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credit management

Former Member
0 Kudos

sir,

what is exactly harizone in dynamic credit

is it a time given for credit

or is it a time given to manufacture a product.

how it impact on credit management.

kindly give me some knowledge on this

thanking u

Accepted Solutions (0)

Answers (3)

Answers (3)

Former Member
0 Kudos

Hi,

Horizon period: horizon period is a period allocated to a customer in the customer credit master record (FD32), where in the system calculates the credit exposure or credit used against the given credit limit taking into account the outstanding sales values within that fixed period (i.e. current document processing date to the date mentioned in the horizon field).

The horizon period is fixed depending on the risk category of the customer. It is always good to have small horizon period in view of a customer, as it does not take the open items beyond the horizon period.

If a horizon date is set, only the outstanding sales values, which fall within the defined credit horizon, are taken into account when calculating the credit limit used. The date defaulted in this field is the smallest horizon specified for the customer and the risk category in Customizing for credit control. If a horizon has not been specified in Customizing, the system defaults the current date, and all outstanding sales values are taken into account for the credit limit used.

In other words, it a date set to restrict the system in checking the credit limit. That is, the system only takes in account the open orders (accepted orders), open deliveries (deliveries that fall with in the date and not billed), open receivables (invoices sent to customers before that date), open items (unconfirmed items in sales order before that date) that occur within that target date.

REWARD POINTS IF HELPFUL

Regards

Sai

Former Member
0 Kudos

Hi,

You can define any of the following credit checks for various combinations of credit control area, risk category, and document credit group:

• 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.

• Maximum Document Value

The sales order or delivery value may not exceed a specific value which is defined in the credit check. The value is stored in the currency of the credit control area. This check is useful if the credit limit has not yet been defined for a new customer. It is initiated by a risk category which is defined specifically for new customers.

• Changes Made to Critical Fields

The credit check is triggered by changes made in the document to values in any of the credit-sensitive fields. According to your Customizing settings, the system runs a check credit between changes or differences in the sales order data against the default values in the customer master record. Examples of such fields are terms of payment and fixed value dates.

• Date of Next Review

Uses the date of the next credit review as a trigger for an automatic credit check. If you process a sales order after a customer's next review date has already gone by, the system automatically carries out a credit check.

• Overdue Open Items

The relation between open items which are more than a certain number of days overdue and the customer balance may not exceed a certain percentage.

• Oldest Open Item

The oldest open item may not be more than a specified number of days overdue.

• Maximum Number of Dunning Levels Allowed

The customer's dunning level may only reach a specified maximum value.

• User-Defined Checks

If you want to carry out checks other than the standard checks, you can define your own checks in the appropriate user exits in Customizing for Sales.

Reward points if useful

Regards

Adarsh Mathur

Former Member
0 Kudos

Horizon in Dynamic credit is the time for which dynamic credit check is to be considered.

Suppose you have a credit check for a customer and the limit set is 100$.

The current credit limit exposure is 100$

Horizon is say 10 days.

Now if you create a sales order with delivey on 11th day then the order wont be blocked today since it is outside the horizon limit set.

However Finance department would run program RVKRED08 periodically to check if the sales order are reaching the credit horizon and then they reorganize the credit data. Thus Sales Order example above would get caught next day and would be blocked

Hope this helps