Configure and Customize SAP Automatic Credit Management

Introduction

Credit management is the management of credit facility granted to customers as credit

exposure allowed. Credit facility is just like telling our customers that they need not pay
immediately, they can pay at a future point of time after receiving the goods or services. But, this
payment at a future point of time involves risk. So, according to the risk foreseen, the amount
and time of credit (Credit Exposure) granted changes. For some customers, the risk perceived
may be high such that we may demand payment in advance.
This credit management comes partially under preview of Sales and Distribution (SD) and
partially of Account Receivables (AR).

Key challenge: Reducing credit risk without hampering the supply chain.

Dealing with Bad Debt: Before getting involved, ask yourself:

How do I react to a bad debt?

Do I block orders from important customers, or do I grab a phone?
What is the volume of blocked orders my F&A department can handle?
Can I afford to block customers (small customer base)?
What do I save?
What is the cost in terms of damage?

Credit Management in SAP

Assuming that we already have SD and AR implemented, credit management can be broadly
used to:

Assign credit limit to customers

Facilities like the credit master sheet or early warning list help you monitor the
customers credit situation
Automatic credit limit checks as well as to specify the points at which they have to be
carried out

Automatically alert the credit representative of a customers critical credit situation as soon as
order processing starts and he may be able to check a customers credit situation quickly and

reliably, and, in line with the appropriate credit policy, to decide whether the customer should be
granted credit.

Credit Check

Every customer is having a certain credit limit, which is measured and maintained by Finance people.
Credit check is done for each and every order/SD documents generated.

Credit check is performed at the following stages of Sales order cycle, Credit check settings
present in each SD document is responsible for interacting with FI module.

Figure 1:Stages of Credit Check

Configuration Setting

Define Risk Category

SPRO > Financial Accounting > Account Receivable and Accounts Payable > Credit Management > Credit
Control Account > Define Risk Categories

Figure 2:Define Risk Category

Define Credit Control Area
SPRO > Enterprise Structure > Definition > Financial Accounting > Define Credit
Control Area

Figure 3:Define Credit Control Area

Figure 4:Define Credit Control Area - Details

The type of update chosen controls when the values of open sales orders, deliveries and billing
documents are updated depending upon the type of document being generated. One of the
following update groups can be chosen as available in standard SAP

Blank If the field is left blank, the SD documents are ignored and only open receivables and
open special G/L items are used for calculating credit exposure.
000012 When a new order is created, the open order value is added to the credit exposure.
When the order is delivered, the open order value is subtracted and the open delivery value added to the
exposure. On billing the delivery, open delivery value is subtracted and the open billing value is added to
the exposure. When billing posts to accounting, the open billing value is subtracted and the open A/R
value added to the exposure. The exposure is finally reduced when the cash is applied against open A/R.
000015 Calculates exposure without considering open sales order value. When the order is
delivered, the open delivery value is added to exposure. On billing the delivery, open delivery value is
subtracted and the open billing value is added to the exposure. When billing posts to accounting, the open
billing value is subtracted and the open A/R value added to the exposure. The exposure is finally reduced
when the cash is applied against open A/R.
00018 This is relevant for non-delivery-relevant orders only. When a new order is created, the
open delivery value is added to the credit exposure. When the order is billed, the open delivery value is
subtracted and the open billing added to the exposure. When billing posts to accounting, the open billing
value is subtracted and the open A/R value added to the exposure. The exposure is finally reduced when
the cash is applied against open A/R.
Note: SAP recommends the use of update group 000012

Organizational Unit in Credit Management

The organizational unit used in credit management is Credit Control Area. It represents the area
where customer credit limits are specified and monitored.
Depending on the relationship between credit control area and company code, the credit
management can be categorized as:

Decentralized credit management

Every company code has its own credit control area. Hence, we can define credit
limits for a customer separately for each company code. This method delivers
benefits such as the local payment cultures can be respected, each company code
has the independence to make its own decisions.

Centralized credit management

Multiple company codes are clubbed under the same credit control area. So, if the
customer transacts with company codes which are under the same credit control
area, the limit is set for all the company codes combined together.

