Customer Credit Management Process
Manage credit limits, risk and order blocks in one mechanism — prevent uncollectible sales.
What problem does it solve?
Customer credit limits and risk scores aren't tracked systematically; orders exceeding limits pass without a block, and the risk of uncollectible sales grows. Credit decisions are disconnected between sales and finance.
How does the solution work?
Conforcus credit management unifies customer credit-limit control, risk scoring and an automatic order-block mechanism on limit breach inside SAP. Risk is checked at the point of sale, with credit decisions integrated into finance.
What changes in practice?
The solution works on the SAP Credit Management structure and brings FI-AR and SD together in one control mechanism. A credit limit is defined and a risk score calculated for each customer. When a sales order is entered, the system compares the customer's open receivables and open orders with the limit; if the limit is exceeded the order is blocked automatically and goes to the credit officer for review. Information from the aging and collection processes feeds the risk assessment, so the risk of a customer whose payment behavior deteriorates stays current.
The sales team can see in the system why an order is not moving, and finance looks only at blocked orders rather than all of them. The decision to release or reject is recorded, so credit decisions rest on the system rather than on personal correspondence. Limit, utilization and risk score are followed per customer in real time, and management sees where risk is concentrated. With sales and finance looking at the same data, limit discussions are shorter and the risk of uncollectible sales is controlled at the order stage.
Benefits
- Orders over limit auto-blocked, bad debt reduced
- Customer risk scored and visible in real time
- Sales and finance aligned on the same credit decision
Where it sits in SAP
Integrated with SAP Credit Management (FI-AR / SD, FSCM Credit Management); includes credit-limit control, risk scoring and automatic order-block logic. Fed by aging and collection processes.
Who it is for: CFO, Credit & Risk, Sales & Finance
Frequently asked questions
Is the solution built on SAP standard credit management?
Yes: the solution is integrated with the SAP Credit Management structure (FI-AR integrated with SD, FSCM Credit Management). Credit-limit control, risk scoring and automatic order-block logic are set up on top of it. Which infrastructure is used depends on the existing system and is assessed at the start of implementation.
How is an order that exceeds the limit blocked, and how is it released?
When an order is entered, the customer's credit limit is checked, and if it is exceeded the order is blocked automatically. The blocked order goes to the credit officer for review and is released or rejected by an authorized user. Who decides in which case is defined according to the company's authorization rules, and the decision stays on record, visible to both sales and finance.
What is the risk score based on, and how are aging and collection data used?
Risk scoring is part of the solution, and the scoring criteria are defined during implementation in line with the company's credit policy. Information from the aging and collection processes feeds the risk assessment, so the risk of a customer with growing arrears is updated accordingly. Score and limit status are visible in real time, which means credit decisions are made on current data.