Credit Management handles customer credit exposure, implements credit policies, sets credit limits, and manages the risk of bad debts or late payments by evaluating customer creditworthiness and monitoring customer accounts.
5 minutes
5 Questions
Credit Management in SAP S/4HANA supports the entire credit process, from credit evaluation to credit limit monitoring. It helps organizations manage financial risk by evaluating customers' creditworthiness before processing orders or deliveries.
Key components include:
1. Credit Master Data: Contains customer credit information, credit limits, risk categories, and payment history.
2. Credit Checks: Automated evaluations triggered at various stages (order creation, delivery, billing) to ensure customers remain within approved credit limits.
3. Credit Scoring: Calculation of customer credit scores based on payment behavior, financial statements, and external ratings.
4. Block Management: Automatic or manual blocking of business transactions when credit limits are exceeded.
5. Credit Limit Management: Setting and monitoring customer-specific credit limits, with approval workflows for limit adjustments.
6. Risk Analysis: Tools for evaluating overall portfolio risk exposure and concentration risks.
7. Integration with AR: Close connection with Accounts Receivable for real-time evaluation of open items, payment history, and Days Sales Outstanding (DSO).
8. Credit Rules: Configurable business rules determining how credit checks are performed based on customer segments or transaction types.
In S/4HANA, Credit Management offers enhanced capabilities through:
- Fiori-based interfaces for credit analysts
- Predictive analytics for risk assessment
- Real-time credit exposure calculation
- Integration with machine learning for early warning indicators
- Embedded analytics and reporting
The process typically flows from credit application review to limit assignment, ongoing monitoring, and periodic review. Credit Management helps reduce bad debt exposure while maintaining customer satisfaction by balancing risk and sales opportunities.
Implementation requires careful configuration of risk parameters, authorization concepts, and integration with Sales and Distribution processes to ensure smooth operations.Credit Management in SAP S/4HANA supports the entire credit process, from credit evaluation to credit limit monitoring. It helps organizations manage financial risk by evaluating customers' creditworthiness before processing orders or deliveries.
Key components include:
1. Credit Master Data: Con…