Credit management :Static credit check

[Former Member]

Hi,

I have a question -In automatic Credit Management OVA8 setting, we have check box under Checks tab, 'Static' credit check.

In the same row further there are two check boxes 'Open orders' and 'Open deliveries'. What are these meant for please?We are using update rule 000012.

If we go by SAP documents, Unless Dynamic credit check,Static credit check considers total credit exposure in which it takes into account total value of all open orders, open deliveries,open billing and open items.In that sense what these check box for as system considers all open documents for credit check? 

In which scenarios we can use these check boxes?   

I went through posts too and it says that- 'For static credit check, system takes only Open billing and Open items in to consideration by default and it is for us to decide to include/exclude 'open orders' and 'open deliveries' as per business requirement' I am not very clear on this part.

Requesting an expert guidance please.   

It would be a great help in understanding concept

Regards

sapuk

[kalyan_mokirala]

Hi,

Static credit check is evaluated based on the below formula.

Customer's credit limit- credit exposure if this value is greater than or equal to the current document value then system passes the document for credit.

Credit exposure here is open orders + open deliveries+ open bills + A/C receivables.

In static credit check we have an option of considering or excluding open orders and open deliveries.

You can exclude open orders and open deliveries in a case where the customer is a major one he does millions $ of business for the company and is a prompt payer (LOW RISK) and if customer wants demands to have credit check on the open bills and the A/C receivables we can have that implemented using static credit check by unchecking open orders and open deliveries.

Similarly if the customer is a low risk customer and want to have credit check only based on the open deliveries , open bills and A/C receivables you can have it through static credit check (Here open orders are not considered in evaluating credit check. ).

So while evaluating credit check at order or Delivery or at GI level, System may evaluate the credit based on the below formulas for the above scenarios.

Customer's credit limit- (Open bills + A/C receivables)

              (OR)

Customer's credit limit -  (open deliveries + Open bills + A/C receivables) If this value is >= current document value system passes the document for credit.

Hope this answers your question.

[Former Member]

Dear

In static credit check- System will check all the Open sales order, Open delivery order and Open invoice irrespective of period.

In Dynamic Credit Check - System will check the Open sales order,Open Delivery doc and Open invoice but the system ignores all open orders that are due for delivery beyond the four month horizon you specified.

Shibu chandran

[Former Member]

Hi sapuk,

Horizon date:- The date in which sales values of the customer will fall is called Horizon date.

Checks :- There are two types of checks in Credit management.

1. Static check:- it will check  all the sales values of the customer which fall with in a horizon date.

2. Dynamic Check:- Even after horizon date , Dynamic credit check will caliculate the credit limit for the customers

Open orders / Open deliveries:-  This has to be checked for both Dynamic and Static checks in the Credit management determination.

Regards,

Raviteja