Credit Management enables you to minimize the credit risk yourself by specifying a specific credit limit for your customers. You can take the financial pulse of a customer or group of customers, identify early warning signs, and enhance your credit-related decision-making. Credit control area is basic organizational unit that represents the area where customer credit is awarded and monitored.
Types of Credit Check:
- Simple check
- Automatic credit check –It has additional checks for credit control
Transactions related to Credit Monitoring
- Credit Overview for company code –F.31
- Customers with missing credit data –F.32
- Blocked SD documents –VKM1
- Release of blocked Sales order –VKM3
- Release of blocked deliveries –VKM5
Credit management is used to set and control customer credit limits and has a integration point with the SD and FI modules. Credit management also has a credit control area is the organizational unit used to set and control credit limits for customers
Here is the org structure of Credit management
• A client can have many credit control areas.
• A credit control area can have many company codes.
• A company code may be assigned to exactly one credit control area, but a list of allowable credit control areas may be configured.
• A company code can have many customers and customers can be related to many company codes.
Therefore, a credit control area can have many customers and customers can be related to several credit control areas. The credit limits can be set in 2 ways. You can set a credit limit per credit control area, which is then the credit limit for any customer within the credit control area, unless otherwise assigned and you can set unique credit limits per customer.
There are also 2 levels when setting the credit limits for a customer.
Globally – The maximum limit of a customer around the world, across credit control areas.
For a credit control area – The limit for the customer in one particular credit control area.