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.
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.
Figure 1 Sales Documents Blocked from Issuing Delivery Documents
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.
Figure 2 Change Customer Credit Management
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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.
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 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 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.
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.
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.
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.
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.
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.
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 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 allows you to set a default cost center per general ledger account per plant.
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.
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.
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.
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.
A BOM application is a costing variant component for automatic determination of alternative BOMs.
A BOM group is a collection of BOMs for a product or number of similar products.
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.
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.
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)
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.
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.
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.
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.
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.
The Price control field in the Costing 2 view determines whether inventory is valuated at standard or moving average price.
A process order is a manufacturing order that is used in process industries. A master recipe and materials list are copied from the master data to the order. A process order contains operations that are divided into phases. A phase is a self-contained work-step that defines the detail of one part of the production process using a primary resource.
In process manufacturing, only phases are costed, not operations. A phase is assigned to a subordinate operation and contains standard values for activities, which are used to determine dates, capacity requirements, and costs.
A procurement alternative represents one of a number of different ways of procuring a material. You can control the level of detail in which the procurement alternatives are represented through the controlling level. Depending on the processing category, there are single-level and multilevel procurement alternatives. For example, a purchase order is single-level procurement, while production is multilevel procurement.
A production order is used for discrete manufacturing. A BOM and routing are copied from master data to the order. A sequence of operations is supplied by the routing, which describes how to carry out work-steps.
An operation can refer to a work center at which it is to be performed. An operation contains planned activities required to carry out the operation. Costs are based on the material components and activity price multiplied by a standard value.
Product drilldown reports allow you to slice and dice data based on characteristics such as product group, material, plant, cost component, and period. Product drilldown reports are based on predefined summarization levels and are relatively simple to setup and run.
Production variance is a type of variance calculation based on the difference between net actual costs debited to the order and target costs based on the preliminary cost estimate and quantity delivered to inventory. You calculate production variance with target cost version 1. Production variances are for information only and are not relevant for settlement.
A production version determines which alternative BOM is used together with which task list/master recipe to produce a material or create a master production schedule. For one material, you can have several production versions for various validity periods and lot-size ranges.
When raw materials are valued at the standard price, a purchase price variance will post during goods receipt if the goods receipt or invoice price is different from the material standard price.
A profit center receives postings made in parallel to cost centers and other master data, such as orders. Profit Center Accounting (PCA) is a separate ledger that enables reporting from a profit center point of view. You normally create profit centers based on areas in a company that generate revenue and have a responsible manager assigned.
Costing-based profitability analysis enables you to evaluate market segments, which can be classified according to products, customers, orders (or any combination of these), or strategic business units, such as sales organizations or business areas concerning your company’s profit or contribution margin.
Transaction ME20 ia a subcontract stock overview and requirments list. You enter a material or vendor and you will see the stocks and the requirements. Based on this info you can create deliveries to supply stock to the vendor as needed.
A purchasing info record stores all of the information relevant to the procurement of a material from a vendor. It contains the Purchase Price field, which the standard cost estimate searches for when determining the purchase price.
A purchase order is a legal contract which binds the supplier to supply materials or services and the purchaser to pay after receiving the materials or services.
A purchase requisition is a request or instruction to Purchasing to procure a quantity of a material or service so that it is available at a certain point in time. There is no legal requirement to carry out the purchase until a purchase order is created. You can record the purchase requisition in commitment management because it may lead to actual expenditure in the future.
The procurement type in the MRP 2 view defines the material as assembled in-house, purchased externally, or both:
E: In-house production A cost estimate will search for a BOM and routing.
F: External procurement Results in the system searching for a purchasing info record price.
X: Both A planned order can be converted into either a production or purchase order.
The special procurement type can be used to override the procurement type.
The Special Procurement Type field found immediately below the procurement type in the MRP 2 view is used to more closely define the procurement type. For example, it may indicate if the item is produced in another plant and transferred to the plant you are analyzing. Special procurement type 30 indicates the material is procured by subcontracting.
A standard hierarchy represents your company structure. A standard hierarchy is guaranteed to contain all cost centers or profit centers because a mandatory field in cost and profit center master data is a standard hierarchy node.
The standard price in the Costing 2 view determines the inventory valuation price if price control is set at standard (S). The standard price is updated when a standard cost estimate is released. You normally value manufactured goods at the standard price.
You supply component parts to an external vendor who manufactures the complete assembly. The vendor has previously supplied a quotation, which is entered in a purchasing info record with a category of subcontracting.
Target costs are plan costs adjusted by the delivered quantity. For example, if the quantity delivered to inventory is 50% of the plan quantity, target costs are calculated as 50% of the plan costs.
The valuation variant is a costing variant component that allows different search strategies for materials, activity types, subcontracting, and external processing. For example, the search strategy for purchased and raw materials typically searches first for a price from the purchasing info record and then Planned Price 1.
Variance analysis involves comparing actual with target costs and dividing the balance into variance categories.
The valuation class in the Costing 2 view determines which general ledger accounts are updated as a result of inventory movement or settlement.
The valuation variant is a costing variant component that allows different search strategies for materials, activity types, subcontracting, and external processing. For example, the search strategy for purchased and raw materials typically searches first for a price from the purchasing info record.
Variance analysis involves comparing actual with target costs and dividing the balance into variance categories.
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