Credit management and Terms of Payment

[former_member184555]

Hi

Can anybody throw some light on the role of Terms of Payment in .Credit Management.

Thanks in advance

Ravi

[Former Member]

Dear sankar ravi,

Credit management

Purpose

Outstanding or uncollectible receivables can spoil the success of the company greatly. Credit Management enables you to minimize the credit risk yourself by specifying a specific credit limit for your customers. Thus you can take the financial pulse of a customer or group of customers, identify early warning signs, and enhance your credit-related decision-making. This is particularly useful if your customers are in financially unstable industries or companies, or if you conduct business with countries that are politically unstable or that employ a restrictive exchange rate policy.

Integration

If you are using the Accounts Receivable (FI-AR) component to manage your accounting and an external system for sales processing, Credit Management enables you to issue a credit limit for each customer. Every time you post an invoice (created in FI-AR), the system then checks whether the invoice amount exceeds the credit limit. Information functions such as the sales summary or early warning list help you to monitor the customer’s credit situation.

If you are using both the Accounts Receivable (FI-AR) component to manage your accounting and the Sales and Distribution (SD) component for sales processing, you can also use Credit Management to issue credit limits for your customers. You can make settings in Customizing to decide the scope of the check and at what stage in the process (for example, order entry, delivery or goods issue) a credit limit should take place. General information functions are also available for use with credit checks.

Features

If you are using both the SD and FI-AR components, Credit Management includes the following features:

Depending on your credit management needs, you can 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 (for example, order entry, delivery, goods issue) the system carries out these checks.

During order processing, the credit representative automatically receives information about a customer’s critical credit situation.

Critical credit situations can also be automatically communicated to credit management personnel through internal electronic mail.

Your credit representatives are in a position to review the credit situation of a customer quickly and accurately and, according to your credit policy, decide whether or not to extend credit.

You can also work with Credit Management in distributed systems; for example if you were using centralized Financial Accounting and decentralized SD on several sales computers.

Hope this helps you.

Do award points if you found them useful.

Regards,

Rakesh

P.S. you can send me a mail at my mail id rakeshsinghchauhan@gmail.com for any specific details

[former_member184555]

Hi

While calculating the open items value during automatic credit check.,

the system doesn't consider those open items which are not due for payment because of the credit period offered thro Terms of Payment( eg., 30 days due net).

I would like to have more clarity on this and would like to know whether it is correct or is there anyother functionality in this.

Ravi

[Former Member]

Your understanding of the same is correct. It doesn't take into consideration those open items which are not due for payment. That's why I had given it is used in payment data analysis and Open Items Net (OI net).

Pls run the account analysis under the Environment tab under FD33 transaction. After that run the open items you will be able to understand the same.

Hope it helps.

[Former Member]

Dear Ravi,

Are you talking about payment terms or Forms of Payment Gurantees ?

If I am correct you are talking about the role of Forms of payment guarantee, which is used in Risk Management/ Credit Management of Export Orders.

Pls refer the below link: <a href="http://help.sap.com/saphelp_47x200/helpdata/en/7f/1d85347860ea35e10000009b38f83b/frameset.htm">Risk Mgmt for receivables in SD</a>

Thanks

[Former Member]

Hi,

It is used for the payment data in credit management. Used basically in calculating the OI Net analysis in credit management.

Used in account analysis and the payments which are due.

Hope it helps.

[Former Member]

It is nothing but the term and condition of the payment

Please go to IMG > SND>business Partner>customer>billing document-->difine terms of payments

Credit limits is different thig but we need to maintain it in to customer specific funsionailty .

Points if help full

Rg ajit

[former_member184555]

Prashant,

My doubt is to know that whether the Terms of Payment has any impact on considering the OPEN ITEMS just like the Horizon period on Open Order value during dynamic credit check.

Ravi

[bcrao]

activate critical field if you want to re check for any alter in terms of payment.

or

you can also use routine- no credit check field for payment terms like 0001 inOVA8

[Former Member]

hi

I think u r talking about credit check on " changing critical fields"

the credit check will startwhen changes are made to credit relevant document fields so that they differ from the defult values proposed from the CMR