Credit Management Reorganization

[Former Member]

The issue, is 'credit exposure' has exceeded the 'credit limit' for some customers.

Rt now, simple credit check is configured (B, - run simple credit check & error message) is configured for a particular order type.

Now, I observe that, for this particular combination of CCA, risk category of customer & credit group (of SO) , OVA8 settings are also maintained. ['Static' & 'ope orders' are activated.]

Firstly, which one is applicable/considered here? Simple credit check or Automatic credit check?

sometime earlier, an user changed ( Increased the values) the "credit limit:, 'individual amt' & 'total amt' in the customer credit master.

I think, the above is the reason for the issue. ( credit exposure crossing credit limit)

Now, what exactly is to be done, for 'reorganizing' the credit data of these customers.?

what are the options ?

Request to guide me on this.

Sumanth.G

Edited by: SUMANTH GURURAJ on Nov 7, 2011 4:03 PM

[former_member209761]

Dear Sumanth,

Firstly, which one is applicable/considered here? Simple credit check or Automatic credit check?

In your OVA8, is the dynamic option CHECKED with the REACTION?

If not, only the SIMPLE CREDIT CHECK WILL FUNCTION.

It is decided by the assignment of credit check to sales order type (A,B,C,D) in ovak.

sometime earlier, an user changed ( Increased the values) the "credit limit:, 'individual amt' & 'total amt' in the customer credit master.
I think, the above is the reason for the issue. ( credit exposure crossing credit limit)
Now, what exactly is to be done, for 'reorganizing' the credit data of these customers.?

Credit exposure will cross the credit limit in 2 cases.

1) the exposure (sales order+invoice values) becomes greater than the credit limit.

2)the credit limit is decreased in FD32 and due to that the exposure becomes greater than the limit

If the credit limit is increased, there is no need for credit-reorganisation.

However you can run RVKRED77/RVKRED88 for the customer/credit control area.

Thanks & Regards,

Hegal K Charles

Edited by: Hegal . K . Charles on Nov 7, 2011 4:19 PM

[Former Member]

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Edited by: SUMANTH GURURAJ on Nov 7, 2011 4:24 PM

[Former Member]

In your OVA8, is the dynamic option CHECKED with the REACTION?

"Dynamic" is DEACTIVATED ( checked off) "Reaction is "D". "Status/Block" is ACTIVATED. "Horizon" is 12 Months.

Pls clarify... Mr.Charles.

[former_member209761]

Dear Sumanth,

If the DYNAMIC is UNCHECKED, it will be SIMPLE CREDIT CHECK.

The proper configuration is to maintain a sync between the assignment in OVAK and also in OVA8.

Which means , if its simple credit check in OVAK against your sales order , then CHECK simple credit check with REACTION in OVA8.

If the credit check is dynamic against the sales order type in OVAK, then CHECK dynamic credit check with REACTION in OVA8.

Thanks & Regards,

Hegal K Charles

[jignesh_mehta3]

If you have maintained "B" at OVAK & in OVA8, Dynamic is not checked, then the "D" in Reaction (against) Dynamic hold not value.

The Credit Check in your case is Static & the Reaction would be as maintaned against Statis in OVA8.

Hope this helps,

Thanks,

Jignesh Mehta

[Former Member]

Hegal's & Jignesh's responses are contradictory.

'Simple credit check' or 'static (not dynamic" credit check ie "Automatic credit control" as maintained in OVA8 is applicable here?

My Understanding is ..... since B (run simple credit check) is assigned to particular sales order type in OVAK, 'Simple credit check' is considered here..

Also, is the change in credit master data (increasing credit limt, individual limit} ..the only reason... for credit exposure exceeding credit limit for some customers? (particular customer)

[former_member209761]

Dear Sumanth,

System will decide on the type of credit check based on the OVAK setting.

Hence if you maintain a simple credit check option in OVAK, obviously you will have to CHECK for simple check check in OVA8 also with the reaction.

Also, is the change in credit master data (increasing credit limt, individual limit} ..the only reason... for credit exposure exceeding credit limit for some customers? (particular customer)

No.

As i had told in the first post, it can exceed when the sales value exceeds the limit.

Thanks & Regards,

Hegal K Charles

Edited by: Hegal . K . Charles on Nov 7, 2011 4:55 PM

[Former Member]

Hi Sumanth,

Your understanding is true, where the document was maintained with 'A', 'B' or 'C' it will consider only credit master amount according to that gives the message,despite of changes in OVA8.

OVA8 changes will applicable only when the document was maintained with D.

Regards

Ram

[jignesh_mehta3]

Hello Sumanth,

Infact myself & Hegal have explained the same thing, in different words. We both mean the same thing. The same is also validated by Ramakrishna.N...

