Enter sales order

The sales person received an order from a customer and enters the order into the sales system. After entering the sales order, the system performs various checks, e.g. credit limit check.

Employee Roles

Document Flow

Business Documents

Block sales order

The sales order is checked against the credit limit of the customers. If the sum of open orders, open deliveries and open items exceeds the credit limit, the sales order will be blocked. No further processing of this order is allowed until the credit manager releases or cancels the order.

Document Flow

Business Documents

Create sales order

The order that was blocked is now released. An outbound delivery can be created.

Employee Roles

Deliver sales order

The outbound delivery is created. The sales order is delivered.

Check credit limit

The incoming sales order is checked against the credit limit assigned to a customer. The system takes into account all open orders, open deliveries and open items. In addition to the credit limit check, further checks can be performed, e.g. oldest open item, highest open item.

Employee Roles

Document Flow

Business Documents

Check customer credit fact sheet

The credit manager reviews the credit data of the customer to decide whether a blocked sales order can be released or canceled. The credit management system collects data from various applications (e.g. CRM, Dispute Management, Dunning, FI ...) to provide an up-to-date and complete view of the customer. The credit manager views the information in the customer credit fact sheet.

Employee Roles

Update internal customer credit rating

The credit management system calculates based on internal and external credit information a new internal credit scoring for the customer. Parameters such as number of dunnings, number of disputes, average delay of payments, external credit rating, are used to calculate the scoring value.

Employee Roles

Calculate new credit limit

The credit management system calculates a proposal for the customer credit limit based on internal scoring value. The credit manager adjusts the proposed credit limit according to his judgement. The change of the credit limit is recorded and documented in the system.

Employee Roles

Release sales order

After the customers' credit risk has been increased, the blocked sales order can be released by the credit manager and the sales department can process the order for delivery.

Employee Roles

Document Flow

Business Documents

Check credit limit

The outbound delivery is checked against the credit limit assigned to a customer. The system takes into account all open orders, open deliveries and open accounts reveivable items. In addition to the credit limit check, further checks can be performed, e.g. oldest open item, highest open item.

Employee Roles

Provide external credit information, e.g. credit scoring

The credit management system has interfaces to various external credit information providers (e.g. D&B, Creditreform, Schufa, Bürgle). The system can directly request external credit information from the services/applications via the Internet. The results are stored within the credit management system and can be used for further processing e.g. calculation of credit limit.

Credit Management

This Business Scenario Map illustrates how a new incoming sales order is checked against the customer's credit limit. It shows how Credit Management supports the information flow between different departments within a company to make quick, efficient credit decisions. External information from third party services/applications can be directly integrated into the credit management solution, if the internal credit information is not sufficient. This streamlined process saves time and money.

Show Document Flow

Value Potentials	Business Benefits
Reduce bad debt risk by 20 - 50%*	Reduce risk of bad debt
	Focus on reliable and profitable customers
	Faster credit-worthiness check
	Fasten the process of checking a customer credit limit
From 20 to 40% quicker access to information*	Optimize the collaboration between departments
	Identify the overall credit risk of your company

Sales Department

Credit Management

Credit Information Provider

Enter sales order

Block sales order

Create sales order

Deliver sales order

Check credit limit

Check customer credit fact sheet

Update internal customer credit rating

Calculate new credit limit

Release sales order

Check credit limit

Provide external credit information, e.g. credit scoring

Source:
*Discussions with customers

The value potentials shown in this table have been reported by selected SAP customers or independent third parties as referenced herein. However, there is no guarantee that such value potentials can be realized in any particular customer-specific business processes, and SAP does not make any representations and disclaims any liability as to the appropriateness of the referenced value potentials for any specific customer situation.
©SAP AG 2008

Business Benefits	Value Potentials
Reduce response time	From 10 to 20% reduced time to collect credit information and to enter the data in the system*


Credit Management With an increased number of companies running into financial difficulties, credit management within a sales organization is an important tool to manage the risk of loss of receivables. Additionally offering unique credit terms may be the only way to win a buyer from the competition. Therefore a company should not eliminate the credit risk, but rather manage the risk. To make fast and efficient credit decisions, a credit manager needs internal and external credit information, coming from different systems throughout the whole company. SAP Credit Management checks a incoming sales order against a customer's credit limit. Due to an insufficient credit limit the order will be blocked and the credit manager can reevaluate the customers credit worthiness. The credit manager updates the credit scoring of the customer by requesting online information from an external credit information provider. The update of the scoring reveals that the creditworthiness of the customer has improved, so the credit manager can set up a higher credit limit and releases the blocked sales order. SAP Credit Management supports the credit manager to streamline the whole process of credit check. The credit information which he needs to make the right credit decision is delivered by the credit management system and it is fully integrated into the application and the credit manager workplace. The direct integration with external credit information providers reduces the response time for online request and helps to make the decision process faster. Credit decisions can be automated based on credit rules, so the credit manager can concentrate on the processing of exceptions. This streamlines the processing of credit checks and therefore reduces transaction costs. Due to the tight integration to other applications (e.g. CRM) the credit limit check can be processed much quicker, since all necessary information is transferred to the credit management system. Once the credit exposure information is stored in the credit management you can easily identify the overall credit risk for your company. Additionally you can classify your customers into risk classes and so concentrate your sales and marketing-activities on reliable and profitable customers.