If the currencies of these company codes are different from that of the credit control area, the
receivables are converted to the credit control area currency to check with the credit limit set.
Centralized credit management has benefits such as easier analysis of credit policy and

modifications required, the focus is shifted to other important areas such as bad debt reductions
and improved customer relations as there is only a central credit team that needs to be
consulted irrespective of the geography etc.

Figure 5: Organisational Unit in Credit Management

Assigning Company Codes to a Credit Control Area

SPRO > Enterprise Structure > Assignment > Financial Accounting > Assign Company Code to
Credit Control Area

Figure 6: Company Codes to Credit Control Area

Assigning Sales Area to a Credit Control Area

SPRO > Enterprise Structure > Assignment > Sales and Distribution > Assign Sales Area to
Credit Control Area

Figure 7: Sales Area to Credit Control Area

Define Credit Groups

SPRO > Sales & Distribution > Basic Functions > Credit Management and Risk
Management > Credit Management > Define Credit Groups.
The credit group specifies which subsequent transaction can be blocked for
processing, if the credit limits are exceeded.You can use the default credit groups or
create new once.

Figure 8: Define Credit Groups

Assigning Sales Documents and Delivery Documents to Credit

Group
SPRO > Sales and Distribution > Basic Functions > Credit Management/Risk Management >
Credit Management > Assign Sales Documents and Delivery Documents > Credit Limit Check
for Order Types > Credit Limit Check for Delivery Types

Figure 9: Credit Limit Check for Order Type

Figure 10: Credit Limit check for Delivery Type

Simple Credit Check Vs Automatic Credit Check

a.
b.

High-volume, low-value requires automation and efficient handling through grouping, with
as little personal handling as possible (refuse orders as much as possible)
Low-volume, high-value requires individualization with emphasis on reporting and blocked
orders or deliveries that can be checked and unblocked.

Figure 11: Simple Credit Check Vs Automatic Credit Check

Simple Credit Check

The simple credit check compares the payer customer master records credit limit to the net document
value plus the value of all open items.
In case the value of the document and open items is more than the credit limit:

System may respond with a warning message in the sales order [OR]
Warning message and a delivery block [OR]
Error message, which will cause the document not to be saved.

Automatic Credit Check Variations & Recommended Use

Automatic Credit Check - Gives extra parameters to define credit checks like Credit Control Area, Risk
Category and

Figure 12: Automatic Credit Check Maintenance

STATIC CREDIT LIMIT DETERMINATION:

1.
2.
3.
4.

Open Sales Orders + Sales Order Value

Open Delivery
Open Billing
Open Receivables
Recommended Use: This is seen to be safer to use as compared to Dynamic Credit Check as it
covers all documents due to varying business needs. For high volume and very low risk

customers (e.g. Risk Category 001), it is good practice to put deliveries on block and
leave the orders untouched. This prevents a level of check.

DYNAMIC CREDIT CHECK:

1) 2) 3) 4) Above Mentioned
5) Horizon Period : Eg. 3 Months.
Here the System will not consider the Open items 1, 2, 3 & 4 values for beyond 3 months.
Recommended Use: If the business is always likely to have fast moving items leaving no chances of
Open Orders, Open Deliveries etc for long time period, this is good to use. There can be other business
considerations to include only Open items within certain period

Maximum Document Value

The sales order or delivery value may not exceed a specific value which is defined in the credit
check. The value is stored in the currency of the credit control area. This check is useful if the
credit limit has not yet been defined for a new customer. It is initiated by a risk category which is
defined specifically for new customers.
Recommended Use: Use it for Credit Group 01 (Orders) and high risk category customers
which you always want to review beyond a particular value. It may also be used for prepaid or
one-time customer with Max doc value.

Critical Fields:

This Credit check is initiated by document changes done in credit sensitive fields. One such
example is terms of payment. When this field changes, a check is done on the data in sales
order against the data in the customer master.

Date of Next Review

System uses the date of the next credit review as a trigger for an automatic credit check. If you process a
sales order after a customer's next review date has already gone by, the system automatically carries out a
credit check.

Overdue Open Items

The relation between open items which are more than a certain number of days overdue and the customer
balance may not exceed a certain percentage. These values are defined in the customizing for automatic
credit control.
Recommended Use: Use it for Credit Group 01 (Orders) in conjunction with Static Credit Check for
slightly higher risk category customers, where you dont want to have more than a certain % of open items.
The values may be reduced with increase in risk category values.