Thanks,

Jignesh Mehta

[Former Member]

Dear Mr.Charles

Your statement

"Hence if you maintain a simple credit check option in OVAK, obviously you will have to CHECK for simple check check in OVA8 also with the reaction."

My comment

- Not necessarily

Because,A single credit control area may be applicable for many document types ( or vice versa).

So, for a particular doct type, a particular setting in OVAK can be maintained.

One question:

In OVAK, against a particular order type : B is maintained. NO VALUE is maintained under the column "credit group" (corresponding).

Now, will simple credit control at SO take place?

Rgds

Sumanth.G

[Former Member]

Hi Sumanth,

In OVAK if you didn't select any one of the credit group option the credit check will not take place.you need to specify where the credit check should take place.

Regards

Ram

[kalyan_mokirala]

Hi Sumanth,

Regarding the statement;

"Hence if you maintain a simple credit check option in OVAK, obviously you will have to CHECK for simple check check in OVA8 also with the reaction."

OVA8 is no way concerned with simple credit check. It is only for automatic credit check.In simple credit check risk category and credit group are not considered at all. Further it happens at order level only.

Automatic credit check can happen at order, delivery and Goods issue level.

If you assign simple credit check for a sales document type (A,B and C) and try to give credit group system throws error "Credit group only necessary for automatic credit check"

For simple credit check credit group is not required at all. You can not have credit check done at delivery or GI level in case of simple credit check.

System evaluates simple credit check based on the simple formula customer's credit limit- A/C receivables. If this value greater than or equal to current document value system passes the document for credit.

Edited by: mokirala tilak on Nov 7, 2011 2:12 PM

[Former Member]

Yes, I tested as Tilak suggested.When we give 'credit group' with B, system does NOT accept.

Edited by: SUMANTH GURURAJ on Nov 7, 2011 6:53 PM

[kalyan_mokirala]

Hi Sumanth,

Please check the order you created whether If automatic credit check is happening please check your order in Check_CM program.

Use the program "CHECK_CM" in SE38 transaction. On executing this program, you will be faced with analysis of SD document with regard to credit management screen appears.

Enter the order number in the sales document field and in the "settings" box check both the check boxes and execute the transaction.

You will be now faced with the credit check analysis done for your order.

I am not sure if this works for simple credit check. Please check.

Let me know the credit analysis of the order. Probably I can help you.

Edited by: mokirala tilak on Nov 7, 2011 2:32 PM

[Former Member]

Hello Tilak

I ran that program whcih you mentioned in SE38.

I got a very detailed analysis of the doct.

The below is the relavant pasted line.

Type of Credit Check: TVAK-KLIMP = B Simple Credit Check (not recommended)

Update Type S066: TMC4-KBTCH = 1 Synchronous updating (1)

All the controls of OVA8 are marked as "No check/No status".

As mentioned above, all the other details are also present in the report.

[Former Member]

For some customers, even though "Simple Credit Check" (B) is assigned at Sales doct type level, the system is allowing to create & save SO. (even though, credit exposure is much higher then credit limit)

[As mentioned earlier, some users have changed the credit limit of the customers earlier]

Two Points here:

1) Why is the system allowing to create & save SO.

2) what should be done now ? [ For some customers, credit exposure is more than the credit limit].. so as to set things right?

I am aware of the credit management programs ..but now sure which one to run & what will be the impact?

Request an expert to kindly guide me on this.

Rgds

Sumanth.G

[former_member209761]

Dear Sumanth,

Please try to understand the below concept clearly.

It is upon you to decide whether you want simple or dynamic credit management.

Simple credit management is not used much these days as dynamic credit management is an enhanced version of simple credit management with horizon period.

For some customers, even though "Simple Credit Check" (B) is assigned at Sales doct type level, the system is allowing to create & save SO. (even though, credit exposure is much higher then credit limit)

1. There is no direct assignment of customer to TYPE OF CREDIT CHECK.

2. Type of credit check has an assignment with the SALES ORDER TYPE.

1) Why is the system allowing to create & save SO.

Check whether the risk category is maintained for the customer in FD32.

2) what should be done now ? For some customers, credit exposure is more than the credit limit.. so as to set things right?

If you have a business that is running, obviously at one point of time, the credit limit will be exceeded by the exposure value.

If you can tell us your reqiurement , maybe we can help you on what all settings you have to change.

But from the posts, i do not think there is anything unusual happening with your credit management.

Thanks & Regards,

Hegal K Charles

Edited by: Hegal . K . Charles on Nov 8, 2011 1:22 PM

[Former Member]

Dear Mr.Charles

1) For some order types, "Simple credit check" is configured & for other order types "automatic credit check" is configured.

[relavant settings are mentioned in OVA8)

2) Pls refer my earlier threads, by running the program "check _cm" , I observe that "simple credit check" has taken place for most of these docts.

