone bankrupt as of this mornign. what is the total of the sales value for which the credit daprtment can eliminate risk? what is the total of sales valuse for which the customer might default? please explain in details.

As per your example just try to understand the different terms :

Open Orders : These orders are not completed and processed for next step either partially or fully. So considering its not at all processed then there is no RISK for the company as the materials is with you only.

Open delivery : This means either the delivery is not delivered fully or partially, again if the delivery is not completed fully then there is no risk for this. as per standard,

Open bill : Here the risk may come, as per standard we do billing after the PGI that means the goods are issued.

So your company has to claim $ 8000. and can eliminate risk of others by either rejecting the orders or cancels.

Thanks,

Raja

[Former Member · Accepted solution]

Thank you very much. Your answer is in detaiiled and I could understand it clearly. ^.

Regards,

lokisandra

[Former Member]

i have a question - isn't open delivery means that goods have already been delivered?

[Former Member]

Hi There,

> i have a question - isn't open delivery means that goods have already been delivered?

Delivery can be open at various stage, 1. If picking is not happened, 2. If PGI is not happened, 3 . If billing is not happened.

So based on these credit exposure will calculate. In your case if the delivery is PGId and not billed then your credit department has to claim that value also.

Generally this is the reason sometimes we activate the credit check also at PGI level.

Thanks,

raja

[Former Member]

hi, so whether i should deem the value of "open delivery" to be risk or not? Thank you. loki

[Former Member]

Hi,

You can exclude the value of all open sales orders, and open deliveries which are not PGI'ed.

You have to consider the value of the PGI'ed materials and all open billing items.

Regards,

Ravi Duggirala

[Former Member]

hi there, Right now i get confused again. Can anyone give me the final answer to my orignal question with a simple explanation please? Thank you. Regards, loki

[Former Member]

hello,

if u have done pgi, but have not billed the customer yet, then you need to bill the customer and consider that amt as recoverable.

so in all ur pgi deliveries (which will now be billed) and ur open billing doc's amt should be considered for recovery.

rgs,

ak

[Former Member]

Hi there, So, $2,000 in "open oreders" could be eliminated from risk. and the company has to claim $11,000? thank you loki