SAP SD , GTS, GST & LE BY

MANOJ TONY
+91 87634 27833 / +91 72177 08599 ONLINE/CLASS ROOM TRAINING
[Link]@[Link]

CREDIT MANAGEMENT:-
Credit management is a process of managing credit limits of the customers. Every company have credit
department and credit department will manage the credit limit of the customer. It is integration
between SD and FI consultant.

ROLES AND RESPONSIBILITIES OF CREDIT DEPARTMENT:-

i. Fixing the credit limit of the customer.
ii. Track the day to day transaction of customer and if they find any customer’s credit limit exceeds
then they block the customer for credit.
iii. Classifying the customers according to customer’s payment history. They categories into high
risk customer, medium risk customer and low risk customer.
iv. Releasing the orders which are blocked for credit.

CREDIT MANAGEMENT PROCESS:-

ORDER CREDIT MANAGEMENT

SYSTEM CHECKS CREDIT

LIMIT OF CUSTOMER

IF CREDIT LIMIT IS IF CREDIT LIMIT

NOT EXCEEDING EXCEEDS
BLOCK
DELIVERY
ORDER

INVOICE WE SEND MAIL TO

CUSTOMER
IF THEY DON’T
CUSTOMER IF THEY RELEASE
RELEASE

DELIVERY BLOCK
ORDER
INVOICE
CUSTOMER MAKES
PAYMENT TO RELEASE
ORDER

Your seriousness is my success… Page 1

SAP SD , GTS, GST & LE BY
MANOJ TONY
+91 87634 27833 / +91 72177 08599 ONLINE/CLASS ROOM TRAINING
[Link]@[Link]

Credit management can be configured in to two ways

i. Simple credit check
ii. Automatic credit check

SIMPLE CREDIT CHECK AUTOMATIC CREDIT CHECK

1. In this if customer credit limit exceed u can

1. If customer credit limit exceed we can
block it order level or delivery level or PGI
block only at order level.
level.
2. We categories into high risk customer ,
medium risk customer and low risk
customer based on customer’s past
2. There is no category of risk management. payment history. High risk customer block
at order level. Medium risk customer block
at delivery level. Low risk customer block
at PGI level.
3. Here all open order value, open delivery
3. In simple system considers only receivable
value, open invoice value and open item
(Open items means invoice raised but not
value are considered while performing
yet paid) while performing credit check.
credit management.

CONFIGURATION OF SIMPLE CREDIT CHECK:-

1. DEFINE CREDIT CONTROL AREA:-
CREDIT MANAGEMENT is an organizational unit where group of people responsible for credit
management. Fi consultant is responsible to define credit control area.
PATH:- SPRO ENTERPRISES STRUCTURE DEFINITION FINANCIAL ACCOUNTINGDEFINE CREDIT
CONTROL AREA NEW ENTRIES Z100 INR UPDATE GROUP [000012]

Update group Controls which document should be update in credit management i.e. whether to update
open order value Or open delivery value or open invoice vale or open item value.
There are 3 types of update groups: -
1) 000012: - It updates all open order values, open delivery values, open invoice values and open
item values into credit management.
2) 000015: - It updates all open delivery values, open invoice values, and open item values into
credit management. Example:- delivery without order reference.

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SAP SD , GTS, GST & LE BY
MANOJ TONY
+91 87634 27833 / +91 72177 08599 ONLINE/CLASS ROOM TRAINING
[Link]@[Link]

3) 000018: - It updates all open order values, open invoice values and open item values into credit
management. Example:- third party process and service item.

Then assign FISCAL YEAR VARIANT [V3] CREDIT LIMIT [5L] save it.

2. ASSIGN COMPANY CODE TO CREDIT CONTROL AREA:-

FI consultant is responsible to assign company code to credit control area.
PATH:- SPRO  ENTERPRISES STRUCTURE ASSIGNMENT  FINANCIAL ACCOUNTING ASSIGN
COMPANY CODE TO CREDIT CONTROL AREA GO TO YOUR COMPANY CODE ASSIGN CREDIT
CONTROL AREA save it.
There are two types of credit process
i. Centralized credit process
ii. De-centralized credit process

Centralized credit process- If a single credit control area is taking care for multiple company code, then
it is called as centralize credit process.
De-centralized credit process- If every company codes are having different credit control area then it is
called de-centralized credit process.

The relationship between company code and credit control area is [one to many] i.e. One credit control
area can have many company code but one company code should be assign to single credit control area.

