Credit Check in SAP refers to the process of evaluating a customer’s creditworthiness before approving a sales order, delivery, billing document. It ensures that the customer stays within their predefined credit limits to minimize the company’s financial risk.
Required Configurations for performing Credit Check
Credit Control Area
Credit Control Area is an organizational unit that enables the management of customer credit limits and credit risk. It serves as the framework for credit management by defining rules for credit checking across one or more company codes.
Below is the path to configure / Use Transaction code OB45
Define Credit Control Area
STEP : Click on 'New Entries' >> Provide a 4 Digit Alphanumeric code for Credit Control Area, Currency of the Credit Control Area, Update and FY Variant.
Update: The credit update controls when the values of open sales orders, deliveries, and billing documents are updated.
FY Variant: The fiscal year variant is necessary when a credit control area covers multiple company codes whose fiscal years are different and the value of open orders is updated by posting period.
Assign Company Code to Credit Control Area
Below is the path to configure >>
STEP : Click on Position and search for your Company code > Provide Credit Control Area and SAVE.
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Credit Segment
Credit segments are required for calculating the credit limit and enable you to carry out detailed checks.
In SAP S/4 HANA, Credit segment must be created in Two places :-
Under folder 'Credit Risk Monitoring' for utilizing the advanced features like Automatic credit limit calculation, Automatic credit score calculation etc.
Under folder ' Integration with Accounts Receivables Accounting and Sales & Distribution' for Performing Credit limit Checks during the Sales order, Accounts Receivables.
Below is the path to create Credit Segment under Credit Risk Monitoring folder >>
STEP : Click on New Entries >> Provide 10 Digit alpha-numeric code for your Credit Segment, Name, currency and Exchange Rate Type and Select Credit Check and SAVE.
Below is the path for configurations under Integration with Accounts Receivables Accounting and Sales & Distribution folder
STEP : Click on New Entries >> Provide the Credit Segment and Description then SAVE.
Assign Credit Control Area and Credit Segment
STEP : Click on New Entries >> Provide the Credit Control Area, Currency, Credit Segment and select Update then SAVE.
Assign Sales Area to Credit Control Area
STEP : Provide your Credit Control Area against your Sales Area and SAVE.
Determine Active Receivables per Item Category
STEP : Position to Item Category of Material and "tick" Credit Active then SAVE.
Assign Sales Document Types and Delivery Documents
STEP : Click on Position > search for Order Type then select Check Credit and Credit Group.
Define Risk Categories
Risk Categories are classifications used in Credit Management to assess and manage the credit risk associated with customers. They define the level of risk a customer represents to the organization and guide the type of credit check and approval process that should be applied. For Example:
Risk Category "A" - No Default Risk
Risk Category "B" - Low Default Risk
Risk Category "C" - Medium Default Risk
Risk Category "D" - High Default Risk
Risk Category "E" - Very High Default Risk
STEP : Click on New Entries > Enter Risk Category and Credit Control Area and SAVE.
Define Automatic Credit Control
This enables the system to perform automated credit checks during business transactions like sales order creation, delivery, and billing. It ensures that a customer’s credit exposure remains within their assigned credit limit, helping to minimize financial risk without manual intervention.
STEP : Click on New Entries and Enter the Credit Control Area, Risk Category, Credit Group and "Tick" SAP Credit Management, Select Reaction for the Credit check (e.g., warnings, blocks, or approvals), to set the Status (Block).
Watch this Video for detailed Explanation:
To Extend the Customer to SAP Credit Management (BP Role: UKM000)
STEP : Go to Transaction Code BP , search for your customer and then click on Edit mode then Select the BP Role UKM000 (SAP Credit Management) > Click on Credit Profile Tab and Select the standard Rules, Risk Class and Check Rule.
Next, click on "Credit Segment Data" segment.
Select the Credit Segment, Select Limit Defined and Provide the credit Limit for customer and SAVE.
To Simulate Credit Check
STEP 1 : Click on button highlighted below
STEP 2 : Enter Amount and the click on Credit check to simulate.
Testing Credit Check for Customer in Sales Order
Go to Transaction Code VA01 ( To Create Sales Order )
Provide the relevant details and make sure confirmed quantity have values.
If Amount entered is more than the credit limit then system will show an error Message as seen below and user will not be able to save the sales order.
In conclusion, SAP FSCM offers flexible solution for managing customer credit risk. This helps businesses make informed decisions, reduce financial risk, and streamline operations.
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