It is essential for a healthy and successful business that you need to protect your company from late payments and customer defaults. Many of my customers ask the following questions often when talking about the credit management.
- How to detect the late payment or customer defaults earlier and prevent the risk of financial losses?
- How to manage the receivables and credit management efficiently and effectively?
The answer is simple that you need a company-wide policy to help you manage your business partners’ credit worthiness and monitor their payment progress.
In SAP S/4HANA Cloud, you can be benefit with the scope item Basic Credit Management (BD6), which supports a company like you to detect the risk of losses on receivables as early as possible. Also, the analytical report apps in this scope item support you to make accurate decisions.
This scope item is licensed with your standard subscription without any additional charge required.
So, what is the business logical behind this scope item? It checks the exposure against the current credit limit for each business partner you’ve granted. When the new order is blocked due to exceeding the credit limit, an authorised staff, normally a credit controller, can release or reject it with one-step action. It’s also possible to check oldest open item, maximum dunning level, or last payment.
Following this blog, I will introduce some major process steps for a credit controller after the scope item BD6 is activated.
Before you start to test in the system, you need to assign the following business roles to your test users.
Firstly, in Manage Credit Accounts (F4596), you can grant a credit limit to your customer. Please be noticed, that the credit limit currency in all company codes is set to use the group currency, which is defined when the solution is activated.
Continued to test the credit management, you need a new sales order. You can execute the Create Sales Order from the Sell from Stock (BD9), or the Sales of Non-Stock Item with Order-Specific Procurement (BDN) test script; or the Quotation Processing MTO and Create Sales Order with Ref. to Follow-On Quotation procedures from the Make-to-Order Production – Finished Goods Sales and Final Assembly (BJE) test script.
When the sales order failed the credit check, the blocked sales order will be displayed in Manage Credit Accounts (F4596) now. The credit controller can release or recheck them within the fiori app directly.
Or if you want to check the details of the blocked sales order, you can click the line and system will navigate you to the Manage Documented Credit Decisions (F5587).
Finally, as a credit controller, you probably need some analytical apps to support you in making decisions in addition to help your daily operational tasks.
For example, a credit controller sometimes needs to check the Key Performance Indicator (KPI) for a business partner’s credit limit as a percentage value and an absolute amount, or which business partners are beyond the threshold value. To fulfil this requirement, you can use Credit Limit Utilization (F1751).
screenshot of F1751, data from SAP internal test system
Another sample is that a credit controller can use Analyze Credit Exposure (F2541) to review the credit exposure with the different dimensions, such as, risk class, business partners, credit segment and country key.
Now I’ve served some appetisers with you for the Basic Credit Management (BD6). If you’re interested in this scope item, please refer to the https://rapid.sap.com/bp/scopeitems/BD6, where you will find the detailed process diagram and step-by-step test script.