Guard Against Nonpayments with Credit Data Reorganization

  • by Rohana Gunawardena, SAP Practice Director, Exium Inc.
  • April 19, 2011
Learn how the SAP system stores credit data, why errors can occur in credit data, and what you need to do to clean up credit data. Take away a list of key SAP Notes and configuration points.
Key Concept
SAP has standard credit management functionality for the order-to-cash process. This functionality is highly configurable, but at the same time, the nature of the data update means that SAP teams need to monitor the quality of credit data and reorganize the data if required.

Many users of SAP ERP Central Component (SAP ECC) have questions about best practices to perform credit data reorganization, and so I have written this article. To protect your business against the high cost of nonpayment, your credit department needs accurate and timely credit data. SAP provides standard functionality that can cover a multitude of scenarios; however, the credit data update is susceptible to glitches that require periodic reorganization of the credit data. If credit update errors occur, you have different options for recreating the credit data (e.g., run one of SAP standard credit reorganization reports, which I will discuss in detail later in this article). Also, there are certain analyses of credit data (e.g., customer credit exposure breakdown by sales and distribution document) that are not as easily obtained as expected. I will discuss some of these issues in the article.  

Credit Management Overview

The SAP credit management functionality primarily resides in the sales and distribution (SD) module, but from a business process perspective, the finance team is more interested in it than the sales team. Often analysts from the SAP finance team take responsibility for this functionality based on end-user interest.

Customer

The word customer in relation to FI-AR is pretty clear, but in SD, a typical sales order has four or more related customers: sold-to, ship-to, bill-to, and payer. In credit management, customer means the credit account customer (the SAP system assigns a number when the customer master record is created), which can be a different customer number from the four key SD customer types. Often, the sales order payer customer and credit account are the same, but not always. In simple cases, all five customers can be the same, but when you are looking at companies with complex customer relationships, all five might be different.

Rohana Gunawardena

Rohana Gunawardena heads the SAP practice division at Exium Inc. Exium is a leading business and technology consulting firm that enables companies to achieve their strategic business goals. Exium specializes in delivering superior IT solutions using ERP systems, with a special focus on SAP products. Rohana has been working with SAP since 1992. During his career he has assisted multiple clients on detailed system correction projects, such as correcting inventory balances, controlling area reorganizations, retrospectively activating group currency, and optimizing inter-company accounting transactions. He has spoken at many SAP conferences and has published more than 20 articles in Financials Expert, SCM Expert, and SAPtips on various aspects of SAP. His presentations have focused on Financials module selection, the order-to-cash process, global rollouts, business segment reporting, cross-module integration, and the financial impact of SCM transactions. Rohana is widely acknowledged as a leading SAP expert. Rohana is a Fellow of the Institute of Chartered Accountants in England & Wales. Previously Rohana has worked with the consulting practices of Accenture, Deloitte, and PwC.

Rohana will be presenting at the upcoming SAPinsider Financials 2017 conference, June 14-16, 2017, in Amsterdam. For information on this event, click here.

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