3. SIMPLE CREDIT CHECK:-

SD consultant is responsible for this configuration.
PATH:- SPRO S&D BASIC FUNCTION CREDIT MANAGEMENT/RISK MANAGEMENT  SIMPLE
CREDIT CHECKGO TO YOUR DOCUMENT TYPE  MAINTAIN CREDIT CHECK AS A or B or C.

4. Then go to your pricing procedure (V/08) which value you want to update credit management
and maintain subtotal as “A” (In net value).
5. Then go to your item category (VOV7) TANCHECK CREDIT ACTIVE.
6. Then create new customer and check payment history record in company code data payment
transaction view.
Payment History record: - If you check this then customer payment will be updated in credit
management i.e. FD32.
7. Go to FD32 and maintain your risk category in status view.

Your seriousness is my success… Page 3

SAP SD , GTS, GST & LE BY
MANOJ TONY
+91 87634 27833 / +91 72177 08599 ONLINE/CLASS ROOM TRAINING
[Link]@[Link]

CONFIGURATION OF AUTOMATIC CREDIT CHECK:-

1. DEFINE CREDIT CONTROL AREA:-
FI consultant is responsible to define credit control area.
PATH:- SPRO ENTERPRISES STRUCTURE DEFINITION FINANCIAL ACCOUNTINGDEFINE CREDIT
CONTROL AREA NEW ENTRIES Z101 INR UPDATE GROUP [000012]  FISCAL YEAR VARIANT
[V3] CREDIT LIMIT [5L] save it.
2. ASSIGN COMPANY CODE TO CREDIT CONTROL AREA:-
FI consultant is responsible to assign company code to credit control area.
PATH:- SPRO  ENTERPRISES STRUCTURE ASSIGNMENT  FINANCIAL ACCOUNTING ASSIGN
COMPANY CODE TO CREDIT CONTROL AREA GO TO YOUR COMPANY CODE ASSIGN CREDIT
CONTROL AREA save it.
3. DEFINE RISK CATEGORY:-
FI consultant is responsible to define risk category. We have 3 risk categories.
i. High risk category
ii. Medium risk category
iii. Low risk category
PATH:-SPROFINANCIAL ACCOUNTING NEWACCOUNT RECEIVABLE & PAYABLECREDIT
MANAGEMENT CREDIT CONTROL ACCOUNT DEFINE RISK CATEGORIES NEW ENTRIESCREATE
THREE RISK CATEGORIES.
4. DEFINE CREDIT GROUP:-
It is used to combine different document types for the purpose of credit management. SD consultant is
responsible to define credit group. Credit groups specifies which transaction to block if customer credit
limit exceed i.e. whether to block at order level, delivery level or PGI level
PATH:-SPRO S&D BASIC FUNCTION CREDIT MANAGEMENT/RISK MANAGEMENTCREDIT
MANAGEMENTDEFINE CREDIT GROUPSNEW ENTRYDEFINE 3 CREDIT GROUPS
5. ASSIGN SALES DOCUMENT AND DELIVERY DOCUMENT:-
In this configuration steps we assign credit groups to order type and delivery type
PATH:-SPRO S&D BASIC FUNCTION CREDIT MANAGEMENT/RISK MANAGEMENTCREDIT
MANAGEMENTASSIGN SALES DOCUMENT AND DELIVERY DOCUMENT.
i. CREDIT LIMIT CHECK FOR ORDER TYPE:-
DOUBLE CLICK ON CREDIT LIMIT CHECK FOR ORDER TYPES GO TO OR CHECK CREDIT LIMIT [D]
AND CREDIT GROUP [Z1]  SAVE IT.
ii. CREDIT LIMIT CHECK FOR DELIVERY TYPE:-

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SAP SD , GTS, GST & LE BY
MANOJ TONY
+91 87634 27833 / +91 72177 08599 ONLINE/CLASS ROOM TRAINING
[Link]@[Link]

DOUBLE CLICK ON CREDIT LIMIT CHECK FOR DELIVERY TYPES GO TO LF  DELIVERY CREDIT
GROUP [Z2] AND PGI GROUP [Z3] SAVE IT.

