Checking and monitoring a customer’s credit limit is an important sub-process in today’s credit management and is aimed at keeping the risk of customer non-payment down to a minimum and ensuring a smooth sales process. Businesses using SAP have two powerful functions at their disposal in this regard: The SAP Credit Management allows you to define and maintain credit data, such as credit limit and risk category, in your system. The SAP Credit Check checks sales documents against the customer’s credit limit and triggers a corresponding reaction.
Automatic Credit Control in SAP
A customer’s credit exposure may not exceed their credit limit. The automatic credit control enables you to decide whether or not to accept a customer’s sales order or proceed with a delivery the moment a sales order or delivery is created in your system. The SAP credit check can take into account different checking parameters and can be carried out at various times during the sales order cycle. The system checks the credit limit used by a customer by checking the total amount of open orders, deliveries, billing documents, and FI items against the allocated credit limit.
In the Customizing, you can define what you want the system to do if a credit check comes back negative. Apart from putting the entire customer account on credit hold, there are a variety of other options for blocking individual business processes.
- Creating material reservations
- Creating purchase requisitions
- Creating production orders and planned orders
- Creating delivery due indices
- Printing order confirmations
- Creating deliveries
- Posting goods issue
- Printing delivery notes
Using specific SAP transactions, a credit representative can list, review and release blocked sales documents for further processing.
However, the SAP standard does not offer sufficient support for the review and clarification process of credit holds. This can hold up the sales process. Inefficient collaboration between sales and credit management departments and create further delays.
Processing credit-blocked sales documents is usually a core responsibility of Credit Management. In order to make a solid decision, credit representatives need key details on the customer’s credit standing and current credit exposure. At the same time, extensive dialog between Sales and Credit Management is often required to review credit holds and to discuss on how to proceed. Processing credit holds quickly and efficiently will help to bring in potential revenue from the customer and will thus benefit the entire organization.