Credit Control Area 

Definition

An organizational unit that represents the area where customer credit is awarded and monitored.

This organizational unit can either be a single or several company codes, if credit control is performed across several company codes. One credit control area contains credit control information for each customer.

Use

Credit and risk management takes place in the credit control area. According to your corporate requirements, you can implement credit management that is centralized, decentralized, or somewhere in between.

Credit limits and credit exposure are managed at both credit control area and customer level.

You set up credit control areas and other data related to credit management in Customizing for Financial Accounting. For more information, see the Implementation Guide under Enterprise Structure ® Definition or ® Assignment ® Financial Accounting and then Maintain credit control area. You assign customers to specific credit control areas and specify the appropriate credit limits in the customer master record.

See also: Specifying Credit Limits by Credit Control Area

Credit and Risk Management Settings: Overview

Structure

The following graphics illustrate the relationship between credit control area, company code, sales organization, customer and currency for central or decentralized credit management respectively.

Decentralized Credit Management

If your credit policy requires decentralized credit management, you can define credit data for your customer for each company code. In the graphic below, the customer has a business relationship with two company codes:

 

You define a currency for each credit control area. The relationship between credit control area, company code, sales organization and currency is illustrated in the following graphic:

 

Central Credit Management

If your credit management is centralized, you can combine your company codes in one credit control area. Credit management then regards the customer as valid for all company codes. In the following graphic, the customer has a business relationship to two company codes that are combined in one credit control area:

 

The next graphic illustrates the relationship between the credit control area, company code, sales organization and currency in a central organization. If the credit control area includes company codes with different local currencies to that of the credit control area, the system converts the receivables into the currency of the credit control area.

This also applies to the open order, delivery and billing values.