Credit management

[Former Member]

Hi

can some one give me details about credit management

Regards

Hema

[Former Member · Accepted solution]

How To Do Configuration For Credit Management

Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between.

An organizational unit that represents the area where customer credit is awarded and monitored. This organizational unit can either be a single or several company codes, if credit control is performed across several company codes. One credit control area contains credit control information for each customer.

For example, if your credit management is centralized, you can define one credit control area for all of your company codes.

If, on the other hand, your credit policy requires decentralized credit management, you can define credit control areas for each company code or each group of company codes.

Credit limits and credit exposure are managed at both credit control area and customer level. You set up credit control areas and other data related to credit management in Customizing for Financial Accounting. The implementation guide is under Enterprise Structure -> Definition or Assignment -> Financial Accounting and then Maintain credit control area. You assign customers to specific credit control areas and specify the appropriate credit limits in the customer master record.

Settings for determining the credit control area of a document. The settings of items 1 - 4 are taken into account according to their priority. The credit control area found is stored in field VBAK-KKBER.

1. Transaction OB38

Check which credit control area is assigned to the company code.

Company code:

Credit control area:

2. Transaction OVFL

Check which credit control area is assigned to the sales area.

Sales area:

Credit control area:

3. Transaction XD02 or VD02

Check which credit control area is assigned to the payer.

Payer:

Credit control area:

4. Transaction SE37

Is user exit EXIT_SAPV45K_001 being used?

5. Transaction OBZK

For the settings under items 2 - 4, field "All company codes" must be marked in Transaction

OB45, or the credit control area must be entered under the relevant company code in table

T001CM of the credit control areas allowed.

Company code:

Credit control areas allowed:

6. Settings for the credit checks

7. Transaction OVAK

Which settings do exist for the sales document type used?

Sales document:

Check credit:

Credit group:

8. Transaction OVAD

Which settings do exist for the delivery type used?

Delivery type:

Credit group for delivery:

Credit group for goods issue:

9. Transaction OB01

Credit management/Change risk category

Definition of the risk category for each credit control area. This risk category can be

assigned to a credit account by using Transaction FD32.

10. Transaction OVA8

Here, the individual credit checks for key fields

o credit control area

o risk category

o credit group are set. Take these key fields from the above settings and go to the detail

screen. In particular, check whether fields "Reaction" and "Status/block" are set

correctly. To carry out follow-up actions in case of a credit block, the credit check

status must be set (field "Status/block").

11. Transaction FD32

Credit master data for the payer of the relevant document.

Credit account:

Credit limit:

Risk category:

Currency:

12. Settings for updating the credit values Update of the credit values is required for the limit

check (static or dynamic credit limit check).

13. Transaction OVA7

Update of the credit value is active for the corresponding item type if the check box is marked. This field corresponds to

field "Active receivable" in Transaction VOV7.

Item type:

Active receivable:

14. Transaction V/08, Pricing

In the pricing procedure used for pricing, subtotal "A" must be entered in a line for

determining the credit value (mark the pricing procedure and doubleclick on "Control").

Usually, the net value plus taxes is used. This way the system is determined to use this

subtotal for credit pricing. The credit price is stored in field VBAP-CMPRE and used for

update and credit check.

You can find the used pricing procedure of the order under "Item -> Condition -> Analysis".

Pricing procedure:

Line with subtotal = 'A':

15. Transaction OB45

Which update group (field "Update") do you use in the relevant credit control area? The

default setting is "12". If you use another update group, check whether this is fine with

you. If you open an OSS message, please tell us the alternative update group.

Credit control area:

Update:

16. Transaction OMO1

Which kind of update did you choose for structure S066?

In any case, "Synchronous update (1)" has to be chosen as the kind of update.

All other settings will lead to errors.

Regards,

Rajesh Banka

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[Former Member]

REFER BELOW

SAP SD Credit Management

All business have their own credit management needs, SAP allows you to specify your own automatic credit checks based on a variety of criteria. You can also specify at which critical points in the sales and distribution cycle the system carries out these checks.

