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SAP Customer Credit Limits

 

SAP Customer Credit Limits Updates

By Elitza Alexandrova


 

How do you maintain Credit Limits for Customers in SAP?

When a customer exceeds their credit limit due to new orders that are greater than their limit, or due to unpaid balances, or combination of both, you have the following two main options.

 

1. Do not increase credit limit but release a specific sales order

We can use transaction VKM1 – Blocked SD Documents. As you can see from the screen shot in Figure 1, this transaction shows sales documents that are blocked from issuing delivery documents due to customer exceeding its credit limit. To release a blocked sales document, we need to check the box next to the order and then click on the green flag (release) and then click on the save button. By doing this we are allowing this sales order to be processed, but without increasing the customer credit limit.

 

VKM1

 Figure 1 Sales Documents Blocked from Issuing Delivery Documents

 

 

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2. Increase customer credit limit and apply it to every existing open order

We use transaction FD32 – Customer Credit Management Change when we need to change customer credit limit as shown in Figure 2. The credit limit needs to be changed in both the central data tab and also the status tab. In order for the change to affect every existing order, not only future orders, before saving the change, in the status tab, we need to click on Credit Management -> Reset (or Shift + F6) and click yes through the windows that pop up next and in the end click on the save button. This will re-determine the customer credit limit on everything currently open and we do not need to individually release every existing open order.

 

FD32

 Figure 2 Change Customer Credit Management

 

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Glossary

 

Activity Input Planning

Just as cost centers can provide planned output services based on activity quantities with Transaction KP26, you can plan cost center activity input quantities from other cost centers with activity input planning using Transaction KP06.

Activity Type

An activity type identifies activities provided by a cost center to manufacturing
orders. The secondary type general ledger account associated with an activity type identifies the activity costs on cost center and detailed reports.

Actual Costing

Actual costing determines what portion of the variance is debited to the next-highest level using material consumption. All purchasing and manufacturing difference postings are allocated upward through the BOM to assemblies and finished goods. Variances can be rolled up over multiple production levels and company codes to the finished product.

Actual Costs

Actual costs debit a product cost collector or manufacturing order during business transactions, for example, general ledger account postings, inventory goods movements, internal activity allocations, and overhead calculation.

Allocation Structure

An allocation structure allocates the costs incurred for a sender by cost element or cost element group, and it is used for settlement and assessment. An assignment maps a source cost element group to a settlement general ledger account.

Alternative Bill of Materials

There can be multiple methods of manufacturing an assembly, and many possible bills of materials (BOMs). The alternative BOM allows you to identify one BOM in a BOM group.

Alternative Hierarchy

While there can only be one cost center standard hierarchy, you can create as many alternative hierarchies as you like. You create an alternative hierarchy by creating cost center groups.

Alternative Unit Of Measure

This is a unit of measure defined in addition to the base unit of measure. Examples of alternative units of measure include order unit (purchasing), sales unit, and unit of issue.

Apportionment Method

An apportionment method distributes the total costs of a joint production process to the primary products. The costs of the individual primary products may vary. They are apportioned by means of an apportionment structure.

Apportionment Structure

An apportionment structure defines how costs are distributed to co-products. The system uses the apportionment structure to create a settlement rule that distributes costs from an order header to the co-products. For each co-product, the system generates a further settlement rule that assigns the costs distributed to the order item to stock.

Assembly Scrap

Assembly scrap is the percentage of assembly quantity that does not meet required quality standards. Assembly scrap is an output scrap because it increases the planned output quantity of items in the production process. You plan assembly scrap in the MRP 1 view using the Net ID checkbox in the Basic Data tab of a BOM item.

Automatic Account Assignment

Automatic account assignment allows you to set a default cost center per general ledger account per plant.

Backflush

Backflushing is the automatic posting of a goods issue for components in an order during confirmation. It reduces the amount of work in warehouse management, especially for low-value parts. The material components from the BOM are assigned to operations in the routing.

Base Quantity

All component quantities in a BOM relate to the base quantity. You increase the accuracy of component quantities by increasing the base quantity, similar in concept to the price unit.

Base Unit of Measure

Material stocks are managed in the base unit of measure. The system converts all quantities you enter in other units of measure (alternative units of measure) to the base unit of measure.

Bill of Material

A bill of material (BOM) is a structured hierarchy of components necessary to build an assembly. BOMs, and purchasing info records allow cost estimates to calculate material costs of assemblies.

BOM Application

A BOM application is a costing variant component for automatic determination of alternative BOMs.

BOM Group

A BOM group is a collection of BOMs for a product or number of similar products.

Bill of Material (BOM)

A bill of material (BOM) is a structured hierarchy of components necessary to build an assembly. BOMs together with purchasing info records allow cost estimates to calculate material costs of assemblies.

Customer Credit Limit

The optional credit limit check allows you to minimize credit risk by specifying a credit limit for customers in the account master data. This check is based on the customer balance and open items of documents such as sales orders, service orders, sales quotes, or customer contracts.

Customer Credit Management

You use Credit Management to minimize financial risks for your organization. This includes a credit check when creating a transaction document and displaying and multiple use of a business partner's credit risk rating. You can connect to one of the following credit management systems for this purpose:
SAP Credit Management (FIN-FSCM-CR) in SAP S/4HANA

SAP Credit Management (FIN-FSCM-CR) in SAP ERP Central Component (SAP ECC)

Goods Issue

A goods issue is the movement (removal) of goods or materials from inventory to manufacturing or to a customer. When goods are issued, it reduces the number of stock in the warehouse.

Goods Receipt

It is a goods movement that is used to post goods received from external vendors or from in-plant production. All goods receipts result in an increase of stock in the warehouse.

Internal Order

An internal order monitors costs and revenue of an organization for short- to medium-term jobs. You can carry out planning at a cost element and detailed level, and you can carry out budgeting at an overall level with availability control.

Material Master

A material master contains all of the information required to manage a material. Information is stored in views, and each view corresponds to a department or area of business responsibility. Views conveniently group information together for users in different departments, for example, sales and purchasing.

Origin Group

An origin group separately identifies materials assigned to the same cost element, allowing them to be assigned to separate cost components. The origin group can also determine the calculation base for overhead in costing sheets.

Price Control

The Price control field in the Costing 2 view determines whether inventory is valuated at standard or moving average price.

 

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Comments 2

Guest
Guest - Bhuvana on Tuesday, 18 July 2017 10:23

How to do enhancement in VKM* based on the sales office

How to do enhancement in VKM* based on the sales office
Guest
Guest - Elitza Alexandrova on Thursday, 03 August 2017 11:37

Hi Bhuvana, thank you for your question. Can you please explain in little bit more details what do you mean by enhancement or what are you looking for improving and accomplishing? Thank you, Elitza

Hi Bhuvana, thank you for your question. Can you please explain in little bit more details what do you mean by enhancement or what are you looking for improving and accomplishing? Thank you, Elitza
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