Hello Satish,
Credit Management is a process in which Company sells a product / service to customers on credit basis. The company collects payments from customer at a later time , after sale of product. The amount of credit fixed by a company for a customer is called credit limit. The customer can Purchase the product from a company within the credit limit, and when the credit limit is crossed, order is blocked by the system.
Types of credit checks:
- Simple credit check: Simple Credit Check = Value of all Open Items + Value of the Current Sales Order. Note: Open Items are invoices for which company has not received payment.
2. Automatic Credit check - Automatic credit check allows you to evaluate a transaction based on the credit rating of the customer, and ensures appropriate further processing of the transaction document. The credit limit check starts either automatically when you save a document or by selecting Check Credit. Automatic credit checks are of 2 types-
- Static Credit Check (Check for credit limit against total value of open sales order + open delivery not invoiced + billing value of open billing document not passed at accounting ).
- Dynamic Credit Check (Check for credit limit against open sales order not yet delivered + open delivery not invoiced + billing value of open billing document not passed at accounting + passed but not paid bill amount).
Hope this will clarifys your dout.
Thanks,
Pankaj
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