This blog post will provide an overview of Credit management function in SAP S/4 HANA.
Before moving into details, let's see some of the differences between ECC and HANA with regard to Credit management.
Master data for Credit Management
In S/4 HANA, the credit management master data is maintained in BP master data. For this, we need to create a new role as Credit Management under the relevant BP.
Once you create the credit management role, you can see there are two parts activated for CM. We maintain all the CM related data within these two sections.
The credit profile contains four main sections namely;
1. Scoring
1.1 Rules
Credit rules are defined in the system in order to calculate the credit limit and the score. In the configuration path below you can create the rules to calculate credit limit and score with user defined formulas
1.2 Score
Score is calculated by the system based on the formula defined in the above configuration path. The calculated score can be overwritten with manually entered values.
1.3 Risk Class
You can create risk classes in the below configuration path. We can assign the score ranges to each risk class, once the score is calculated by the system, the risk class will be picked automatically in the master data.
1.4 Check Rule
Here we can define how the system should check the credit exposure of a particular customer. There are three main ways of checking this.
1.4.1 Statistical check - With this credit check system will consider all the open sales orders/open delivery/open billing/open FI documents in the system and calculate the credit exposure.
1.4.2 Dynamic Check - With this credit check system will consider all the open sales orders/open delivery/open billing/open FI documents in the system and calculate the credit exposure. But the open items will be limited depending on the time horizon we define in the system. Ex: If the horizon period is 1 month, system will check all the open documents mentioned above which belong to the last 1 month only. Items older than that period will not be considered.
1.4.3 Default - All checks active - In default check, system will consider the open sales order value and billing documents posted to FI but not paid by the customer yet.
2. External Credit Information
You can maintain the customer credit ratings provided by the external parties in this section. For this you need to create the rating procedures in the system ex: Moodys, and define the ratings given by them.
3. Further Information
Under this section you can maintain all types of collaterals maintained by the customers like guarantees/insurances/exception for credits etc. In the below table you can maintain this data with the amount and validity period. You can mark "Relevant for credit check" if you need to include the collateral during the credit check.
There is a main credit segment which will be assigned to the customer by default. You can define other segments with different credit limits which will be under the main segment.
Credit Limit
You can manually provide the credit limit for the customer instead of allowing system to calculate the limit using the credit rules and formulas.
Display liability option will give an overview of the credit exposure with a breakdown of the open documents and its value. So that it will be easy for you to know what the open documents are considered for the credit exposure of a particular customer.
The above is a basic overview on SAP S/4 HANA credit management master data. Hope this article will help for the beginners who are interested in this topic.
Before moving into details, let's see some of the differences between ECC and HANA with regard to Credit management.
| Credit Management (CM) | |
| ECC | S/4 HANA |
| CM comes under Sales and Distribution module | CM comes under Financial Supply Chain Management |
| Relevant master data is the customer in SAP | Relevant master data is BP in SAP with a separate role for CM |
| Credit exposure is monitored at credit control area level | Credit exposrue is monitored at credit segment level |
| Credit limit rules are not available | Credit Rules engine is available |
| No connectivity to 3rd party Risk rating systems | Connectivity is available |
Master data for Credit Management
In S/4 HANA, the credit management master data is maintained in BP master data. For this, we need to create a new role as Credit Management under the relevant BP.
Once you create the credit management role, you can see there are two parts activated for CM. We maintain all the CM related data within these two sections.
- Credit profile
- Credit Segment data
Credit Profile
The credit profile contains four main sections namely;
- Scoring
- External Credit Information
- Further Information
1. Scoring
1.1 Rules
Credit rules are defined in the system in order to calculate the credit limit and the score. In the configuration path below you can create the rules to calculate credit limit and score with user defined formulas
1.2 Score
Score is calculated by the system based on the formula defined in the above configuration path. The calculated score can be overwritten with manually entered values.
1.3 Risk Class
You can create risk classes in the below configuration path. We can assign the score ranges to each risk class, once the score is calculated by the system, the risk class will be picked automatically in the master data.
1.4 Check Rule
Here we can define how the system should check the credit exposure of a particular customer. There are three main ways of checking this.
1.4.1 Statistical check - With this credit check system will consider all the open sales orders/open delivery/open billing/open FI documents in the system and calculate the credit exposure.
1.4.2 Dynamic Check - With this credit check system will consider all the open sales orders/open delivery/open billing/open FI documents in the system and calculate the credit exposure. But the open items will be limited depending on the time horizon we define in the system. Ex: If the horizon period is 1 month, system will check all the open documents mentioned above which belong to the last 1 month only. Items older than that period will not be considered.
1.4.3 Default - All checks active - In default check, system will consider the open sales order value and billing documents posted to FI but not paid by the customer yet.
2. External Credit Information
You can maintain the customer credit ratings provided by the external parties in this section. For this you need to create the rating procedures in the system ex: Moodys, and define the ratings given by them.
3. Further Information
Under this section you can maintain all types of collaterals maintained by the customers like guarantees/insurances/exception for credits etc. In the below table you can maintain this data with the amount and validity period. You can mark "Relevant for credit check" if you need to include the collateral during the credit check.
Credit Segment Data
There is a main credit segment which will be assigned to the customer by default. You can define other segments with different credit limits which will be under the main segment.
Credit Limit
You can manually provide the credit limit for the customer instead of allowing system to calculate the limit using the credit rules and formulas.
Display liability option will give an overview of the credit exposure with a breakdown of the open documents and its value. So that it will be easy for you to know what the open documents are considered for the credit exposure of a particular customer.
The above is a basic overview on SAP S/4 HANA credit management master data. Hope this article will help for the beginners who are interested in this topic.
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