Static & Dynamic Credit Check

[Former Member]

Hi Gurus,

Tell me the difference between Static and Dynamic Credit Checks.

What is the difference between the Open Order Value used in Static check and the one used in Dynamic Check?

Shriniwas.

[Manoj_Mahajan78 · Accepted solution]

Hi...

Simple Credit Check 😘 Tr.Code - FD32

It Considers the Doc.Value + Open Items.

Doc.Value : Sales Order Has been saved but not delivered

Open Item : Sales Order has been saved , Delivered, Billed & Transfered to FI, but not received the payment from the customer.

Static Credit Check it checks all these doc value & check with the credit limit

1) Open Doc.Value / Sales Order Value : Which is save but not delievered

2) Open Delivery Doc.Value : Which is delivered but not billed

3) Open Billing Doc.Value : Which is billed but not posted to FI

4) Open Item : Which is transfered to FI but not received from the customer.

Dynamic Credit Check 1) Open Doc

2) Open Delivery

3) Open Billing

4) Open Items

5) Horizon Period = Eg.3Months

Here the System will not consider the above 1, 2, 3 & 4 values for the lost 3 months.

REWARD IF U FINDS THIS AS USEFUL....

Regds

MM

[former_member227476]

dear reddy

please go through this:

CREDIT MANAGEMENT

CREDIT MANAGEMENT

In normal business process, credit sales are most important. Each and every customer purchases the material on credit basis. When the business grants materials on the basis of the credit then there should be certain limit for the credit, otherwise business incurs loss if customer not paid back. so has to avoid this kind of situation SAP provided a tool called credit management/Risk management by which the business can monitor the credit policy of the customer. To look after the credit policy of the customer, one organizational unit can be defined and maintained in FI module and whose responsibility is to grant and to monitor credit of the customer that is called CREDIT CONTROL AREA.

(1) CREDIT CONTROL AREA:

It is an independent organizational unit which is responsible to grant and to monitor the credit. Credit control area can be defined for a single company code or it can be defined to number of company codes that means one credit control area can have number of company codes.

Path:

IMG

Ent.structure

Definition

Financial accounting

Define credit control area

Choose existing one, copy, rename it

Currency: assign the currency of the credit control area

Update: Ex. 000012

it is the update for open orders/delivery/billing document values. it controls when the open sales orders, deliveries and billing documents are updated. the following update groups can be assigned for updating credit related statistics in S & D.

1) Update group 000012:

if we assign this update group for credit control area then the documents are updated like below:

a) Sales orders: it increases open order value from delivery relevant schedule lines.

b) Delivery document: it reduces open order values and increases open delivery value

c) Billing documents: it reduces open delivery value and increases open billing document value.

d) Financial accounting document: it reduces open billing document value and increases open items.

2) Update group 000015:

a) Delivery document: it increases open delivery value and in increases open billing document value.

b) Financial accounting document: it reduces open billing document value and increases open items.

3) Update group 000018:

a) Sales orders: it increases open delivery value

b) Billing document: it reduces open delivery value and increases open billing document value

c) Financial accounting document: reduces open billing document value and increases open items

If system unable to update the document with specified update group then it will go to next possible update group.

Ex: if we assign update group 000012, which is in delivery document reduces open order value and increases open delivery value. If in the sales order some items are not relevant for delivery then system automatically determines update group 000018.

Fiscal year variant: ex: K4

Default data for automatically creating new customers:

If maintain the values in any one of the fields then system automatically creates credit control area date for new customers by default.

Risk Category: ex: 001

Credit limit: maintain amount (specify the credit limit of the customer)

Representative group: ex: 001

Assign credit representative group who is responsible to monitor the credit of customer.

□Check all company codes:

It specifies that this credit control area is eligible for all the company codes. save it.

(2) Assign company code to credit control area

Path: IMG

Ent. Structure

Assignment

Financial accounting

Assign company code to credit control area.

Choose our company code from position button and assign our credit control area.

(3) Assign sales area to credit control area

Path: IMG

Ent.structure

Assignment

SD

Assign sales are to credit control area

Choose our sales area and assign credit control area

(Due to this assignment the credit limit will be apples for all the materials that belong to different divisions), save it & exit.

Define groups: (FI-CO settings)

Here we assign groups and assign this groups to customer.

 IMG

 financial accounting

 accounts receivables and accounts payable

 credit management

 Credit control account defines groups.

Go to new entries and define credit groups and assign this group to credit control area.

