One or More Credit Control Area assinged to one company code

[Former Member]

HI Guys,

In credit management , the below said customizing is done by FI.

Financial Accounting Customizing

Financial Accounting  Accounts Receivable and Accounts Payable  Credit Management  Credit Control Account  Assign Permitted Control Areas to Company Code

Can any one explain why and for what purpose “assign permitted control areas to company code”.

Because one control area can be assigned to one company code. If not please clarify.

Regards,

Sai

[Former Member]

Credit Control Area

Definition

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.

Use

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.

• 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. For more information, see the Implementation Guide 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.