Oldest Open Item

The oldest open item may not be more than a specified number of days overdue.

Recommended Use: Use it for any Credit Group 01 or 02 (Orders or deliveries) in

conjunction with Static Credit Check for slightly Low-Medium risk category
customers.

Maximum Number of Dunning Levels Allowed

The customer's dunning level may only reach a specified maximum value exceeding which the item may
be blocked if so configured.

User-Defined Checks- For e.g. Cheque received from a customer bounced, then subsequent orders
may get blocked.

Credit Management at work

For each customer, credit limits are specified in the particular credit master record.
If the customer exists in multiple credit control areas, individual limit can be
specified for each credit control area. In addition, a central credit limit can also be
specified for all the credit control areas under which the customer exists. Then, the
total of the credit limits for each credit control area should not exceed the central
credit limit.
FD32 (FI T code) is used to set credit limit and credit risk category for the customer.

Figure 13: Credit Limit for Customer

Overview Screen
It gives an overview of credit settings of the customer.

Customers credit limit, credit exposure, percentage of credit limit used and horizon (as
applicable in dynamic credit check) are presented as status
Payment history along with the average number of days taken for payment is shown
Payment data contains details such as authorized cash discount and unauthorized cash
discount that was available for cleared items, the outstanding receivables in sales days
Dunning data consists of dunning area for the customer, when he was last dunned and
the dunning level reached during the last dunning run
Control contains the credit risk category of the customer, date of the last check on
customer credit limit, if the customer is blocked for credit management business transactions,
the credit representative group responsible for the customer, the payment history classification,
the financial standing of the customer and date when the credit check of the customer was
carried out last.

Figure 14: Overview Screen

Central Data Screen

It gives an overview of central credit limit settings of the customer.

The maximum permitted credit limit as a total of limits across all credit control areas to
which the customer is assigned
The maximum permitted individual credit limit that a customer can have under any one
credit control area
The currency in which the two maximum limits are specified. This is because we can
enter the central data in any currency of choice, independently of the currencies of the control
areas
The currently exhausted credit limit as a total (percentage) across all credit control
areas to which the customer is assigned (should be less than or equal to max limit)
The currently assigned largest credit limit across all credit control areas to which the
customer is assigned (should be less than or equal to max limit)
Date on which the most recent general information about the customer was
obtained

Figure 15: Central Data Screen

Status Screen
Shows the customer's actual individual details according to particular credit control area

The credit limit for the credit control area, credit account if the limit is to be specified for
a group of customers, the percentage of credit exposure, horizon date to be taken into
consideration, the receivables, special G\L transactions and the order value not yet transferred
to FI used for the credit exposure calculation as well as the amount of secured receivables is
shown under credit limit data
The credit risk category, credit representative group, customer credit group and
customer group used mainly for sorting or reporting, the reference data for customer credit
review, if the customer is blocked for credit management business transactions, the last and
next internal review date for the customer credit limit as applicable to the particular credit control
area are shown under Internal data
The date of last external review, the credit information number as applicable to external
agency, the classification of payment history of the customer as well as the financial standing is
shown under external data

Figure 16: Status Screen

Credit Check at work in Sales Order creation

When sales order is created (SD), system verifies the credit limit used by the customer by
communicating with values set in FD32 (FI)

Figure 17: Credit Check

Release Sales Documents from Credit Block

Block will be released if the Agent discussed with Customer and / or payment is received from
Customer. VKM1, VKM3 and VKM5 are key T codes used to release Sales and Delivery

documents from Credit Block. For the document selected, the following options are
available:

Grant the credit and release the document

Reject the credit and cancel the document
Forward the blocked document to another processor
Recheck the blocked document
Reassign the blocked document and specify a new sequence of documents.
This enables to give priority to and release several documents with a low document
value until their credit limit is completely used up, instead doing so for a single
document with a high document value that has already exceeded its credit limit.

