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ORDER MANAGEMENT CREDIT CHECK / EXPOSURE SETUP
Order Management Credit Check / Exposure Setup
this document describes setup and parameters used for Credit Checking within
Order Management.
Solution
Question and Answer
WHAT IS CREDIT HOLD?
In the Customer Standard form when the 'Credit Hold' check box is checked, all orders for
the customer will go on Credit Check Failure hold without going through the credit check logic.
By checking the 'Credit Hold' check box,
a hold source is automatically created to put all that customer existing and future orders on
hold, regardless of the credit worthiness of the customer. Similarly when the 'Credit Hold'
check box is unchecked a hold source is automatically released and all that customer existing
orders that are currently on hold will be released from the hold and no future orders for this
customer will be placed on the hold.
The 'Credit Hold check box can be enabled at the customer level, and site level (Bill to Site).
When the 'Credit Hold check box is enabled on customer level, the 'Credit Check Failure hold' is applied
on the order
header as soon as order is saved, and will prevent the order from booking. The Credit Check Failure
hold is a
generic hold and will prevent the order from booking if applied on the order header before booking an
order.
If the 'Credit Hold check box is enabled at site level (bill to site), the Credit Check Failure hold is applied
on the
order lines of an order using this bill to site, upon saving. Orders with such lines on hold can still be
booked
by setting the value of the profile option OM: Prevent Booking for Line Generic Holds to No.
WHAT IS CREDIT CHECK?
In Customer Standard form when the Credit Check check box is checked, the Credit Checking program
applies
the Credit Check Failure hold after checking the credit worthiness of the customer and applies the hold
only from
booking onwards.
In summary, the 'Credit Check Failure hold' can be applied by Order Management's Credit Checking
program,
as well as by putting a customer or site on hold by enabling the Credit Hold check box.
The difference is, if a customer or site is put on hold, a hold is applied on the order/lines as soon as the
order
is entered. Whereas the Order Management Credit Checking program applies the hold only from
booking onwards
after checking credit worthiness of the customer.
CREDIT CHECKING PARAMETERS
This section explains credit checking parameters and how they affect credit exposure and the
application of
credit check holds when placing orders.
TRANSACTION TYPE SETUP
Navigation:
Order Management Responsibility:
Setup -> Transaction Types -> Define
The Credit Check Rule defined must be included in the transaction type used when placing an Order.
Main Tab > Credit Check Rule area
The Credit Check Rule can be used at the following points in the Order Life Cycle. The same credit
check rule,
or different credit check rules, can be defined for all four (4) of these phases:
1. Ordering
2. Picking/Purchase Release
3. Packing
4. Shipping
PAYMENT TERMS SETUP
Navigation:
Receivables Responsibility:
Receivables -> Setup -> Transactions -> Payment Terms
OR
Navigation:
Order Management Responsibility:
Setup -> Orders -> Payment Terms
The Payment Term used when placing the order must be credit check enabled. Modify the Payment
Term
So that Credit Check Attribute is selected.
CREDIT LIMIT SETUP
Navigation:
Order Management Responsibility:
Customer-> Standard
Enter customer number and click on Find
Click OK to open the customer
In the Addresses tab, select the address for the bill to and click open to enable credit checking
Profile: Transaction tab
Enable the attribute Credit Check
Set your Payment Term value to the one where you enabled credit check
Next, click on Profile Amounts tab to set up your currency and your credit limits
Navigation:
Order Management Responsibility:
Customer-> Standard
Enter customer number and click on Find
Click OK to open the customer
In the Addresses tab, select the address for the bill to and click open to enable credit checking
Profile: Transaction tab
Enable the attribute Credit Check
Close the address
Click on the Profile Transactions tab at the Customer level, enable Credit Check
Next, click on Profile Amounts tab to set up your currency and your credit limits
Credit Limits need to be set up for one or more of the following:
1. Item category level
2. Bill To Site level (see note: 365866.1 and version of file OEXUCRCB.pls)
3. Customer level
4. Party level (This level is applicable only if Credit Management is installed 11.5.10 and higher)
5. Operating Unit Default level
Credit Checking processes these levels in the order displayed above and will decide which limit to use
based on the criteria shown in the following Note 365866.1
Please note changes have been made that affect versions of 11.5.9 and 11.5.10.2. The changes
implemented in these and future versions enforce the following: credit checking has to be set at site
level to enable customer level credit checking (the credit limits must be null at site level for this to
work). This is explained in Note 365866.1.
CREDIT RULES SETUP
Navigation:
Order Management Responsibility:
Setup -> Rules -> Credit
Credit Check Rules defines how and when the credit rule is to be applied.
