credit check- difference between static & dynamic credit check.

[Former Member]

Hello,

can anybody tell what is the difference between static & dynamic credit check.

Thanks, Nitin.

[Former Member · Accepted solution]

Hi Nitin,

Difference between static and dynamic in credit management.

Main difference is horizon period is related for dynamic check not for static check

SIMPLE CREDIT CHECK:

Tr.Code - FD32

It Considers the Doc.Value + Open Items.

Doc.Value: Sales Order has been saved but not delivered

Open Item: Sales Order has been saved, Delivered, Billed & Transferred to FI, but not received the payment from the customer.

Eg: Customer Credit Limit is Rs.1,00,000/-

Suppose Doc.Value + Open Item Value is Rs.1,10,000/-

Here credit limit exceeds then system reacts.

Options: A) Warning Message

B) Error Message (Sales Order won't be saved)

C) Error Message with Delivery Block

AUTOMATIC CREDIT CHECK: Give extra credit facilities to the particular customer.

STATIC CREDIT LIMIT DETERMINATION: Checking Group + Risk Catageory + Credit Control Area.

A) Credit Checking Groups: Types of Checking Groups.

01) Sales

02) Deliveries

03) Goods Issue

At all the above 3 levels orders can be blocked.

B) Risk Catageory: Based on the risk Categories Company decide how much credit has to give to the customer.

HIGH RISK (0001) : LOW CREDIT

LOW RISK (0002) : MORE CREDIT

MEDIUM RISK(0003) : Average Credit

Static Credit Check it checks all these doc value & check with the credit limit

1) Open Doc.Value / Sales Order Value : Which is save but not delivered

2) Open Delivery Doc.Value : Which is delivered but not billed

3) Open Billing Doc.Value : Which is billed but not posted to FI

4) Open Item : Which is transferred to FI but not received from the customer.

DYNAMIC CREDIT CHECK:

1) Open Doc

2) Open Delivery

3) Open Billing

4) Open Items

5) Horizon Period = Eg.3Months

Here the System will not consider the above 1,2,3& 4 values for the lost 3 months

Then assign the Sales Doc & Del Documents.

Sales Doc.Type(OR) + credit Check (0) + Credit Group (01)

Credit Limit Check for Delivery Type : Del.Type (LF) + Del Credit

Group (02) + Goods Issue Credit Group (03)

Please Reward If Really Helpful,

Thanks and Regards,

Sateesh.Kandula

[Former Member]

Hi Nitin,

Static and Dynamic Credit Check both take the following into consideration while performing a credit check.

1) Open Orders

2) Open Deliveries

3) Open Invoices

4) Open Items

Incase of a dynamic credit check a time horizon factor is taken into consideration for the open orders. Let's assume you have set the time horizon as 1 month then while performing the dynamic credit check, open orders within the last 1 month would only be considered. Orders prior to this would not be taken into consideration. SAP is given this feature so that you can avoid very old orders that were entered in the system but were not processed after that.

Incase of a static credit check there is no time horizon period so all the open orders in the system for a particular customer would be taken into consideration.

Do note the time horizon period is only for the open orders and not for any of the other factors.

Regards

Nadarajah Pratheb

[Former Member]

Hello Dude,

The biggest difference between static and dynamic credit check is the Time Horizon.

If want more explanation come back.

[Former Member]

hi

<b>Static Credit Limit Check</b>

The customer's credit exposure may not exceed the established credit limit. The credit exposure is the total combined value of the following documents:

- Open orders

- Open deliveries

- Open billing documents

- Open items (accounts receivable)

The open order value is the value of the order items which have not yet been delivered. The open delivery value is the value of the delivery items which have not yet been invoiced. The open invoice value is the value of the billing document items which have not yet been forwarded to accounting. The open items represent documents that have been forwarded to accounting but not yet settled by the customer.

<b>dynamic credit check</b>

Dynamic Credit Limit Check with Credit Horizon

The customer's credit exposure is split into a static part; open items, open billing, and delivery values (see above), and a dynamic part, the open order value. The open order value includes all undelivered or only partially delivered orders. The value is calculated on the shipping date and stored in an information structure according to a time period that you specify (days, weeks, or months). When you define the credit check, you can then specify a particular horizon date in the future (for example: 10 days or 2 months, depending on the periods you specify). For the purposes of evaluating credit, you want the system to ignore all open orders that are due for delivery after the horizon date. The sum of the static and dynamic parts of the check may not exceed the credit limit.

[Former Member]

In

Static Credit check: System carries out credit check by getting credit exposure by comparing total value of open sales documents, open delivery documents, open billing documents and open items.

Dynamic Credit check:It indicates system carries out Dynamic Credit check within specified credit horizon. System gets credit exposure by splitting static Part (Open items, open billing and open delivery values) and dynamic part i.e. Open order value.

thank you

with regards

chaitanya