Automate and Control Your Credit Approval Process with DCD Functionality

  • by Mark Chalfen, Finance Capability Lead, Bluefin Solutions
  • August 9, 2012
Learn how to use SAP Financial Supply Chain Management’s Documented Credit Decision functionality for processes that previously were done manually. This functionality enables users to complete processes that are managed between SAP and non-SAP systems without having to exit from the SAP system.
Key Concept

SAP Receivables Management has improved the standard FI-AR Credit Management process in recent releases. The main benefits include the automation of internal and external data to credit rate and credit score customers. The original benefits focus on risk mitigation and control rather than credit decisions, such as credit limit requests and sales order block approvals. Within enhancement package 6, SAP has released the Documented Credit Decision functionality. SAP has also back-ported the solution to enhancement packages 4 and 5 (Support Package 10 for enhancement package 4 and Support Package 5 for Enhancement Package 5). This functionality enables current processes that are performed manually and managed between SAP and non-SAP processes to be performed completely in an SAP system and provides a full audit history.

The Documented Credit Decision (DCD) functionality is a case-based solution to track credit decisions. The traditional method to approve a blocked sales order would be for sales administrator clerks to review the order and make a decision. If it fell out of their approval level, they may make a phone call to seek further approval. The sales order would be approved, and run through into billing. If there was an issue with the customer paying the invoice, a review may take place to identify why the sales order was unblocked. Depending on the industry and type of customer, the volume of these approvals may be high, leading to uncertainty as to the true reason for the decision. Some clients may have a paper-based solution, or keep email approvals; however, none of these is system generated or held centrally.

Moreover, a secondary decision following the unblocking of the sales order is to change it (i.e., increase the credit limit). The credit limit approval itself may allow the sales order to proceed through the credit-checking process, meaning that approval is no longer required. The ability to link all these tasks together provides more insight to the credit management team. Lastly, certain industries may spend a few weeks to seek approval, so being able to see the current credit position of a customer is beneficial for future decision making.

An Event-Driven Solution

SAP has provided flexibility to allow events to be built to define a particular scenario. A sales order can be blocked for many different reasons, such as the following:

  • The credit limit may be exceeded
  • The customer may have unpaid invoices older than a defined limit
  • The customer may have reached a certain dunning level

Mark Chalfen

Mark Chalfen is the finance capability lead at Bluefin Solutions, a niche SAP consultancy in the UK, and an SAP mentor. Mark has more than 12 years’ experience in SAP FI/CO in a number of industries. Mark’s core skills include Financial Supply Chain Management (SAP FSCM) and the new GL. He is currently advising a wide variety of clients on maximizing their SAP landscape either in the current R/3 version or upgrading to SAP ERP.

See more by this author


No comments have been submitted on this article. 

Please log in to post a comment.

To learn more about subscription access to premium content, click here.