Sales order block-credit limit

[Former Member]

Hi, all,

I am having currently Dynamic Credit check implemented at my client as per settings below.

Scenario:  One customer having a credit limit say 18 lacs :, Current exposure : 75%.,Available credit limit say: 4 lacs

Now when i create sales order in VA01 for 2 lacs order is saved.

Now when i go to VA02 and increase qty ,order value now gets increased to 10 lacs which crosses available credit Limit of 4 lacs. Order goes for credit block as information of DYNAMIC CREDIT CHECK comes while saving.(Here Confirmed QTY is ZERO)

MY REQ: As credit manager releases sales order via VKM4.

              User performs availability check and Schedule lines gets confirms qty.

              User then is able to proceed with delivery & invoicing.

             HERE WE WANT TO RESTRICT ORDER PROCESSING, as Customer's credit limit is crossed,system should not allow to process Sales order.  As this increases the exposure to 200% which i guess is wrong.

Clients Ultimate Req. is that only those orders should go into credit block whose CREDIT LIMIT is exceeded.

Kindly guide how to control this above case!

Regards,

VC

[hualin_zhang]

Hi VC,

I have a question.

If you don't want to deliver the SO when it is credit blocked. Why the credit manager relase it?

Release, means you even you know that it is blocked for credit, you still want to deliver it. Isn't it ?

Reagads,

Hualin

[Former Member]

Hi Hualin,

As firstly user creates sales order in VA01 with qty say 1pc ,so Order value is within credit limit.

Now in VA02 it increases qty to 100 pc which increases Order value and crosses available credit limit.As user tries to save sales order Information message of Dynamic check exceeded comes and still order gets saved.

This order goes to credit block due to status=B is set in Order Header- field- CMGST.

As credit manager is unaware of Exceeded limit ,he releases order in VKM4 (as in VKM4 i guess we are not able to see available limit and used limit values)

We need to control for sale order processing that are over limit.

Regards,

VC

[hualin_zhang]

Hi VC,

This requirement is not reasonable.

Obviously, the credit manager is wrong here in the process.

Credit management, is to control the sales order and it's follow-on process.

If you don't want to deliver the SO, DO NOT relaese it.

Why the credit manager release SO without confirming at all whether it is really right to release it?

Credit status is the right and standard way to control the sales order processing that are over limit.
Don't let it be uselss.

Best regards,

Hualin Zhang

[Former Member]

Hi Hualin,

I agree with you,But here the case is daily lots of sales order goes to credit block.

Also its not possible to check each sales order 's credit limit exposure as we have to go to f.35 screen.

Is there  any way where credit manager while releasing in VKM4 can check for multiple orders/customers credit limit usage and availability in one screen.

One thing to clear: how system in VA02 allows to save sales order even if credit limit is crossed-dynamic credit check exceeded.

regards,

VC

[hualin_zhang]

Hi VC.

We come to the right direction now.

In VKM4, it is very easy to show the "credit value of the SO" and the "credit limit" in one screen. You can just change the layout and select the corresponding fields.

In my system, there is a layout saved with name "002". I am not sure if it is standard or not. You may check in your system.

As for the saving of SO that is credit blocked. It can be controled by customizing.

Transaction code is OVA8.

On the "Dynamic" line, you can choose the "Reaction" when the SO exceed credit limit.

A B C and D are availbale.  B and D will achieve your requirement: it will not allow user to save the SO when it exceed credit limit.

Best regards,

Hualin

[Former Member]

Hi Hualin,

On your first suggestion i tried and layout can be controlled.

But for second, i tested and found that With Reaction B or D & status=block,system very well allowed to save sales order in VA02 if qty is increased and credit limit crossed.Can we control at this stage itself so that a sales order whose credit limit is exceeding should never be allowed to be saved.And hence no point of going into credit block will come, which i guess will reduce error on Credit manager side.

Regards,

VC

[VeselinaPeykova]

You are absolutely right - at least in my sandbox (ECC6 EhP4), this is the standard behaviour: the error (prevent the order from saving for credit reasons) works only in creation mode and is converted to warning in case of document change action:

I cannot confirm at the moment whether the exact same approach is used in later versions - you will need to check that by yourself.

Unfortunately this would mean that if your client insists on implementing these changes, you will need to go for custom development (it was already suggested where you can try to add the coding).

I would strongly recommend in case you adopt this logic for raising an error in change mode, to perform extensive testing, review S066/S067 updates, test the impact on order rescheduling, ATP, EDI, route settlement (if you use DSD) etc.

