Credit Management/Risk Management (FI-AR-CR, SD-BF-CM) 

Purpose

Outstanding receivables or bad debts can have a considerable impact on a company’s performance. Using credit management, you can minimize your credit risk by defining a specific credit limit for your customers. This means that you can determine the financial situation of a customer or group of companies, recognize early warning signals, and make decisions more easily with reference to the credit assignment. This is especially important if you do business with customers in financially unstable sectors or countries, or trade with countries that are politically instable or that adopt a restrictive exchange rate policy.

Integration

If you implement the Accounts Receivable (FI-AR) application component to manage your receivables, but a non-SAP system for sales and distribution processing, Credit Management enables you to assign a credit limit to each customer. When you post an invoice (in FI-AR) the system then checks whether the amount exceeds the credit limit. Facilities like the credit master sheet or early warning list help you monitor the customer’s credit situation.

If you implement both the Accounts Receivable (FI-AR) component and Sales and Distribution (SD), using credit management you can assign a credit limit for each customer, and in Customizing for SD, you can specify at which point (for example, order, delivery, goods issue) and to what extent a credit limit check is to take place. You can also take advantage of the information functions.

This documentation for Credit Management refers to the components FI-AR-CR and SD-BF-CM.

For information about the component FIN-FSCM-CR, see SAP Credit Management (FIN-FSCM-CR).

Features

Assuming you implement both SD and FI-AR, credit management then covers the following areas:

·        You can define automatic credit limit checks according to a range of criteria and in line with your company’s requirements You can also define at what point the system carries out these checks (order, delivery, goods issue, and so on).

·        The credit representative is automatically alerted to a customer’s critical credit situation as soon as order processing starts.

·        The relevant employees can be automatically notified of critical credit situations via internal mail.

·        Your credit representatives are able to check a customer’s credit situation quickly and reliably, and, in line with the appropriate credit policy, to decide whether the customer should be granted credit.

·        Using Credit Management you can work in distributed systems, that is central financial accounting, non-central sales and distribution on several sales and distribution computers.

For information on which section of the IMG menu you can make what settings for Credit Management and Risk Management, see Settings for Credit Management and Risk Management

 

Risk Management for Receivables

For information on risk management for receivables, see Risk Management for Receivables in Sales and Distribution