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Credit and ReceivablesRisk Management
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Credit Management
Credit Management is a cross-functionalactivity between SD and
FI
SD FICREDIT
SalesPeoplewant tosell
FIPeoplewant toreducerisk
Credit is an independent function
in the SAP R/3 system
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Static vs. Dynamic Checks
Receivables
Opendelivery value
Openorder
Credit Limit
Open
order
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: 30
Credit Limit: $100,000Ttl. Commit.: $30,000
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: $100,000
Ttl. Commit.: $30,000
45
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Credit Control Area
The credit control area is the organizationalunit that specifies
and controls the credit limitfor a customer
Credit control areas can be used to createcentralized or
decentralized credit control in acompany with more than one company
code
A company code can be assigned to only onecredit control area,
but each sales area withina company code can be assigned to a
differentcredit control area
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Decentralized Credit Management
Each company code sets and monitors a credit
limitindependently
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 thesingle 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 fromEuros 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 iscarried out (order
creation, delivery creation orgoods issue)
Determine type of check
Based on:
Credit control area
Risk category
Document (credit group)
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Automatic Credit Control
Salesorganization
CompanyCode
CreditControl Area
Customer
RiskCategory
TransactionType
Credit group
When Credit is CheckedWhy Credit is CheckedWhat the system does
(warning, error)
As of release 4.0, Creditcontrol area can also beDetermined
via:
user exitspayersales area
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GuaranteedPayment
Receivables Types
LettersofCredit
Credit andProcurement
Cards Export
CreditInsurance
CreditManagement
Transactions usingthese paymentmethods/guaranteesdo not affect
TotalCommitment