SM30 - Table/View

· V_TVTW - Define Distribution Channel

· V_TVTA_KKB - Assign sales area to credit control area

· V_T014 - FI - Define Credit Control Area

· T001CM - FI - Assign Permitted Credit Control Area to company code

OVXG - Set up Sales Areas

e.g. Sales Organization

Distribution Channel

Division

Distribution Channel

Division

FD32 - Customer Credit Management

OVAK - Define credit limit check by sales document type

· Check Credit

o A - Credit limit check and warning message

o B - Credit limit check and error message (no sales order can be created)

o C - Credit limit check and delivery block (block delivery if hit credit limit)

§ Options B and C -> used for checking open order values (when you create/change the sales order)

o D - Automatic credit control with open order values

§ More control in transaction OVA8 - Automatic credit control

§ You check for open orders and deliveries, or just open deliveries.

§ or open order values with other options

· Credit group

o Allows you to combine different sales document types for the credit limit check

VKM1 - Blocked SD Documents - Finance have to released the delivery block

OVAD - Define credit limit check by delivery order

· Whether the automatic credit check occurs at the time of delivery creation and/or goods issue

OVA7 - Define credit limit check by item category

· Set whether to include/exclude item category for credit limit check

OVA6 - Define credit group. You can groups together different business transactions which should be dealt with in the same manner with regard to the credit check.

You enter the credit groups when you configure the sales document types for credit management and define the (D - automatic credit check).

· SAP default credit groups

o 01 - credit group for sales order

o 02 - credit group for delivery

o 03 - credit group for goods issue

OVA8 - Automatic credit control - Double click on the line items

You can have the followings credit limit check: -

· Static

Depends on the customer total value of open orders, deliveries, billing documents and open items.

· Open items

No of days open

Overdue open items checks is based on the ratio of open items that are overdue by a certain number of days.

Max open items %

The customer balance must not exceed a certain percentage.

· Oldest open items

If you don't want to deliver to the customer at all when even only 1 invoice is overdue.

Tick the Check for Oldest Open Item and Set the field Days oldest item = 1.

Days oldest item

No of days allowed for overdue or payment terms.

Use of the credit check Oldest Open Item. If a user attempts to alter the order quantity of a released sales document

that was previously blocked, it would be reblocked again by the system. The system only reblocks the sales document if the new order quantity is above a certain % amount.

· Released documents are still unchecked

The preset % is whatever you want to set it as when configuring your automatic credit processing. You enter a deviation % and number of days, eg, you can set it so that an order can be changed by up to 10% within 30 days of original order entry date without it going back on credit block.

· Next Review Date

If a customer has a credit limit of 1000 USD, and you would like to restrict this credit limit only to be available in current month (say March). If the document day is in April then the credit limit is zero.

You can use the "NextReview date" and "Number of days" fields and combined it with the "Last int.review" field in customer credit master "Status" view (FD32).

VOKR - Display of work list for credit management (configure the display variant)

How To Do Configuration For Credit Management

Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between.

An organizational unit that represents the area where customer credit is awarded and monitored. This organizational unit can either be a single or several company codes, if credit control is performed across several company codes. One credit control area contains credit control information for each customer.

For example, if your credit management is centralized, you can define one credit control area for all of your company codes.

If, on the other hand, your credit policy requires decentralized credit management, you can define credit control areas for each company code or each group of company codes.

Credit limits and credit exposure are managed at both credit control area and customer level. You set up credit control areas and other data related to credit management in Customizing for Financial Accounting. The implementation guide is under Enterprise Structure -> Definition or Assignment -> Financial Accounting and then Maintain credit control area. You assign customers to specific credit control areas and specify the appropriate credit limits in the customer master record.

Settings for determining the credit control area of a document. The settings of items 1 - 4 are taken into account according to their priority. The credit control area found is stored in field VBAK-KKBER.

1. Transaction OB38

Check which credit control area is assigned to the company code.

Company code:

Credit control area:

2. Transaction OVFL

Check which credit control area is assigned to the sales area.