I am wondering - in case there are a lot of blocked orders per day: did anybody perform analysis and understand the reason for that situation? Is it because of incorrectly set credit limits, changes to payment terms, problems with clearing resulting in overdue items or some other reason (I can see that you already have some custom logic implemented in credit management)?

Probably if you can find a way to reduce the workload for the manager - less orders to check, he will have more time and motivation to review all orders and later to release only the ones which should be processed further. If even after eliminating the master data/system issues the number of orders is still too much for a single person - then maybe it is a good idea that he starts to delegate and distribute the workload among his peers - so that he can focus only on the more tricky cases.

[hualin_zhang]

Hi VC,

Oh, Sorry, but I forgot that it is document change.

As Veselina mentioned, it is standard behavior that no error message will be issued when you change the sales order, even you set the reaction to B/D.

This is because if system issue error message in change mode, the user is not able to change the sales order. That means, the delivery can happen for the original quantity at any time.

This is a problem for business. Normally if you want to change the SO, that means your customer want to change the order quantity. Because of exceeding credit limit, the SO should not be permitted. In this case, the SO should be blocked. If system issue error message and doesn't allow the user to change the SO, the SO with original quantity will always exist there and has open status. You can not control the delivery any more. This is obviously not correct.

This behavior is added to system by a very old note 416637. The behavior has been like this since 46C.

Hope it is helpful for you.

@Veselina, Thank you.

Best regards,

Hualin

[Former Member]

Hi  Veseline,

Yes i also noticed same behavior(dynamic Check=warning in VA02) in system.

As you mentioned about analysis, its same reason due which this requirement is raised so that sales orders of those customers whose credit exposure is 100 % ,should not be allowed to invoiced.

Earlier we have checks related to open items, Next review date,Critical fields,with Reaction-C and status =block.But client removed this before 1 month and now continued with only

Oldest open items ,with Reaction = C and status = block,no of days=17.

About custom development, can you suggest the same more specific!

We have currently Availability check,route determination scenario.

Also Credit exposure gets updated here only after  confirmed Qty in sales order which user does after order is released in VKM4.

Regards,

VC

[Former Member]

Hi Hualin,

thanks for note suggested...Already reviewed it earlier!

Anyways i need to control over exposure usage.

Any order with original quantity will be consumed if it falls within credit limit.

But problem is unless and until Schedule lines are confirmed Credit exposure is not hit.And a user can create as many orders ,till availability check is not performed yet.this increases chances of over usage of credit limit.(by VA02)

Awaiting more inputs from experts!!

Thanks,

VC

[VeselinaPeykova]

The problem with error message converted to warning for credit limit would occur in case the confirmed quantity is increased for items relevant for credit exposure update.

This could happen when:

• you had partial confirmation for some items (delivery block with confirmation reset or insufficient stocks)
• you increased the quantity in the sales order manually (item quantity, new item)
• you changed an item category (tann->tan)
• you reduce the credit limit and run recreation of credit data etc.

Analysis means to determine which reason causes the subsequent credit limit blocks, so that you can target it specifically.

From business perspective - are the credit limits optimally adjusted? What about seasonal factors and the business impact on credit limits?

If the customers exceed too often the credit limits, why don't you re-classify them, so that they pay either at the time of delivery or even in advance?

In addition - I can see some valid business reasons to let an order blocked for credit limit pass through.

As to your question - I would not go for development at all, unless I have exhausted all other available options to solve the issue, but if you really insist to do that, already pointed out the most appropriate exits.

If the credit manager releases the orders without performing investigation, then it makes very little sense to have a credit control manager, because there is not much control on what gets through and there is no management taking place.

SAP can solve technical problems, but in this case getting some knowleadgeable persons in credit risk analysis as advisors or organizing workshops to revise the current company procedures for credit account processing would be way more appropriate.

Edit: did your colleagues investigate the stock shortages problem? This should not happen very often with correct setup and proper process organization.

Message was edited by: Veselina Peykova

[Former Member]

Hi,

i think that you can try to implement custom code into a credit check requirement -> VOFM.

Regards

[michael_kozlowski]

There are user exits as listed below to implement customer specific routines:

Include LVKMPFZ1

Include LVKMPFZ2

Include LVKMPFZ2

Also consider trx VOFM for defining customer specific CM requirements.

[Former Member]

Hi,

can you plz elaborate  as to which and what routines i can apply!!

As at sales order level in VA02 itself ,client wants that if any changes related to Quantity is done and if NETWR value crosses available credit limit,firstly it should not allow to save sales order.

How system will check NETWR value if quantity is still unconfirmed(Availability check is not yet performed) to credit limit availability.

Regards,

VC