Define Risk Categories FI-CO settings)

Here we define risk categories for the credit control area and assign the risk category to the customer

Path: same as above

Define risk categories

Go to new entries and define risk categories, 001-high risk, 002-medium risk, 003-low risk

Assign to credit control areas

Define credit representative groups:

It is a user group for particular credit control area and we assign each customer to a customer group.

Path: same as above

Go to new entries, define credit representative group and assign it to credit control area, save it & exit.

Define Credit Representatives:

Here we allocate credit representatives to credit representative group for credit control; each credit representative group is responsible for certain number of customers

We define one partner function for each credit representative group.

Ex: partner function KB, Partner type PE

Path: same as above

credit.rep.group. CCA partner function partner counter co. code personnel no. nameID.no

001 1000 kb check

This personnel number should be assigned to HR Master Record.

SD CONFIGURATION SETTINGS:

Enter settings

Path: IMG

S&D

Basic Function

Credit Management/Risk management

Credit Management/ Risk management setting

Enter setting.

a) conditions-procedure:

Choose our pricing procedure & Assign Subtotal as ‘A’-KOMP-COMPRE credit price, to net value or gross value.

b) Configurationally partner functions:

-Select sales doc .header, Click on ‘change’ icon

-Select partner determine procedure (TA) (click on partner function in procedure control button under dialog structure. & check partner function KB-credit Rep. KM-credit manger as a mandatory, as for these 2 factor belong to partner type PE (personal)

Credit Representative & credit manager are employees in the business who are responsible to monitor the credit of the customer.

c) Output types:

Here we define output type ex:-KRML-credit processing.(choose it position button select it )

*General data:-

Access sequence: 005

Check Access to conditions:

Check multiple

*Default Values:

Dispatch time: send immediately

Transmission medium: simple mail

Partner Function: KB

>G0 to VV11. Create condition Records for out put type KRML

>Specify output type KRML, Specify Key combination & select the condition tables

>Specify credit control Area, credit Group, Risk category partner function-Kb, Transmission medium: 7(simple mail)

>specify dispatch type: 0, language: EN

>Select condition line item & click on communication & maintain the data (message)

>Go back, save it & exit

This out put can be used to exchange credit information.

Maintain SD update in LIS for credit management

Path:

IMG

Logistics-General

Logistics information systems

Logistics data warehouse

Updating

Updating control

Activate update

Sales &Distribution

--Choose ‘so66’, & click on it & check day on it & check day on popup box. So that system updates open orders for credit Management daily wise.

b) DETERMINE ACTIVE RECEVIBLE FOR ITEM CATEGORY

--Choose Item category TAN & check credit active.

This indicator proposes into VOV7 of TAN.

Receivable Risk management

When sell the goods payment guarantee for the goods plays a vital role, along with credit management receivable risk management provides another effort tool guarantee agent credit risk

a) Define forms of payment guarantee

-- go to new entries & define payment guarantee form ex; z1

& payment guarantee category: 3 payment card financial document category: R-receivable Financial document type, 01letter credit payment guarantee form payment cards

b) Define & Assign payment guarantee schemes

a) Define payment guarantee schemes

Here we define payment guarantee procedure

ex;-000001-letters of credit.

000002-payment card

-Assign forms of payment guarantee. Select own payment guarantee procedure click on form s of payment grantee

--Go to new entries, specify sea no: 02 specify payment guarantee form;Z1-payment card

b) Define customer determination schemes her we define customer guarantee procedures

ex:- 0001- letter of credit

0002- Payment cards

C) Define document determination schemes

Here we define document determination. Procedure

ex:- 01-standard

0 2 – letter of credit

it will be proposed into V0V8 of ex;-or

d) Assign document scheme to order types:

- choose sales doc type or assign document payment guarantee procedure Ex: 02 so that system automatically proposes this payment guarantee procedure by default.

e) Define payment guarantee scheme determination

-- Go to new entries, specify customer, payment guarantee procedure (0002) document guarantee procedure (01) Assign payment guarantee procedure

Ex;- 000002.

Save it & exit

With this configuration setting payment card concept can be mapped.

CREDIT MANAGEMENT:-

Define Credit Rules:

Path: IMG – SALES & DISTRIBUTION – BASIC FUNCTIONS – CREDIT MANAGEMENT / RISK MANAGEMENT – CREDIT MANAGEMENT –

1) Define Credit Rules:

Here we define Sales Documents, Delivery Documents and PGI documents as those transactions deal with credit management in the same manner.

ex:- 01 – Credit group for sales order

02 – Credit group for delivery

03 – Credit group for goods issue.