Figure 18: Release Credit Block

Reports

RFDKLI10 - Customers with missing credit data

RFDKLI20 - Reorganization of credit limit for customers in credit control areas
RFDKLI30 - Central and credit control area related data for customer (short overview)
RFDKLI40 - Overview credit limit (extensive)
RFDKLI41 - Credit master sheet
RFDKLI42 - Early warning list
RFDKLI43 - Master data list especially for printing customer cards along with data from
external systems
RFDKLI50 - Mass change for master data in credit management
RFDKLIAB - Display changes for credit management data
RVKRED06- Checking blocked credit documents
RVKRED08 - Checking sales documents which reach the dynamic credit check horizon
(periodic report)
RVKRED09 - Checking the credit documents from credit view (released documents are
checked only if the validity period for the release is up)
RVKRED77 - Reorganization of open credit, delivery and billing document values
especially when update errors occur
RVKRED88 - Simulation reorganization credit data SD

1. In OB45, you can set a Risk Category and Credit limit amount for all newly created customers.
Problem is, this will create a record in KNKK even for customers who may have no reason for a credit limit.

1.A. it will create the credit limit for all the new customers created. In such case remove CCA for the new
customer in XD02 and see. or go to OBD2 supress CCA and check.
2. So the question is: Why can't I OB45 for a specific Account group(s)? It's all or nothing, and this just
doesn't make sense to me. Does anyone know of another to way to accomplish this, beside just manually
creating FD32 for each new customer?
When I create a Sold to 0001 customer, I want it's risk category and credit limit amount defaulted to set
values.
2.A. some times we have to fiddle the system, so please supress CCA for those customers you are not
allowing any credit limit.
please check the system and come back with queries.
regads,
balajia

En primer lugar hay que calificar a los clientes con diferentes categoras de riesgo.
Es decir, no es lo mismo un cliente que sabes que es de alto riesgo y que no te
paga nunca, que uno que puede tener una demora ocasional. Se debe tener en
cuenta eso y SAP permite la creacin de todos los que te sean necesarios. Se llama
categora de riesgo del cliente.
* Cada categora de riesgo de cliente, puede llevar diferentes formas de verificacin
del lmite. Sap por defecto tiene dos formas. La primera, es una verificacin simple,
slo te controla por ejemplo los valores mximos de pedido. La otra es la
verificacin compleja.
* En la verificacin compleja, tienes varios indicadores para poder definir:
- Verificacin esttica de crdito: Slo te controla el lmite de pedidos, por ejemplo,
de entregas...
- Verificacin dinmica: Te controla en un horizonte de tiempo que determines el

importe de pedidos, entregas, facturas e impagados.

- Verificacin de la partida antigua ms abierta: Por ejemplo aqu defines a partir de
cuantos das de impago, se debe bloquear al cliente, lo que decas de "los das de
gracia"..
- Existe alguna ms pero debera mirar la documentacin...
Puedes combinar todas estas opciones para ajustarlo a lo que ms necesites.
Adems de todo esto, defines que quieres que haga el sistema, que no deje
introducir el pedido, que lo permita pero lo bloquee, que solo de un aviso...

I do not have any FD33 master data

maintained for credit limit, but sales
document is credit checked or blocked
Saltar al final de los metadatos

Creado por Andrea Drab, modificado por ltima vez en nov 26, 2014
Ir al inicio de los metadatosSymptom

Sales document is blocked by credit, but credit limit is not maintained / deleted.
No credit master data is maintained in FD33, but sales document is blocked.

Analysis
Please check if there is a 'Default data for automatically creating new customers' maintained:

This means following:

1. If you create a new customer, by saving a credit master data is also directly created with the default
values from the credit control area (KNKK-record);
2. You create an order for a customer to whom there is no credit master data. If default values are in the
determined credit control area defined, these are used instead of the not existing credit master data in
order to execute the credit check.
Please read following SAP Notes related to this topic:
SAP Note 338486 - Credit check despite non-existing credit master
SAP Note 425643 - Automatic creation of a credit master record f new
SAP Note 674076 - Credit management master data for new customer

Basic Configuration
setting for Credit
Management
created by Mr patchala on May 14, 2012 4:08 PM, last modified by
May 15, 2012 11:42 PM

Mr patchala

on

Version 3
inShare18

Hi friends ,
Here i am trying to explain the configuration steps for credit management and this article is
for people who wants the basic and step by step configuration for credit management
In sap there is two different types of credit controls those are 1) Static 2) Dynamic

In Static check there is no Horizon period, and in dynamic you have horizon period.
Horizon period is the duration of the time. If you maintain horizon period as 2
months, then all the open documents that are with in this period are taken for credit
check, documents beyond that are not for consideration. in static system will
consider the all open document till now.

