SAP Credit Management - Functional Overview

Scenario Overview:

Customer Profile:

1. Global enterprise customer with multiple divisions and dynamic credit requirements.
2. Current credit limit: $500,000, distributed across business units (BU).
3. Payment terms: Net 30 days with credit scoring from external agencies.

Order Details:

Consolidated sales order across BUs worth $350,000, exceeding BU-specific credit limits but within the global credit limit.

Real-time credit evaluations involve both internal credit policies and external scoring.

1. Sales Order Creation and Global Credit Evaluation:

Complex Order Breakdown:

Sales Order:

• BU1: $150,000.
• BU2: $100,000.
• BU3: $100,000.

Each BU is linked to a shared global credit limit in UKM_LIM.

System Workflow:

Order Validation:

At order creation (VA01), SAP SD triggers:

1. BU-level credit checks against predefined thresholds in UKM_BP.
2. Consolidated global credit evaluation via credit segment grouping.

Custom Credit Rules:

• SAP FSCM (Financial Supply Chain Management) applies multi-level checks:BU1 exceeds its local credit limit ($125,000 limit vs. $150,000 order).System escalates to evaluate global exposure.
• Rule configuration in SPRO under Financial Supply Chain Management → Credit Management → Define Risk Class and Check Rules.

2. Escalation and Multi-Level Approval Workflow:

Escalation Trigger:

• Workflow triggered via SAP Business Workflow.
• Notification sent to multiple stakeholders:

BU1 Credit Analyst.

Global Credit Manager for consolidated review.

Multi-Level Approval Steps:

BU-Level Assessment:

• Credit Analyst evaluates BU1’s exposure and historical payment behavior.

Data pulled from:

UKM_BP: Customer master.

UKM_ITEM: Credit exposure details.

UKM_PAYHIST: Payment history.

• Result: Analyst recommends approval with temporary exposure adjustment.

Global Credit Manager Review:

• Reviews consolidated exposure using data aggregated in UKM_CONSOL.
• Incorporates external credit score from service CreditAgencyReportQuery_In (e.g., D&B score of 750).
• Overrides BU1 limit temporarily and approves order, recording decision in UKM_DCD.

Approval Documentation:

• System logs: Approver details, timestamps, rationale, and external score in UKM_DCD.
• Linked to sales order (VBAP) and customer.

3. Advanced Credit Allocation and Real-Time Updates:

• Dynamic Credit Allocation: System Action: Temporarily increases BU1 credit limit to $150,000 using a documented decision. Global exposure updated to $425,000 post-order.
• Integration Touchpoints: CreditCommitmentNotification_In updates SAP Credit Management. Credit exposure recalculated in UKM_ITEM and reflected in consolidated view (UKM_CONSOL).

4. Order Fulfillment with Conditional Credit Release:

Conditional Fulfillment Process:

Order split into three deliveries:

• BU1: $150,000.
• BU2: $100,000.
• BU3: $100,000.

Delivery for BU1 placed on hold pending customer confirmation of overdue payments.

Custom Credit Block:

SAP SD dynamically applies a block on delivery creation (VL01N) for BU1 based on:

• Overdue items in BSID and UKM_OVERDUE.
• Workflow sent to collections team for expedited payment follow-up.

5. Customer Payment and Real-Time Credit Exposure Adjustment:

Payment Processing:

1. Receipt Handling:

• Customer pays $200,000 covering overdue invoices and partial new invoices.
• Payment allocated via FSCM Collections Management, ensuring overdue invoices are prioritized.

2. Behavior Update: Payment behavior improves, increasing internal credit score from 80 to 85 in UKM_BP.

3. Automatic Exposure Update:

• Payment reduces exposure from $425,000 to $225,000:$200,000 applied to overdue and new invoices.Exposure recalculated in UKM_ITEM and logged in UKM_PAYHIST.

6. Advanced Reporting and Analytics:

Real-Time Dashboards:

KPI Monitoring:

• Consolidated exposure: 45% utilization of $500,000 limit.
• DSO reduced to 40 days (from 50).

Reports:

• Generated using SAP BW on HANA for:Global exposure by BU.Payment behavior trends.
• Data sources: UKM_ITEM, UKM_PAYHIST, and UKM_DCD.

Predictive Insights:

Credit Risk Forecasting:

• Machine learning models analyze customer behavior to predict future defaults.
• Inputs: Historical data from UKM_BP, UKM_PAYHIST, and external credit scores.

Technical Tables and Transactions:

Critical Tables:

UKM_BP: Business Partner master data.

UKM_LIM: Credit limits and thresholds.

UKM_ITEM: Credit exposure data.

UKM_CONSOL: Consolidated exposure across segments.

UKM_PAYHIST: Payment behavior history.

UKM_DCD: Documented credit decisions.

UKM_OVERDUE: Overdue invoice tracking.

Key Transactions:

• VA01: Sales order creation.
• UKM_CASE: Credit case management.
• UKM_DCD: Documented decision logging
• .FBL5N: Customer line item display.
• VL01N: Delivery creation.

7. Multi-System and Advanced Integration:

Integration with External Credit Agencies:

• SOAP Web Services:CreditAgencyReportQuery_In fetches live scores.
• CreditAgencyReportNotification_Out logs decisions.

Scoring data integrated into credit management.

Real-Time Communication via PI/PO:

• Interfaces:CreditCommitmentNotification_In for credit exposure updates.
• CreditPaymentBehaviourSummaryNotification_Out for payment updates.
• Middleware ensures seamless communication between SAP SD, FI-AR, and FSCM.

Advanced Risk Monitoring:

• Integration with SAP Analytics Cloud (SAC) for advanced credit monitoring dashboards.
• Predictive models run on HANA database using customer and transactional data.

Enhanced Lifecycle Benefits:

This advanced scenario highlights SAP's capabilities to manage complex credit lifecycles involving multi-level approvals, dynamic allocation, and advanced analytics. By leveraging FSCM, SD, and FI-AR integration with real-time updates, organizations can efficiently manage risk, maintain compliance, and ensure operational excellence even in high-stakes credit management situations.