Make SAP Automatic Credit Management Work for You, Without Damaging Supply Chain Efficiency
- by Dr. Stef G.M. Cornelissen, MBA, SAP Business Consultant, Sperry Partners BV
- July 1, 2006
SAP offers Automatic Credit Management to automate the risk check during order creation and delivery. Learn how to implement this tool without frustrating an efficient supply chain.
SAP Automatic Credit Management first became available with R/3 Release 3.0. Using settings in FI and Sales and Distribution (SD), it prevents the shipping or selling of goods to customers whose credit status is doubtful. Extensive reporting allows for in-depth analysis of current risk and payment history.
The good news is that SAP Automatic Credit Management aims to safeguard your business against bad credit risks. The
bad news is that strict controls can damage the efficiency of your supply chain. This is the classic clash between
logistics and finance in any implementation. To implement Automatic Credit Management in a sensible way, you need to
strike a balance between these two business targets. It is important to have a clear understanding of this gray area
between finance and logistics. At all times the logistics team should examine the configuration for its impact on the
I’ll explain the settings available for Automatic Credit Management in the sales process in all releases
since R/3 3.0. With these settings you can control system behavior for customers whose credit status you no longer trust.
The automatic process determines the system reaction each time you create or change a sales order or delivery. The system
gives a warning, blocks the document, or allows further processing depending on the actual customer credit situation. It
takes into account payment behavior, credit limits, and current total credit exposure (Figure 1). With
each setting it is essential to weigh the gain in control against the effect on the logistic process
Credit management in the sales flow
In part 1 of this series, I’ll deal with the settings for automatic credit controls in the sales process.
Part 2 will describe credit management organization, credit limits, credit exposure calculation, and customer
Automatic Credit Management Basics
When all the settings are in place, a document gets a credit block when a customer is past its credit limit. When
you save the sales order/delivery, the system displays a message (Figure 2)
Example of a credit management warning message. The system saves the document with a credit block
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