6. DEFINE AUTOMATIC CREDIT CONTROL:-

We define automatic credit control to the combination of [credit control area +risk category +
credit group]
T-code for automatic credit control is OVA8.
PATH:-SPRO  S&/D  BASIC FUNCTIONS  CREDIT MANAGEMENT/RISK MANAGEMENT 
CREDIT MANAGEMENT  AUTOMATIC CREDIT CONTROL.
8. Then go to your pricing procedure (V/08) which value you want to update credit management
and maintain subtotal as “A” (In net value).
9. Then go to your item category (VOV7) TANCHECK CREDIT ACTIVE.
[Link] create 3 new customers (high risk customer, medium risk customer and low risk customer)
and check payment history record in company code data payment transaction view.
[Link] to FD32 and maintain your risk category in status view. Here create credit management for
three customers you have created and maintain their risk category.

AUTOMATIC CREDIT CONTROLS (OVA8):-

NO CREDIT CHECK:-
Here you can specify a routine number that contains conditions for when a credit limit check should take
place.
ITEM CHECK:-
If you check this then system will perform credit check while entering the line item in sales document. If
you uncheck this then system will perform credit check while saving the sales document.
CREDIT LIMIT SEASONAL FACTOR:-
Here you can increase or decrease the credit limits to the entire customer during a particular period. If
you maintain some percentage over here and maintain the from and to date, then system will increase
the credit limit up to that percentage. If you check minus then the credit limit will decrease.
DEVIATION IN PERCENTAGE:-
Generally after releasing the order which is blocked for credit, if user increases the value in that order
then system will again block the order for credit. If you maintain some percentage in deviation in %,
then system will allow to increase the quantity to that extent in that released order.
PAYER:-
Payer check will come into picture if you have multiple payers. If you check payer then performing open
item check and oldest open item check system consider the invoice of the particular payer.
If you uncheck payer then while performing open item check and oldest open item check system
consider the invoices of all the payer who are in a group.

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SAP SD , GTS, GST & LE BY
MANOJ TONY
+91 87634 27833 / +91 72177 08599 ONLINE/CLASS ROOM TRAINING
[Link]@[Link]

[Rough – Create a customer with SP – SH – BP – PY and create another two payer and assign both payer
with SP.]
Grouping of multiple payers or customer into single credit limit. First maintain credit limit for one
payer and assign this payer as credit account for other payer in FD32.
Status view edit change account maintain 1st payer maintain risk category save it.
STATIC:-
If you check static then system will update all open order values, open delivery values, open invoice
values, & open item values into credit check. (FD32).
REACTION:-
This field controls how system should response if order is block for credit i.e. whether to give warning
message or error message or no message.
STATUS/BLOCK:-
if you check this then while creating sales order if customer credit limit exceed then system will block
the order for credit.
If you uncheck this system will not block the order for credit even a customer credit limit exceeds.
OPEN ORDERS:-
If you check this then only system will perform credit check in order level while creating order. If
customer credit limit exceeds then system will block the order.
If you uncheck this then system will not perform credit check in sales order and system will not block
orders.
OPEN DELIVERY:-
If you this then only system will perform credit check while creating delivery document. The blocked
order values will not be updated into credit management (FD32).
DYNAMIC:-
If you check Dynamic it updates all open order values, open delivery values, open invoice values, and
open item values but any open order if the delivery creation date exceeds horizon date then that order
will not update into credit management (FD32).
We maintain horizon period in credit management ( FD32 ) overview.

STATIC DYNAMIC
If you check static then system will update all open If you check Dynamic it updates all open order
order values, open delivery values, open invoice values, open delivery values, open invoice values,
values, & open item values into credit check. and open item values but any open order if the
(FD32). delivery creation date exceeds horizon date then
that order will not update into credit management
(FD32).

DOCUMENT VALUE:-
If you check this and if you maintain maximum document value then while creating sales order if sales
order value exceeds Max. Doc. Value then system will block the order for credit.

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SAP SD , GTS, GST & LE BY
MANOJ TONY
+91 87634 27833 / +91 72177 08599 ONLINE/CLASS ROOM TRAINING
[Link]@[Link]

