Credit and Receivables Risk Management

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Exercise Introduction

You have decided to implement the Credit Management function in SAP to better manage
Accounts Receivable to minimize the risk from customer default while making sure that the
impact on sales due to credit blocks is reasonable and minimized.

Some configuration settings have already been made to allow for credit management. Additional
settings must be made, along with master data entries to complete the implementation of credit
management. We will make those entries for ## Health Express, then check to see that they
function.

1. Set Updating for Sales Documents

First, we need to define how different transactions affect what our customer owes us, or the
Total Commitment. To do this, follow the menu path:

Tools Customizing IMG Edit Project
Click on
Enterprise Structure Definition Financial Accounting Define Credit Control
Area (click on the icon)




Select your credit control area, ##FS, then click on the details icon ( ) to get the following
screen:
Select your credit control area,
then click on the details icon
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Enter 000012 for the Update group and K1 for the FiscalYrVariant, then click on the save icon
( ). The update group defines how documents in the sales process change the Total
Commitment. With update group 000012:

Sales orders
o Increase the open order value
Deliveries
o Reduce the open order value
o Increase the open delivery value
Billing documents
o Reduce the open delivery value
o Increase the open billing document value
Financial accounting documents
o Reduce the open billing document value
o Increase the open items

Click on the back icon ( ) twice to return to the SAP Reference IMG
( ).
Enter 000012 for Update group
Enter K1 for FiscalYrVariant
Then click on the save icon
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2. Create Risk Category

The credit risk category will control the credit review process. Different credit risk categories
can be created so that different procedures can be used with different groups of customers. To
create a risk category, follow the menu path:

Tools Customizing IMG Edit Project
Click on
Financial Accounting Accounts Receivable and Accounts Payable Credit
Management Credit Control Account Define Risk Categories ( )

Which will bring up the following screen:




Click on the New Entries icon, which will bring up the following screen:



Click on the New Entries icon
Add the entry:
Z## ##FS ## Standard Risk Category
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Add Risk Category Z## for credit control area ##FS with name ## Standard Risk Category.
Click on the save icon ( ),then click on the back icon ( ) twice to return to the SAP Reference
IMG ( ).


3. Maintain Automatic Credit Control

With Automatic Credit Control, the SAP system can be configured to perform credit checks to
run at different times during order processing. It is possible to define a system response for each
credit check (for example, warning message). In the case of a warning message, a block can be
set in the credit status of a document so that further processing cannot continue until the credit
problem is corrected.

To configure Automatic Credit Control, follow the menu path:

Tools Customizing IMG Edit Project
Click on

Sales and Distribution Basic Functions Credit Management/Risk Management
Credit Management Define Automatic Credit Control ( )

Which will produce the following screen:



Click on the New Entries icon, which will produce the following screen:


Click on the New Entries icon
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Make the following entry:

Enter
CCA RkC CG Credit control
##FS Z## 01 Standard Credit Check

Then click on enter icon ( ). The currency value will change to USD:




To define the Automatic Credit Checking procedures, make the following entries:

Enter
CCA RkC CG Credit control
##FS Z## 01 Standard Credit Check

Then click on enter icon
Currency changes to USD
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Make the entries shown above, then click on the save icon ( ),then click on the back icon ( )
twice to return to the SAP Reference IMG ( ).


Check Dynamic
Enter Reaction C (warning plus value by which credit limit is exceeded)
Check Status/Block (block further processing)
Enter 2 for Horizon (2 months for dynamic check)
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4. Set Customer Credit Limit

With the configuration of the Automatic Credit Check complete, the credit limit can be
established for ## Health Express. Setting the credit limit for a company involves a change to
Master Data, which is done from the SAP Easy Access menu paths. Click on the back icon
( ) until you reach the SAP Easy Access screen, then follow the menu path:

Logistics Sales and Distribution Credit Management Master Data Change

which will bring up the following screen:




To find customer ## Health Express, click on the customer field, then click on the search icon
to call up the following search window:



Click on the customer field, then
click on the search icon
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After entering ## for the search term and clicking on the enter item, you should get a list of
customers:




Double-click on ## Health Express to select it, then make the following additional entries:

Enter ## for search term,
then click on the enter icon
Double-click on ## Health Express to select it
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Make/confirm the entries shown above, click on the enter icon ( ) and the following screen will
appear:

Confirm that the customer number has
been entered from the Search process
Enter ##FS for Credit control area
Select Status, then click enter
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Enter 1000 for Credit limit and Z## for Risk Category, then click on the save icon ( ). The
SAP ERP system should now be configured with a credit limit of $1,000 for Health Express.
Next, we need to test the configuration. Click on the back icon ( ) until you reach the SAP
Easy Access screen

