(Date: 03-09-2021)

CREDIT MANAGEMENT:
IT IS THE PROCESS OF MANAGING THE CREDIT LIMIT OF CUSTOMERS. WHEN EVER
CUSTOMERS CREDIT LIMIT EXCEEDS THEN THE CREDIT DEPARTMENT BLOCKS THE TRANSACTION.

ROLES AND RESPONSIBILITIES OF CREDIT DEPARTMENT:

 FIXING THE CREDIT LIMITS OF CUSTOMERS
 REVIEWING THE CREDIT LIMITS OF CUSTOMERS
 BLOCKING THE TRANSACTIONS IF CUSTOMERS CREDIT LIMIT EXCEEDS.
 CLASSIFYING THE CUSTOMERS INTO HIGH RISK, MEDIUM RISK, AND LOW RISK
CATEGORIES
 RELEASING THE ORDERS BLOCKED FOR CREDIT.
CREDIT MANAGEMENT IS OF TWO TYPES
1. SIMPLE CREDIT CHECK
2. AUTOMATIC CREDIT CHECK

S.N SIMPLE CREDIT CHECK AUTOMATIC CREDIT CHECK

O
1 in simple credit check you can block the
customer at order level.
2 In simple credit check there is no concept
of risk categories
3 in Simple credit check system considers
receivables only while performing credit
check receivables means open level
open items mean invoice raised and
accounting document generated but not
yet paid.
In automatic credit check, if customers credit
limit exceeds you block at order level,
delivery level or PGI level.
in automatic credit check we have risk
categories
high risk- order level
medium risk-delivery
low risk-PGI level.
in automatic credit check system considers
open order values, open delivery values,
open invoice values and open item values
while performing credit check.

CENTRALISED AND DE-CENTRALISED CREDIT PROCESS:

IF MULTIPLE COMPANY CODES HAVING SINGLE CONTROL AREA, THEN WE CALL IT AS
CENTRALISE CREDIT PROCESS.

WHEREAS IF EVERY COMPANY CODE IS HAVING A SEPARATE CREDIT CONTROL AREA,

THEN WE CALL IT AS DECENTRALISED CREDIT PROCESS.

CREDIT MANAGEMENT IS AN INTEGRATION B/W SD AND FI

SIMPLE CREDIT CHECK CONFIGURATION
1. DEFINE CREDIT CONTROL AREA
GROUP OF PEOPLE ARE RESPONSIBLE TO CREDIT ACTIVITIES IS CALL IT AS CREDIT
CONTROL AREA (CREDIT MANAGEMENT)
 FI CONSULTANT IS RESPONSIBLE TO DEFINE CREDIT CONTROL AREA.
UPDATE GROUP: THIS FIELD CONTROLS WHICH SALES DOCUMENT SHOULD BE UPDATED INTO
CREDIT MANAGEMENT I.E., WHETHER TO UPDATE SALES DOCUMENTS, DELIVERY DOCUMENTS
OR BILLING DOCUMENTS ETC. WE HAVE 3TYPES OF UPDATE RULES

 000012 (IT UPDATES ALL OPEN SALES ORDER VALUE, OPEN DELIVERY VALUES, OPEN
INVOICE VALUES AND OPEN ITEM VALUES INTO CREDIT MANAGEMENT.)
 000015 (IT UPDATES ALL OPEN DELIVERY VALUES, OPEN INVOICE VALUES AND OPEN
ITEM VALUES.)
 000018 (IT UPDATES ALL OPEN ORDER VALUE, ALL INVOICE VALUES AND OPEN ITEM
VALUES INTO CREDIT MANAGEMENT. WE USE THIS IN SERVICE ITEM AND 3 PARTY)
RD

2. ASSIGN COMPANY CODE TO CREDIT CONTROL AREA

 FI CONSULTANT IS RESPONSIBLE TO DO THIS ASSIGNMENT
SD CONFIGURATION FOR SIMPLE CREDIT CHECK:
 SIMPLE CREDIT LIMIT CHECK
 GO TO ITEM CATEGORY CONTROLS AND CHECK CREDIT ACTIVE
 GO TO PRICING PROCEDURE NET VALUE STEP AND MAINTAIN SUBTOTAL AS A.
 MAINTAIN CREDIT LIMITS, TRANSACTION CODE FD32