2) Assign sales documents & delivery documents:

a) Credit limits check for order type:

Choose sales document type OR, & assign type of credit check that system has to carry out for the sales order.

If system has to carry out simple credit check then assign the values from ‘[] to C’

If system has to carry out automatically credit check then assign value as

‘D’ – Automatic credit check. Depending upon the value that we set here system responds when the credit limit exceed. If you set ‘C’ then system blocks the delivery for the sales order & the authorized person in the business has to take the decision whether to accept the order or to reject the order.

b) Credit limits check for delivery types:

Choose delivery document type LF & assign credit group for delivery as a 02. & assign 03 – credit group for goods issue on goods issue for credit group.

Save it & exit.

(A)CARRYING OUT SIMPLE CREDIT CHECK ( blank, A, B , C )

Go to VA01, raise the sales order.

Specify the order quantity whose value exceeds customer’s credit limit & check the status.

System gives the status that ‘Credit limit has been exceeded’

Save the sales order

System blocks the delivery (in delivery document) then the authorized person can release the block by taking transactions Ex: - VKM4 – ALL

VKM3 – sales document

VKM5 – delivery

Path: Logistics – S&D – Credit Management – S&D Documents – VKM4- All.

Specify ‘Credit Control Area’, ‘Document type’ & Select Sales document & deliveries.

Click on ‘Execute” Icon

Select ‘Sales Document’, Click on ‘Release ‘button

Click on ‘Save’

Click on ‘Lead list’

Go to VL01N

Initiate out bound delivery

Go to VF01 raise the Invoice.

Note: System doesn’t release the order level, delivery level then go to VA01 & remove the ‘Credit Limit Lock’ at header level.

- Save it & Exit.

(B) AUTOMATIC CREDIT CHECK (D)

System carries out automatic credit check by following different different checks. System gets credit exposure in automatic credit check like simple credit check. But it has the more control on the document then the document then the simple credit check.

MAINTAIN MASTER DATA (FD32)

PATH: Logistics S & D  Credit management Master data  FD32  Change.

While defining credit control area the FI/CO consultants they maintain this values in the field like credit group, credit limit & checking group, risk category.

System automatically creates credit master for new customers. In credit master we maintain data as well as system also updates certain data.

Specify customer number, credit control area,

Check overview, check address, check control data, check status, and check payments.

Overview:

System gives the overview of the customers credit history .Ex: what is the credit limit, credit exposure dunning levels etc

Address:

System gets the address from the customer master

Control data:

Specify the total limit (total credit limit)

Specify the individual limit at the company code level

Currency: INR

Status

total company cod In this screen system shows the data like credit limit and how much credit limit used what is the receivables value, sales value, customer risk category and customer credit group.

Payment history:

In this screen system shows the payment history of the customer-payer if he paid any amount. System updates this screen with payment details due to the indicator that we check in co code data section of customer master in payment transaction tab ‘check payment history’, save it.

AUTOMATIC CREDITY CONTROL OVA8)

Path: IMG SD basic functionscredit management/risk managementcredit management.

Define automatic credit control:

Go to new entries,

Specify credit control area, risk category and credit group

Document controlling (first section)

--No credit check:

We can specify the routine for credit control area ex: when system should not carry out credit check for sales document which doesn’t contain line items

Check item check:

This control specifies from where system has to carry out credit check in document. ex: as soon as the user enter the customer number in the sales order or enter the material number

Released documents are still unchecked:

Deviation in percentage:

It specifies the deviation factor for documents that have already been approved for the credit. Ex: if u specify deviation factor 10% & order for 10 boxes & the price Rs. 100/- and the credit approved for the Rs. 1000/-, then customer wants additional boxes the deviation factor exceeds 10%, and then system automatically carries out credit check again.

Number of days:

Specify the number of days after which a changed document must be rechecked for the period. It is used for credit document that have already been released by credit representative but if they have subsequently changed then system doesn’t carry out another credit check, if

The value of the changed order is not greater than the value already approved for the credit.

The current date is not greater than the original release date plus number of days that we specified here.

Credit limit seasonal factor (percentage):

specify a percentage tolerance for this limit up to which the customers credit limit may be temporarily extended or reduced ex: if us enter 5% her and if u select minus fixed then if the customer credit limit is 10,000 and it is extended by further 500/-.