5. Create Sales Order

To test the credit check, first we will create a sales order that will be within the $1,000 credit
limit for ##Health Express. To create the sales order, follow the menu path:

Logistics Sales and Distribution Sales Order Create

which will produce the following screen:
Message notifying us that we have not
maintained a credit limit for ## Health Express,
which is why we are in this transaction!
Enter 1000 for Credit limit and
Z## for Risk Category, then
click on the save icon
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Make the following entries, then click on the enter icon ( ) and the following screen will
appear:



Enter:
Order Type OR
Sales organization ##FS
Distribution channel DI
Division SB
Then click on the enter icon
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Enter the information shown above, then click on the enter icon ( ). Next, follow the pull-
down menu path EnvironmentPartnerDisplay credit account:


Search for ## Health Express
Enter PO Number HXP##
Search for ## NRG-B
Enter 2 for Order quantity
Then click on the enter icon
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From the Create Sales Order screen, we can check the customers credit status:



Follow pull-down menu
path to review credit limit
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Because we have not saved the sales order yet, ## Health Express has all of its $1,000 credit
limit available. Click on the back icon ( ) to return to the Create Sales Order screen, then
click on the save icon ( ) to save the sales order. When the sales order has been saved, click on
the back icon ( ) until you are back at the SAP Easy Access screen.

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6. Review Customer Credit Limit

Now that the sales order has been saved, it should be reflected in the customers available credit.
To check this, follow the menu path:

Logistics Sales and Distribution Credit Management Master Data Change

which will bring up the following screen:




Confirm the information required for ## Health Express, then click on the enter icon ( ). The
revised credit limit data will be displayed:


The customer number for ## Health
Express should be entered as a default
value by the SAP system. Confirm the
credit control area and status setting,
then click on the enter icon
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Note that the sales order has used 59% of ## Health Expresss credit limit. Click on the back
icon ( ) until you are back at the SAP Easy Access screen.


7. Create Sales Order over the Credit Limit

If ## Health Express orders another 2 cases of NRG-B bars, this should trigger the Automatic
Credit Check logic as it would cause ## Health Express to exceed its credit limit. To check
this, create another sales order as in Step 5. To do this, follow the menu path:

Logistics Sales and Distribution Sales Order Create

Enter the following information:







Then click on the enter icon ( ):


Note impact of sales order on customers credit
Order Type OR
Sales organization ##FS
Distribution channel DI
Division SB
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Enter the information shown above and click on the save icon ( ), and the following message
will pop-up:




This is a result of the settings we made for Automatic Credit Control in Step 3. We set the
reaction to C, which meant that we would get a warning message plus information as to the
amount by which the order exceeded the credit limit. Because we specified a warning message,
we can save the sales order, but it will be blocked from further processing until the credit limit
problem is resolved. If we had specified an error message for the reaction, the order would not
be able to be saved. Click on the enter icon ( ) on the message to save the order, then click on
the back icon ( ) until you are back at the SAP Easy Access screen.
Search for ## Health Express
Enter PO Number HXP##A
Search for ## NRG-B
Enter 2 for Order quantity
Then click on the enter icon
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8. Review Customer Credit Limit Again

Now that the second sales order has been saved, we should check how it appears in the
customers available credit. The menu path for credit management is:

Logistics Sales and Distribution Credit Management Master Data Change

After confirming the customer data, you can review ## Health Expresss credit:




Note that the amount of credit used has not changed! While we saved a second order for ##
Health Express, it is blocked, and as blocked orders cannot be processed further, the SAP ERP
system does not count them against the customers credit limit.


9. Review and Release the Blocked Sales Order

Usually an important task in credit management is to review all blocked orders and decide how
they should be handled. In a reasonably large company, this might be a task performed every
few hours.

To review the blocked sales order, follow the menu path:

Logistics Sales and Distribution Credit Management Exceptions Blocked
SD documents
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which will produce the following screen:




Make sure that at least ##FS is entered for the Credit control area, then click on the execute icon
( ). This will produce the following report:








We will release this sales order for further processing. To do this, select the order by clicking the
check box, then click on the release icon ( ), then click on the save icon ( ). This will
produce the following message:
Credit control area ##FS and the account
number for ## Health Express should be
entered by default. Only ##FS is required to
find the blocked sales order.
Click on the execute icon to list the blocked
sales order
Select blocked sales order, click on release,
then click on the save icon
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Use the back icon ( ) until you are back at the SAP Easy Access screen, then recheck the credit
limit using the menu path:

Logistics Sales and Distribution Credit Management Master Data Change

The just-released sales order is now reflected in the Customers credit limit status:




Click on the back icon ( ) until you are back at the SAP Easy Access screen
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10. Create Delivery

As a sales order is processed, its changing status is visible in Credit Management. To see this,
we will process one of the sales orders further. To create a delivery for one of ## Health
Expresss sales orders, follow the menu path:

Logistics Sales and Distribution Shipping and Transportation Outbound
Delivery Create Single Document With reference to Sales Order

which will produce the following screen:




Enter ##SP for shipping point and enter a sales order, then click on the enter icon ( ) to produce
the following screen:

Enter ##SP for shipping point
and either use the default order or
search for a ## Health Express
sales order, then click on enter
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Click on the save icon ( ) to create the delivery. Use the back icon ( ) until you are at the
SAP Easy Access screen, then check ## Health Expresss credit status using the menu path:

Logistics Sales and Distribution Credit Management Master Data Change

Verify the default data, then click on the enter icon ( ). It appears that the status is unchanged,
but use the pull-down menu path:

ExtrasSales value

which will produce the warning message:



Click on the enter icon ( ) to see more detail on the sales value:

Click on the save icon to create the delivery
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Note that the sales value of $1,180 is made up of an open sales order and an open delivery. Click
on the enter icon ( ) to close this window, then use the back icon ( ) until you are at the SAP
Easy Access screen.


11. Pick Order and Post Goods Issue

To further process the sales order, we can perform the picking and post the goods issue in one
step. To do this, follow the menu path:

Logistics Sales and Distribution Shipping and Transportation Outbound
Delivery Change Single Document

which will produce the following screen:






Verify that the delivery number is entered, then click on the enter icon ( ) to get the following
screen:
The sales value is made
up of an open sales order
and an open delivery
The delivery number should
be entered automatically. If
not, use the search to find it.
Then click on the enter icon
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Enter 300 for SLoc (storage location), 2 for Picked Qty, then click on the Post goods issue icon
( ).

12. Create Billing Document

To create an invoice for the sales order, follow the menu path:

Logistics Sales and Distribution Billing Billing Document Process Billing
Due List

which will produce the following screen:

Click on the Picking tab,
Enter 300 for SLoc (storage location)
Enter 2 for Picked Qty
Then click on the Post goods issue icon.
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Enter ##FS for the Sales Organization, then click on DisplayBillList:





Click on block at end of line to select the delivery, then click on Collective billing document.
When processing the delivery is complete, the color of the line will change:

Enter Sales Organization ##FS
Click on DisplayBillList
Click on block at end of line to select, and then click on Collective billing document
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Use the back icon ( ) until you are at the SAP Easy Access screen, then check ## Health
Expresss credit status using the menu path

Logistics Sales and Distribution Credit Management Master Data Change






As one of ## Health Expresss sales order has now been processed and invoiced, it shows up in
the Accounts Receivable category.


Processed sales order is
now in the receivables
category
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13. Receive payment from the Customer

When we receive payment from the customer, it should free up some of the credit limit. To test
this, receive payment from the customer by following the menu path:

Accounting Financial Accounting Accounts Receivable Document Entry
Incoming Payments

Which will produce the following screen:




Enter the information shown above, then click on Process open items. This will produce the
following screen:

Enter todays date for document date
Make sure ##FS is entered for company
code and USD is entered for Currency/rate
Enter 100000 for Account under bank data
Enter 590 for Amount
Search for ## Health Express
Then click on Process Open Items
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Double-click on the USD Gross amount to assign the payment to the open invoice, then click on
the save icon ( ) to post the payment.
Double-click on the USD Gross amount
until the Not assigned quantity is zero.
This assigns the payment to the open
invoice. Click on the save icon
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Click on the back icon ( ), which will produce the following pop-up window:



Click Yes, and you will return to the SAP Easy Access screen.

Check ## Health Expresss credit status one last time using the menu path

Logistics Sales and Distribution Credit Management Master Data Change

Click on the enter icon ( ) to get to the following screen:



Note that paying the invoice has cleared the Receivables item.

To generate a report on this customer, follow the pull-down menu path:

EnvironmentReportingCredit overview

Click Yes
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which will produce the following screen:



Click on the execute icon ( ) to generate the overview report:



To complete this assignment, you need to print a copy of this report to hand in. To do this, click
on the print icon ( ) and you will get the following screen:

Click on the execute icon to generate the overview report
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After clicking on the continue icon you should be returned to the Document flow screen and a
message like the following should be displayed at the bottom of the screen:



The SAP ERP system will also open window that will contain details of the print job:



Be sure to neatly print your name on a printout
of the Credit overview report to hand in.


Click on the Enter (continue) icon