3) Yes, Risk category is assigned in these customer credit masters. (I do NOT understand why)

• This problem (credit exposure exceeding credit limit) is happening ONLY for Indian customers (Indian co cd & India CCA)

Requirement :

a) Why & how this problem (credit exposure exceeding credit limit) for Indian customers.... occured/occuring?

b) Now, what is to be done to these customers, so that ... things are corrected?

Request an expert, who has worked intensively on credit management to guide me on this.

[former_member209761]

Dear Sumanth,

For some order types, "Simple credit check" is configured & for other order types "automatic credit check" is configured. 

You can ask someone in the core team why they have maintained such a configuration.

If the business has not specified such differentiation, then it might have been done by the sole discretion of the implementation team or can even be a configuration error.

While checking in OVAK, check the CREDIT CHECK TYPE only for those documents which is being used by business.

Because i have seen A against many standard order types. which is actually maintained by default.

by running the program "check _cm" , I observe that "simple credit check" has taken place for most of these docts. 

Have you tried to identify whats the difference between most of the document which has a SIMPLE credit check and

the remaining few which has a dynamic credit check?

If not, do it.

 This problem (credit exposure exceeding credit limit) is happening ONLY for Indian customers (Indian co cd & India CCA)
Requirement :
a) Why & how this problem (credit exposure exceeding credit limit) for Indian customers.... occured/occuring?
b) Now, what is to be done to these customers, so that ... things are corrected?

a) Credit exposure is the value of sales incurred by a particular customer code.

When that customer code buys something from the company, he is liable to pay.

That customer code can buy as long as the credit limit is not exceeded. (but if the risk category is not maintained for the customer code in FD32, system will not be checking the credit limit for the customer code)

So your indian customer codes will be having outstanding items in FBL5N.Check it.

As and when they make payment for these outstanding, the credit exposure will decrease.

If there is no outstanding, exposure will be 0.

b) Nothing has to be done. The customer has to make payment. If done, system will automatically reduce the credit exposure.

Try to check the functionality of credit management in Google or Wiki.You will get more clarity on what is credit management and what is exposure and why is it exceeding the credit limit

Please address me as hegal.

Thanks & Regards,

Hegal K Charles

Edited by: Hegal . K . Charles on Nov 8, 2011 3:41 PM

[kalyan_mokirala]

Hi Sumanth,

Check_CM report is indicating simple credit check happenng for the order created. Even if you add risk category in the credit master it will not be considered. You can just neglect that.

I suspect that the problem could be because of updating of information structures.

just try running RVKRED77 program which will reorganise the credit data in case of update errors. Just try for one payer and check whether it is helpful.

If it works then you can have a batch job scheduled every weekend for required credit control areas.

Edited by: mokirala tilak on Nov 8, 2011 11:31 AM

[Former Member]

Dear Hegal

The bottomline: System is allowing me to create & save SO for those order types mapped with "simple credit check", (even though credit exposure is much more than allowed credit limit)

Hope you got the point.

[former_member209761]

Dear Sumanth,

Take the customer code for which system is allowing you to save the order.

Check the credit control area

now in OVA8, select the CREDIT CONTROL AREA/CREDIT GROUP/RISK CATEGORY.

Go to details

Against SIMPLE CREDIT CHECK , make the reaction as ERROR or ERROR with VALUE (C or D).

There will be 2 options

OPEN ORDERS and OPEN DELIVERY

Check Both

If there is Dynamic check in the same combination, remove it.

Now check whether system is allowing.

Pre-requisite : Risk category should be there in FD32 of the customer code for that credit control area.

Also check in OVAD , whether the credit check is activated for the item category.

Now if it doesnt solve the issue, Maintain the Dynamic credit check for the order type in ovak.

after that run the re-organisation programs like RVKRED88/RVKRED77 and then create a fresh order and check.

Check and revert back.

Thanks & Regards,

Hegal K Charles

[kalyan_mokirala]

Hi Sumanth,

Try running RVKRED77 program which will reorganise the credit data in case of update errors. Just try for one payer and check. Once that is done then create a fresh order which uses simple credit check. If this does not work then check other options

Edited by: mokirala tilak on Nov 8, 2011 12:57 PM

[kalyan_mokirala]

Hi Charles,

As per my best understanding of credit management, In OVA8 screen we donot have simple credit check field. I think it is Static credit check where we have open orders and open deliveries check boxes.

Static check is a type of automatic credit check and no way related to simple credit check. As I had already mentioned in this chain earlier,Simple credit is evaluated based on simple formula; Customer's credit limit- A/C receivables If this value is greater than or equal to current document value system passes the document for credit. It will not consider credit group or risk category into consideration. So even if you have some valid record of OVA8 as per my understanding if the sales document is assigned simple credit check, it will never consider that OVA8 record. I doubt that there must be some information structure problem.

[Former Member]

closed.

Edited by: SUMANTH GURURAJ on Nov 8, 2011 6:36 PM