From & To:

specify the dates by which the plants have to confirm the quantities. It is used for promotions.

Check in financial accounting:

Check-payer:

It indicates the credit checks against open items, oldest open item and dunning level are carried out using the open items and the dunning level of only with current payer. system doesn’t take other payers who are assigned to this credit area.

Permitted days and permitted hours:

It specifies the time period for accounts receivables summery in days & hours. System uses this value to verify whether the data in the accounts receivables summary exceed the period that we set in days & hours.

CHECKS (NEXT SECTION)

Reaction status/block

 STASTIC    OPEN ORDER  OPEN DELIVERY

 DYNAMIC   HORIZON  

 DOCUMENT VALUE   MAX.DOC. VAL. 500.000.00

 CREDIT FIELDS  

 NEXT REVIEW DATE   NUMBER OF DAYS 

 OPEN ITEM   MAX.OPEN ITEM% 

 OLDEST OPEN ITEM   DAYS OLDEST ITEM 

 HIGH DUNN. LEVEL   HIGH DUNNING.L 

 USER 1  

 USER 2  

 USER 3  

STASTIC:-

System takes open sales document, delivery, billing document, open items into consideration to carry at credit check. System gets the credit exposure with the total value document and customers credits unit. If the credit limited exceeded this system reacts according to value that we get in reaction fields

DYNAMIC:-

In dynamic credit check system gets the credit exposure the static part. But the difference between static &dynamic is, dynamic check contains horizon period ex 2 month.

To evaluation the credit check system takes for the open items, open orders, open delivery into consideration that falls below the 2 month. System doesn’t take those documents that fells after 2 months.

DOCUMENT VALUE:-

In case credit check should be carried out based on the max document value, it is relevant for new customer to when credit limit has not been defined.

CRITICAL FIELDS:-

Payment terms, fixed value date, additional value dates are considered as critical fields. If the data has been changes in those fields system has to carry out credit check.

NEXT REVIEW DATE:-

Systems automatically carry out credit check based on the next review date.

OPEN ITEMS:-

System carries out credit check, based on the open items. System takes the maximum percentage of over due items in open items and number of days when the open items are over due.

OLDEST OPEN ITEM:-

It indicates to carry our credit check based on the age of the oldest open item.

HIGHEST DUNNING LEVEL:-

System carryout credit check based on the higher dunning level.

USER1, USER2, USER3:-

These checks can be used for customer specific credit check by using user exit save it.

●Go to VOV8, & make sure that credit limited check should be ‘D’ automatic.

●Go to VA01 & raise the sales order. Check the dynamic credit check static & save the document.

●System block the sales document for delivery then release it by using transaction codes VKM5.

Message was edited by:

siva narayana

Message was edited by:

siva narayana

[Former Member]

Hi Srinivas,

There is only one difference in Static and dynamic credit check, i.e the Horizon period. Horizon period is the orders whose delivery will be done after some period.

While calculating the Credit exposure those order are not calculated, for that you need to define the horizon period(2 mth, 3 mth etc).

There is no difference in open order value in static/dynamic credit check.

Reward points it encourages me.

Rgds.

Bidhu.

[Former Member]

hi

Static Credit Limit Check

The customer's credit exposure may not exceed the established credit limit. The credit exposure is the total combined value of the following documents:

- Open orders

- Open deliveries

- Open billing documents

- Open items (accounts receivable)

The open order value is the value of the order items which have not yet been delivered. The open delivery value is the value of the delivery items which have not yet been invoiced. The open invoice value is the value of the billing document items which have not yet been forwarded to accounting. The open items represent documents that have been forwarded to accounting but not yet settled by the customer.

Dynamic Credit Limit Check with Credit Horizon

The customer's credit exposure is split into a static part; open items, open billing, and delivery values (see above), and a dynamic part, the open order value. The open order value includes all undelivered or only partially delivered orders. The value is calculated on the shipping date and stored in an information structure according to a time period that you specify (days, weeks, or months). When you define the credit check, you can then specify a particular horizon date in the future (for example: 10 days or 2 months, depending on the periods you specify). For the purposes of evaluating credit, you want the system to ignore all open orders that are due for delivery after the horizon date. The sum of the static and dynamic parts of the check may not exceed the credit limit.

Main diffrence is horizon period is releted for dynamic check not for static check

Reward if USeful

Thanx & regards

Naren..