Credit Check Functionality in Order Management

1)  Overview:

The ultimate goal of Credit Management processes is to
minimize the financial risk that your organization assumes as a result of
day-to-day operations. Order Management’s credit checking feature is the
process by which orders are validated and released against your credit checking
business rules. Using credit rules, system parameters, and credit profiles,
Order Management credit checking verifies that your customer has sufficient
credit availability with your organization to allow orders to be processed and
shipped in advance of payment. Order Management
enables you to perform credit checks on customer orders or order lines, and
automatically hold orders or lines that violate your credit setup.

2) Credit check functionality can work at any of
the following stages.
·        
Order Entry
·        
Picking
·        
Packing
·        
Shipping 

3) In order to trigger
automatic Credit checking on sales orders it is necessary that the credit
checking is enabled for the order type, customer profile and payment terms
associated with the transaction.
Credit check set up
involves the following setup steps:
·        
Credit Check Rules Setup
·        
Customer Profiles Setup
·        
Payment Terms Setup
·        
Order Types Setup

Sales orders that pass
credit check at all the three points (Profile, Order Type and Payment Term) are
allowed to progress normally. Those that fail will have credit check failure
hold placed on either the order header or order lines.

4)
Setups Involve enabling Credit Check Functionality:
              

5) Different Setup
Levels

 
A.      Credit
Check Rules Setup
SetupàRulesàCredit
Rule–
XX Credit Checking Rule
Credit
Check Level- Sales Order / Sales Order Line
Credit
Hold Level- Sales Order / Sales Order Line
Exposure
Tab:
Check
Use Pre-Calculated Exposure & Include External Credit Exposure

             

 
B.     
Payment Terms Setup
SetupàOrdersàPayment
Terms
Name:
XX New
Check
Box – Credit Check

             

 
C.      Order
Types Setup
SetupàTransaction TypesàDefine

<Defining
Line Type Transaction>
Transaction
Type – XX Credit Line
Order
Category- Order
Sales
Document Type – Sales Order
Transaction
type Code- LINE
Price
List- XXPriceList

             

                               
<Defining
Order Type Tansaction>
Transaction
Type – XX Credit
Order
Category- Order
Fulfillment
Flow – Order Flow – Generic
Sales
Document Type – Sales Order
Transaction
type Code- LINE
Default
Order Line Type- XX Credit Line
Price
List- XXPriceList
Credit
Check Rule– XX Credit Checking Rule (Ordering Level)

             

 
D.     Customer
Profiles Setup
Customerà Standard
Search
Customer Name
à
Accounts
àClick
Details
Select
Bill to site
à Open
Details
Profile
Tab
àEnable Credit
Check
 
            Oracle Order Entry automatically holds customer orders that exceed credit limits. You can control who is authorized to release Credit Check holds when you want to make an exception or the customer’s credit balance is acceptable. You can use Credit Check and Order credit limit either in Customer level or Customer site level.

             

             

6) Entering
Sales Order

Enter the sales Order with all the above setup
criteria’s.
Order ReturnsàSales
Order

            

            

            

 

7) Deactivating
Credit Checking

There are three ways to deactivate Credit
Checking on an order:
  • You can
    use an Order Type that does not have an assigned credit check rule.
  • You can
    define the Customer Profile with ‘Credit Check’ checkbox unchecked.
  • You can
    setup Payment Terms on Order /Line with ‘Credit Check’ checkbox unchecked.
Deactivating
Credit Checking does not automatically release orders previously on credit
check failure hold.

8)
Reports & Concurrent Programs Regarding Credit Check:

Credit Check Processor
Concurrent Program:
  • Credit
    Check Processor can automatically apply OR release order or order line
    credit holds.
  • Best use
    of this program when you suspect your customers credit exposure has
    changed and you want to re-evaluate their sales order status.
  • You can
    also use Credit check Processor whenever you change the customer credit
    profile or credit check rule set up and you want these changes to
    immediately take effect on your booked sales orders.
  • Credit
    check processor “always” uses Booking Credit check rule to
    apply/release the holds.
  • There is
    limitation for applying the hold through credit check processor it
    currently only considers exposure of the order lines which are in ‘Booked’
    status.
  • When
    using pre-calculated exposure in credit check rule, run the ‘Initialize
    credit summaries’ concurrent program every time before running the credit
    check processor.
Initialize Credit
Summaries Table Concurrent Program:
·        
This Program enables you to periodically rebuild
a credit exposure image for all customers or customer sites for all possible
credit rule definitions.
·        
When you submit the ‘Initialize Credit
Summaries’ program, the changes to customer or customer site credit exposure is
calculated and updated in OE_CREDIT_SUMMARIES table.
·        
Frequency to run Initialize Credit Summaries
will be based on ones business needs. If customer’s credit exposure is changing
frequently, then probably you can run it frequently.

List of Credit Check Reports:
  • Orders/Lines
    on Credit Check Hold Report:
The
Orders/Lines on Credit Check Hold Report shows customer balances for customers
with orders on credit hold to help you determine why their orders are on hold.
It identifies all the credit holds currently outstanding for a customer within
a date range, or identify why a particular order is on hold

  • Outstanding
    Holds Report:
The
Outstanding Holds report shows orders on hold, including credit check hold, for
any or all customers. It reviews order holds for the customer or customers you
choose. This report displays the order number, order date, ordered items, and
order amount for each order line on hold for each customer you select.
  • Credit Exposure Report
  • Credit Order Detail Report
  • Credit
    Limit Usage Report
  • October 14, 2014 | 27 views