As well as Credit Management, there are several other ways to guarantee payments including letters of credit, export credit insurance, and payment cards. These forms of payment guarantees are all integrated in the Risk Management for Receivables component, providing you with an efficient tool for guaranteeing the payment of all billing values that arise in sales and distribution processes.

You can only use Risk Management for Receivables if you are also using the Sales and Distribution component.

The form of payment guarantee controls how you guarantee the payment of a sales document item (for example, using a private guarantee, payment card, unconfirmed or confirmed letter of credit, or export credit insurance). In the first step you can use a secure form of payment such as a letter of credit to try and minimize the payment risk as much as possible. If this is insufficient, you can turn to Credit Management to create a credit limit for restricting the risk. In this way, Credit Management enables you to secure values yet to billed that could not be guaranteed using a form of payment guarantee.

The following graphic shows how credit and risk management work together to minimize your risks.