CRITICAL FIELDS:-
If you check this then while creating sales order if user changes any of the critical fields then system will
block the order for credit even though the customer is having enough credit balance.
Critical fields are [Payment terms, fixed value date and additional value days] in credit management.
We can change the critical fields in sales document billing document tab.
NEXT REVIEW DATE:-
If you check this then while creating sales order system will check order date with next review date if the
sales order date exceeds next review date then system will block the order for credit. We maintain next
review date in FD32 status view.
The number of days field in next review date is grace days.
OPEN ITEMS:-
If you check this and if you maintain maximum open item % then while creating sales order, system
checks is there any open item exist for this customer or not, if yes then it will accumulate the value of
open items and system will also check is any of the open item overdue or not, if there is any overdue
item then system will add the values of overdue items and calculate the % between overdue item values
and open item values. If this % is exceeds maximum open item % then system will block the order for
credit.
HOW TO OVERDUE AN ORDER:-
There are 3 steps:-
1. Change the billing date while creating invoice.
2. Go to VF02  click on accounting change mode double click on customer number
change baseline date.
3. Go to FBL5N maintain your customer number company code execute double click on
invoice number  change mode change billing date.
OLDEST OPEN ITEM:-
It is nothing but overdue item if check oldest open item then while creating sales order system checks
for this customer is any one of the previous invoice is overdue or not, if yes then system will block the
next transaction.
HIGHEST DUNNING LEVEL:-
Dunning is the process of sending reminders to the customer whose payment is delayed.
Dunning configuration is done by FI consultant.
If you check dunning level and if you maintain highest dunning level and if that dunning level executes
then system will block the next transaction.
Generally we have 3 dunning level.
USER-1/USER-2/USER-3:-
If client’s requirement related to credit management is not fulfilling with standard configuration then we
need to use user exits. SAP has provided 3 user exits if you are using 1st user then check user 1, if you
are using 2nd user exits then check user 2 and if you are using 3rd then check user 3.

DIVISION WISE CREDIT CONTROL AREA:-

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SAP SD , GTS, GST & LE BY
MANOJ TONY
+91 87634 27833 / +91 72177 08599 ONLINE/CLASS ROOM TRAINING
[Link]@[Link]

If you have 6 divisions then you have to create 6 + 1 = 7 credit control areas. 6 actual and 1 dummy
credit control area.
First create credit control areas, Z100 make it as dummy which we already created and create
Z101 for Z1 division, Z102 for Z2, Z103 for Z3, Z104 for Z4, Z105 for Z5 and Z106 for Z6.
Then assign dummy credit control area to company code.
Assign permitted credit control area to company code.
In this configuration steps we assign actual credit control area to company code.
Go to new entry ZALK – Z101, ZALK – Z102, ZALK – Z103, ZALK – Z104, ZALK – Z105, and ZALK –
Z106 save it.
Define risk category
New entry  Z01 – Z101, Z02 – Z101, Z03 – Z101
Z01 – Z102, Z02 – Z102, Z03 – Z102
Z01 – Z103, Z02 – Z103, Z03 – Z103
Z01 – Z104, Z02 – Z104, Z03 – Z104
Z01 – Z105, Z02 – Z105, Z03 – Z105
Z01 – Z106, Z02 – Z106, Z03 – Z106
Assign credit control area to sales area
SPRO ENTERPRISES STRUCTURE ASSIGNMENT  S&D ASSIGN SALES AREA TO CREDIT
CONTROL AREA
(In this configuration steps we assign actual credit control area to sales area).
ZDOM – Z1 – Z1 = Z101 ZDOM – Z2 – Z1 = Z101
ZDOM – Z1 – Z2 = Z102 ZDOM – Z2 – Z2 = Z102
ZDOM – Z1 – Z3 = Z103 ZDOM – Z2 – Z3 = Z103
ZDOM – Z1 – Z4 = Z104 ZDOM – Z2 – Z4 = Z104
ZDOM – Z1 – Z5 = Z105 ZDOM – Z2 – Z5 = Z105
ZDOM – Z1 – Z6 = Z106 ZDOM – Z2 – Z6 = Z106......do for Z3 & Z4 distribution channel.
Define credit Groups
SPRO S&D  BASIC FUNCTION CREDIT MANAGEMENT / RISK MANAGEMENT CREDIT
MANAGEMENT DEFINE CREDIT GROUPS.
ASSIGN SALES DOCUMENT AND DELIVERY DOCUMENT
DEFINE AUTOMATIC CREDIT CONTROL
Z101 – Z01 – Z1 Z102 – Z01 – Z1 Z103 – Z01 – Z1
Z101 – Z02 – Z2 Z102 – Z02 – Z2 Z103 – Z02 – Z2
Z101 – Z03 – Z3 Z102 – Z03 – Z3 Z103 – Z03 – Z3 ......Do for same Z104, Z105 & Z106.
Create new customer for division wise credit control
Extend the customer from one division to another division and assign credit control area in
billing tab.
Maintain credit limits (FD32)
Customer number [xxxxxxx
Credit control area Z101 Z102 Z103 Z104 Z105 Z106
Credit limit 1L 2L 3L 4L 5L 6L

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