1 credit and receivables risk management. 2 credit management credit management is a...
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Credit and ReceivablesRisk Management
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Credit Management
Credit Management is a cross-functional activity between SD and FI
SD FICREDIT
SalesPeoplewant tosell
FI Peoplewant toreducerisk
Credit is an independent functionin the SAP R/3 system
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Credit/Risk Process
Credit Management SD, FI
Cust: Health ExpressRisk: MediumCredit Limit: $10,000Ttl. Commit: $6,000
Order: 5923Order Amount: $5,000 Credit Limit ExceededBlock orderE-mail to credit rep. (opt.)
Blocked document listor E-mail (opt.)
Review situationRelease order
Pick, pack & ship orderBill Customer
Credit control (blocks) can be applied at order entry,delivery creation or goods issue
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Total Commitments
Receivables
Specialcommitments
Openbilling value
Opendelivery value
Openorder value Credit Limit
Unpaid bills
Short payments, down payments
Not transferred to FI (optional)
Delivery items not yet billed
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Static vs. Dynamic Checks
Receivables
Opendelivery value
Openorder
Credit Limit
Openorder
Openorder
Receivables
Opendelivery value
Openorder
Openorder
Openorder
Credit HorizonStatic Check
Dynamic Check
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Other Checks: Open Items
Health Horizons ReceivablesDays in arrears Amount
10 $4,00017 $6,00028 $5,000
33 $10,00046 $5,000
Health Horizons
Max. open items: 20%Number of days: 30Credit Limit: $100,000Ttl. Commit.: $30,000
<30>30
$15,000$30,000
= 50% > 20%
Why Total Commitment and not credit limit?
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Other Checks: Oldest Open Date
Health Horizons ReceivablesDays in arrears Amount
10 $3,00017 $6,00028 $5,00033 $10,000
46 $5,000
Health Horizons
Oldest Open Item: 45Credit Limit: $100,000Ttl. Commit.: $30,000
45
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Other Checks: Next Review Date
Health Horizons Order
Date: 6/6/04Amount: $3,000
Health Horizons
Next check date: 6/01/04Number of days: 10Credit Limit: $100,000Ttl. Commit.: $30,000
Health Horizons Order
Date: 6/14/04Amount: $4,000
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Credit Control Area
The credit control area is the organizational unit that specifies and controls the credit limit for a customer
Credit control areas can be used to create centralized or decentralized credit control in a company with more than one company code
A company code can be assigned to only one credit control area, but each sales area within a company code can be assigned to a different credit control area
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Decentralized Credit Management
Each company code sets and monitors a credit limit independently
Credit Control Area 1
Company Code 1
Sales Org.1
Health ExpressLimit: $50,000
Credit Control Area 2
Company Code 2
Sales Org.2
Health ExpressLimit: $100,000
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Centralized Credit Management
Transactions with each company code apply to the single credit limit set for the single credit control area
Credit Control Area 1
Company Code 1
Sales Org.1
Limit: $150,000
Company Code 2
Sales Org.2
Health ExpressHealth Express
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Exchange Rates
Receivables for Company Code 2 are converted from Euros to US Dollars when credit is checked
Credit Control Area 1Currency: USD
Company Code 1Currency: USD
Sales Org.1
Limit: $150,000
Company Code 2Currency: EU
Sales Org.2
Health ExpressHealth Express
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Automatic Credit Control
Determine points at which credit check is carried out (order creation, delivery creation or goods issue)
Determine type of check Based on:
Credit control area Risk category Document (credit group)
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Automatic Credit Control
Salesorganization
CompanyCode
Credit Control Area
Customer
RiskCategory
TransactionType
Credit group
When Credit is CheckedWhy Credit is CheckedWhat the system does (warning, error)
As of release 4.0, Credit control area can also be Determined via:
user exitspayersales area
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GuaranteedPayment
Receivables Types
Letters of
Credit
Credit andProcurement
Cards ExportCredit
Insurance
CreditManagement
Transactions usingthese payment methods/guaranteesdo not affect Total Commitment
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