Business Process in SAP Credit Management Part 1: Overview
SAP Credit Management is a component of SAP Financial Supply Chain Management.
SAP Credit Management provides functions for integrating external credit information, scoring, categorizing new and existing customers on the basis of their credit data, and converting this information into quick credit decisions.
SAP Credit Management allows organizations to monitor and control their customer’s credit risk in one central system.
SAP Credit Management is particularly suitable for handling credit management processes in extremely distributed system landscapes.

Increase the financial visibility of your customer base with SAP Credit Management
- Control your customer’s credit exposure
- Optimize terms for your customers
- Reduce amount of bad or doubtful debt
Functional Overview
Credit Limit Management
- Implement a company wide credit policy
- Manage a customer credit profile
- Centralize credit management in a distributed system landscape
Credit Case
- Credit case for structured processing of credit limit applications
- Track status and result of credit limit applications
Credit Rules Engine
- Categorize customers by scoring rules
- Calculate and assign customer-specific credit limit automatically
- Check credit rules
- Model and implement own customer credit score cards
Credit Information
- Interface to external credit agencies
- Input parameters for scoring rules
- BW Content
Credit Manager Portal
- Role-based access to credit management information and analysis
Profit Margin Versus Sales

Organizations with a low profit margin suffer particularly from the default probability of receivables from their deliveries and services.
Compensation for losses on receivables is much more difficult for organizations with low profit margins than for organizations with higher profit margins.
Probability of Default Defines Hedge

Customer Sales Versus Credit Risk
…Possible action for customer A:
- Greater use of collateral instruments
- Increase the sales price
Possible action for (optimal) customer B:
- Do not use collateral instruments
- Improve the customer relationship
Possible action for customer C:
- Manually control the transaction
- Change the dunning procedure
- Continually monitor the credit risk
Possible action for customer D:
- Reduced use of collateral instruments
- Decrease the sales price
Credit Management Process

Credit managers often classify their customers in risk classes, which are derived from the customer’s score (represents the customer’s credit status).… The risk class dictates how the customer’s credit risk is controlled and monitored. It therefore controls the specification of payment conditions, including the allocation of payment targets and provision of collateral.
Features
Business Partner – Credit Master Data
You manage all credit-relevant master data of a business partner in SAP Credit Management (FIN-FSCM-CR). This data includes the current credit limit, one or more externally determined rating values, the risk class, and an order limit. Each of the master data fields has a change history that gives information about the time of the change, the user, and the old and new value. There is also a note function that the credit analyst can use to enter additional information about the business partner. Alternatively, he or she can use a document storage function to store information such as press articles, correspondence, bank information, and rating information.
SAP Credit Management (FIN-FSCM-CR) also enables you to include collateral defined for a business partner in the calculation of the credit exposure, meaning that you can also monitor your own company’s risk.
Credit Information and Business Partner Rating
The credit analyst can determine and manage both external and internal credit information for a business partner. This information is used mainly as input parameters for the Credit Rules Engine, which companies can use to carry out automatic business partner ratings (scoring), making credit decisions, or calculating credit limits.
Processing External Credit Information
Requesting external credit information is completely integrated in SAP Credit Management (FIN-FSCM-CR) and enables companies to request information electronically using appropriate XML interfaces. Since credit departments often use several external credit information providers, SAP Credit Management (FIN-FSCM-CR) can save the information provided by such an interface separately according to the data provider. The XML interface is designed to allow the user to call up information about both business partners and private customers.
Processing Internal Credit Information (Score)
The credit analyst can also extract internal data for a business partner from the legacy systems and use the company’s own rating rules to determine a score. You can have these score values determined by the following factors:
- Master data of the business partner (for example, country of origin of the business partner)
- Payment behavior (for example, average days in arrears)
- Dunning history (for example, number of dunning notices in the last 12 months)
- SAP Dispute Management (for example, the number of dispute cases in the last 12 months)
The external and internal credit information determined is stored in the master data of the business partner. The system monitors the validity of the data determined periodically. The score data can be updated either manually or automatically.
Score and Credit Limit Calculation and Credit Limit Check (Credit Rules Engine)
SAP Credit Management (FIN-FSCM-CR) enables you to automate certain processes by applying certain rules. These rules are controlled by the Credit Rules Engine and hence support the subsequent automated business processes:
Rating of Business Partners
A procedure is assigned to each business partner; each procedure has a formula for calculating the rating value. You can define the formula to meet your own requirements using various data that is available as input parameters for the formula. SAP Credit Management (FIN-FSCM-CR) also has mass processing functions that enable you to recalculate the rating value or change the rating procedure for a large number of business partners.
- Determining Credit Limit
You can calculate the credit limit of a business partner automatically. Using SAP Workflow you can implement an approval procedure where changes to a credit limit can be checked and approved by a superior.
- Rules for Credit Check
You can define rules for determining which credit checks are carried out for an order. Here you can choose whether, in addition to the check for the credit limit utilization, other checks are to be carried out, for example, the maximum age of the oldest open item, or the maximum number of dunning transactions of the business partner.
You can also define what consequences a negative check result in SAP Credit Management (FIN-FSCM-CR) is to have (for example, block customer account or trigger workflow).
Credit Information and Credit Decisions
The credit analyst requires information from different systems to make decisions quickly and efficiently about blocked orders or the amount of the credit limit. SAP Credit Management (FIN-FSCM-CR) supports credit analysts in determining the required customer-related data and analyses in SAPNetWeaver Business Intelligence (SAP Netweaver BI), and optionally in the Credit Manager Portal.
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