Configuration settings:
1) Define Risk Category:

SPRO -- > Financial Accounting -- > Account Receivable and Accounts Payable -- > Credit
Management -- > Credit Control Account -- > Define Risk Categories
Go to NEW ENTRIES and create the Risk Category with the combination of Credit Control
Area.
Save the record.

2) Define Credit Control Area:

It is the responsible organizational element which takes care of all the credit management
activities in a company code.
SPRO --> Enterprise Structure -- > Definition -- > Financial Accounting -- > Define Credit
Control Area.
Go to NEW ENTRIES and create the Credit Control Area.

Note: if you maintain risk category and credit limit in "default data for automatically creating
new customers" , it will automatically apply for new creating customers in future.

3) Assign Company Code to Credit Control Area:

SPRO

--> Enterprise Structure -- > Assignment -- > Financial Accounting -- > Assign
Company Code to Credit Control Area.
Select the Company Code and assign the Credit Control Area to the Company Code.
Save the record.
4) Define Credit Groups:

The credit group specifies which subsequent transaction can be blocked for processing, if the
credit limits are exceeded.
SPRO -- > Sales & Distribution -- > Basic Functions -- > Credit Management and Risk
Management -- > Credit Management -- > Define Credit Groups.
You can use the default credit groups or create new once.

5) Assign Sales Document and Delivery Document to Credit Group:

SPRO -- > Sales & Distribution -- > Basic Functions -- > Credit Management and Risk
Management -- > Credit Management -- > Assign Sales Document and Delivery Document -> Credit Limit Check for Order Types.

Select the Sales Document Type and assigned to Check Credit, Credit Group. And save
the record.

-- Credit Limit Check for Delivery Types.

-- Select Delivery Document Type and assigned to Delivery Credit Group, Goods Issue
Credit Group
-- Save the record.

6) Maintain Credit Limits for Customer:

Logistics -- > Sales & Distribution -- > Credit Management -- > Master Data -- > FD32Change.
-- Specify the Customer for whom the credit limits has to be maintained
-- Specify the credit control area of the customer.
-- Select all the views and enter.
a) In the overview screen , from the main menu select Go to -- > Control Area Data -- >
Status.

Now you have to give value Credit Limit, Risk Category, Last/ Next Interval
Review

Note : for only Dynamic check maintain "Credit horizon date" field
b) From the main menu select Go to -- > Control Area Data -- > Payment History.
On this view the system display the payment history of the customer, provided we check
the field Payment History Recorded in the corresponding customer master.
c) From the main menu select Go to -- > General Data -- > Central Data.
Here we have to specify the Maximum Permitted Credit Limits and Save the record.

7) Automatic Credit Control:

During the sales document processing, if the credits are exceeded, the system can
automatically block the required transaction for this we need to configure automatic credit
control.
SPRO -- > Sales & Distribution -- > Basic Functions -- > Credit Management and Risk
Management -- > Credit Management -- > Define automatic credit control.
We need to define automatic credit control in the combinations of Credit Control Area, Risk
Category and Credit Group.

Note : 1) you can maintain seasonal discount by specifying "credit limit seasonal factor " tab.
2) in checks tab maintain you want to go for static or dynamic check.
3) specify the system reaction if credit limit is exceeded by "Reaction " check box
a) No massage
b) Warning massage
c) Error massage
4) you can block the order/deliver/pgi by specifying "Status/block" field
5) for dynamic control maintain "Horizon" value
6) for static select " open orders""open delivery`s"

Save the Automatic Credit Control Area.

1.
2.

Note: For the system to carry out the credit limit check during the sales document
processing, the following settings must be done.
1) In the definition of corresponding sales document type, we must not specify the
value No Credit Limit Check for the field Check Credit Limit.
2) In the definition of corresponding item category, we must check the field Credit
Active.
Hope you like my explanation..
Regards,
Patchala.