Sales area:

Credit control area:

3. Transaction XD02 or VD02

Check which credit control area is assigned to the payer.

Payer:

Credit control area:

4. Transaction SE37

Is user exit EXIT_SAPV45K_001 being used?

5. Transaction OBZK

For the settings under items 2 - 4, field "All company codes" must be marked in Transaction

OB45, or the credit control area must be entered under the relevant company code in table

T001CM of the credit control areas allowed.

Company code:

Credit control areas allowed:

6. Settings for the credit checks

7. Transaction OVAK

Which settings do exist for the sales document type used?

Sales document:

Check credit:

Credit group:

8. Transaction OVAD

Which settings do exist for the delivery type used?

Delivery type:

Credit group for delivery:

Credit group for goods issue:

9. Transaction OB01

Credit management/Change risk category

Definition of the risk category for each credit control area. This risk category can be

assigned to a credit account by using Transaction FD32.

10. Transaction OVA8

Here, the individual credit checks for key fields

o credit control area

o risk category

o credit group are set. Take these key fields from the above settings and go to the detail

screen. In particular, check whether fields "Reaction" and "Status/block" are set

correctly. To carry out follow-up actions in case of a credit block, the credit check

status must be set (field "Status/block").

11. Transaction FD32

Credit master data for the payer of the relevant document.

Credit account:

Credit limit:

Risk category:

Currency:

12. Settings for updating the credit values Update of the credit values is required for the limit

check (static or dynamic credit limit check).

13. Transaction OVA7

Update of the credit value is active for the corresponding item type if the check box is marked. This field corresponds to

field "Active receivable" in Transaction VOV7.

Item type:

Active receivable:

14. Transaction V/08, Pricing

In the pricing procedure used for pricing, subtotal "A" must be entered in a line for

determining the credit value (mark the pricing procedure and doubleclick on "Control").

Usually, the net value plus taxes is used. This way the system is determined to use this

subtotal for credit pricing. The credit price is stored in field VBAP-CMPRE and used for

update and credit check.

You can find the used pricing procedure of the order under "Item -> Condition -> Analysis".

Pricing procedure:

Line with subtotal = 'A':

15. Transaction OB45

Which update group (field "Update") do you use in the relevant credit control area? The

default setting is "12". If you use another update group, check whether this is fine with

you. If you open an OSS message, please tell us the alternative update group.

Credit control area:

Update:

16. Transaction OMO1

Which kind of update did you choose for structure S066?

In any case, "Synchronous update (1)" has to be chosen as the kind of update.

All other settings will lead to errors.

Dunning Process In Credit Management

1) You have a Customer which you had felt, he is doing good business and supplied material on Credit of 45 days.

2) Since this customer is good as you felt, you have not managed Credit Checks as well. So, he had comfortably reached to the fullest credit (or even more) which you can afford for any customer.

3) One fine day you got realized that, there is very bad debt with this customer and need to recover from him and till then, there will be no further supply to the customer.

4) Your company's legal department has laid a policy that, in order to recover any bad debts, like:

a) We will send a normal payment reminder.

b) In case customer doesn’t respond, we will send at least further reminder (dunning notice) may be 9 times

(9 reminders) (Dunning level) and what intervals of time (dunning frequency)

c) Still if the customer doesn’t respond for the reminders, you will file a law suit against the customer for recovering

the Payments.

d) Finally, after getting verdict, you may proceed for auction of his property or as per the order for Law.

Now in SAP, the definition of Dunning procedure is a pre-defined procedure specifying how customers or vendors are dunned.

For each procedure, the user defines

- Number of dunning levels

- Dunning frequency

- Amount limits

- Texts for the dunning notices

In SAP, you will maintain the Dunning Procedure at customer master. Referring to this your SD Team / FI Team (user team) will effect Dunning

PS: You might remembered the dunning procedure laid by Relaince Mobile, sometime back, sending street rowdies for recovering the bad debts from users. That is dunning. Remember Reliance, you will not forget dunning forever.

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