Hi Anjan
It is the aim of every credit policy to reduce the risk represented by customer receivables.
Along with Credit Management, several other ‘Payment Guarantee Forms’ within the
business processes are explored. These include letters of credit and payment cards.
These ‘payment guarantee forms’ differ in the level of security they can offer and are all
integrated within Risk Management.
When a payment guarantee is used (for example, a letter of credit), the system first tries to
provide the optimum in risk minimization. If this is not possible, then Credit Management in
a second step is used to create a credit limit and therefore restrict the level of risk.
Letters of credit are used predominantly for large -scale export transactions, whereas cre dit
while Cards are more important for Retail transactions.
You create a Letter of credit by using VX11 after creating that you assign that in billing tab of sales order in risk Management Financial doc number.
keep in mind the incoterms of Letter of Credit and Sales order should be same.
Reward if helpful
Thanks & Regards
Abhishek Swarup
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