Credit Management/Risk Management

Credit Management/Risk Management:

Credit Management/Risk Management Setting:
Before doing setting for credit management, we need to make some setting in different function Like output determination ,partner determination, Pricing, Reports, authorization, subsequent function in shipping and availability check & TOR, Logistic control update, Updating credit control area etc) as below:

Configuration:
- Enter Setting
o Conditions : Procedures – in pricing procedure for Total, enter A in subtotal column. With this the system calculates subtotal for the credit price during pricing and store them in certain field (KOMP-CMPRE = credit price of the item).
o Configuration : Partner (Screen of Partner determination). We have two standard partner function KB (credit representative) KM (Credit Manager) for credit processing. Both partner function are allocate to partner type PE. Enter these partner function in Sales Document Header and Delivery Header. Standard setting already available.
o Output Types: Standard output condition type KRML (Credit Processing) is there.
o Requirement for creating delivery due index from order Standard – 104. (VOFM)
o Requirement for Goods issue from Delivery. Standard – 113 (VOFM)
o Apart from the above setting we have to make setting in other area as
Authorization : Two authorization objects are created for Credit Management
V_VBUK_FRE and V_KNKK_FRE
Logistic controlling Update: Info structure S066 is used for monthly updates for outstanding orders in credit management. We can change the monthly to daily or weekly.
Updating credit control Area: 11, 12, 18. The system determines higher credit update if a transaction cannot be processed with required credit update. For example update 18 is carried out if 12 is not possible.
- Determine Active Receivable per Item category.
Item category – CheckBox
Here you specify whether an item of the respective item category is to be included in credit functions. (check and update of open credit values)
- Maintain authorization
o Define document value class
Ex. HIG – High value LOW – Low value
Using document value class Credit representative can be given authorization.
o Assign document Value class. Ex.
Credit control area credit value Curcy Docu Value class
1000 10000 INR LOW
1000 20000 INR HIG
o Maintain authorization. (User setting). Authorization objects:
V_VBUK_FRE and V_KNKK_FRE

Credit Management
Configuration:
- Define Credit Group. Standard –
01 – Credit group for Sales Order
02 – Credit group for Delivery
03 – Credit group for goods issue
- Assign Sales document and delivery document
o Credit Limit check for order type
SalDtype check credit Credit Group
OR D (Automatic) 01 – Credit group for sales order
o Credit limit check for delivery
DlvType DlvCreditGrp GIcreditGrp
LF 02 03
- Define Automatic Credit Control. Based on
CreditControlArea + Risk Category + Credit Group
RCSO 0001 01
Based on these three criteria we can have different setting for credit management. Risk category is assigned to customer while creating Credit record for the particular customer. Credit Group is assigned to Order/Delivery type, credit control area is assigned to sales area and company code.
Below is the explanation of major field in setting:
No credit check: Here you can define subroutine which contains requirement to carry out credit management. If the requirement is not matched, it will not do credit check. For ex. No credit check if the document contains no item.
Item check: If you select this, the system will carryout credit check as soon as you enter the item and press enter. Generally credit check is done while you save the document.
Deviation in %: A sales order of Rs. 1000 value has been approved by credit and than customer call for another qty of value rs. 100. Here if you have defined 10%, than it will allow to enter the additional qty within the range of the deviation.
Number of days: Specify the number of days after which a changed document must be rechecked. It is used to check document already released by credit, but subsequently changed.

Credit Limit Season factor: for a particular season we want to increase or decrease the credit. Here we enter % of deviation and start date and end date. We select checkbox MINUS than it will decrease the credit limit, if we do not check the checkbox than it will increase the credit limit.

Check in financial accounting: Credit check is done for Sold-to party. It can have different Payer. Generally system checks the open item of all the payers. However if we want to restrict it to the Payer of current document, select the check box Payer.

Checks:
Reaction: Space : No Message
A – Warning
B – Error Message
C – Like A + Value by which the credit limit has been exceeded.
D – Like B + Value by which the credit limit has been exceeded.
Static check: Open Sales Order + Open Delivery document + Open billing Document + Open items
Dynamic check : The customer’s credit check split in Static Part – Open items, Open billing, open delivery items – and dynamic part, the open order. The value is calculated based on the shipping date and the credit horizon you specify in the adjacent field. For example you want the system to ignore all the open order that are due for delivery after the horizon date.

We can select either static or dynamic credit check.

Document Value: the system carry out credit check based on a maximum document value.
Critical field: it checks whether critical fields have been changed. Like Payment Terms, additional value days, fixed Value date.
Open Item: Based on open items.

- Simple credit Limit check
SalTy check Credit Credit Group
OR A
Option for credit check:
Space – No credit Limit check
A – Run simple credit limit check and warning message
B – Run simple credit limit check and error message
C – Run simple credit limit check and delivery block.
D – Credit Management – automatic credit control

In simple credit management no need to give credit group. We can assign any of the above option except D i.e. for automatic credit check. Simple credit limit check is for Sales document only.

Master Record for Credit Management:
FD32
Overview Tab: in this tab total overview of the customer is displayed like credit limits, payments details arrears etc.
Address : Address details
Central Data:
Total Amount: Credit limit for all credit control area.
Individual Limit: Credit limit within a credit control area. For any credit control area. Should not more than Total Amount
Status:
Credit Limit: Upper limit for total receivable. This amount is considered in credit check. This amount should not be grated than Individual limit.
Payment History:
In customer master record, in company code data, Payment tab if we select Payment History checkbox, than all the payment made by this customer will be shown here.

Some transaction code in credit Management:

VKM1 – blocked Sales order VA14L – SD document blocked for delivery
VKM2 – Released FD10N – display balances
VKM4 – All FD11 - Analysis
VKM3 – Sales document FBL5N – Open item display
VKM5 – Delivery F.31 – credit overview
V.01 – Incomplete Sales document F.33 – Brief Overview
F.32 – Missing data FCV1 – Create A/R summary