OPTIONS TAB
Choose the level of Credit Check; either sales order or sales order line
Choose the level of Credit Hold; either sales order or sales order line
CREDIT CHECK LEVELS: SALES ORDER LEVEL OR SALES ORDER LINE LEVEL
SALES ORDER
Order level credit check uses exclusively header level information ignoring different bill-to sites
detailed at line level. Order level credit check is performed for the header 'Bill to Site'. When credit
checking rules are defining using sales order as the credit check level, the credit check engine will
examine order totals and evaluate credit exposure against the credit profile (Bill to Site) attached at
header level. Holds will be always applied at header level.
Order level credit check is useful when order lines always have the same 'Bill To Site' as the order
header.
*Negative Number: Includes past due, current, and future open receivables up to X days beyond the
current date.
*Positive Number: Includes open receivables with invoice dates X days earlier than the current date.
*No Value: Includes all open receivables.
INCLUDE OPEN RECEIVABLES BALANCE
The Open Receivables balance will be used to calculate the credit amount available to the customer.
The balance used is the customer balance taking into account any cleared payments. If Pre-Calculated
flag is set, the receivables balance used will be the balance of the account when the Initialize Credit
Summary process was last run.
INCLUDE PAYMENTS AT RISK
Selecting this attribute will make the system also include in the customer balance, payments that are
at risk, i.e. payments that have not yet been cleared.
OPEN RECEIVABLES DAYS
The Open Receivable Days field indicates the range of dates for open receivables
that will be considered in this credit check rule.
INCLUDE UNINVOICED ORDERS
If selected, the un-invoiced orders will be included in amount of credit that is available. For example,
un-invoiced orders that have been Booked will reduce the amount of credit available.
Including un-invoiced orders in credit checking includes the order that have been Booked, Picked,
Shipped, Interfaced to AR, and Closed from Order Management but not Invoiced from AR.
If an order line has been interfaced to the Receivables interface table but has not been invoiced yet,
the Order Management credit check engine will include this line amount as part of the un-invoiced
order amount. On 11.5.10 one must have patch 6359269, the 30 NOVEMBER 2007, ORDER
MANAGEMENT (11.5.10) ROLL UP PATCH or higher, for credit check program to consider the order lines
that have been interfaced to the Receivables interface table but have not been invoiced yet.
INCLUDE FREIGHT AND SPECIAL CHARGES
If you enabled Include Uninvoiced Orders, you must then indicate whether to include Freight and
Special Charges for uninvoiced orders when performing credit checking.
Select the Freight and Special charges check box to include Freight and Special
Charges.
INCLUDE TAX
If you enabled Include Uninvoiced Orders, you must then indicate whether to include Tax information
for uninvoiced orders when performing credit checking. Select the Tax check box to include Tax
information for uninvoiced orders. Credit checking calculations on open receivables always include tax
amounts and are not affected by the Include Tax option. If the performance of credit checking requires
improvement you can toggle off this option.
INCLUDE ORDERS CURRENTLY ON HOLD
If you enabled Include Uninvoiced Orders, you must then indicate whether to Include Orders Currently
On hold. Select the Include Orders Currently On hold check box to include orders on hold within the
exposure calculation for your credit rule.
INCLUDE RETURNS
If you enable Include Uninvoiced Orders, you must then indicate whether to Include Returns. Select the
Include Returns check box to include returns within the exposure calculation for your credit rule.
SCHEDULED SHIPPING HORIZON DAYS
Indicate the number of scheduled shipping horizon days for your credit rule for uninvoiced orders to be
included in your total credit exposure when performing credit checking.
Note: If the Use Pre-calculated Exposure check box is checked and the Include Uninvoiced Orders
check box is checked, then Shipping Horizon Days is protected against update and is NULL.
CREDIT EXPOSURE REPORT
The following are examples of how credit rule setups impact exposure as shown in the Credit Exposure
Report.
The receivables balance for the customer is <5.61> - credit
Value of Orders Booked but not Invoiced is $405 - this includes a single order for $45 that is on credit
check hold. The credit holds have been cleared for the other orders.
MAXIMUM DAYS PAST DUE
If Credit Checking rule has a maximum days past due = 0, then orders entered for customer with
invoices due on day 0 (sysdate) will fail in credit checking and will be held by Credit Check Failure hold.
The Maximum Days Past Due field value specifies the number of days that you will allow an invoice to
be past due - before holding the customers orders. During the credit checking process, Order
Management will verify that no invoices for the customer have been past due beyond the number of
days you specified with this field. If there are any past due invoices, the order is placed on Credit Hold.
EXAMPLE 1.
==========
Do NOT Use Pre-Calculated Exposure
Do Not Include Open Receivables Balances
Include Uninvoiced Orders
Do Not Include Orders Currently On Hold
| |---------------Credit Limit Currency ---------------|
| Overall Limit Exposure Available
--- --------------------- -------------------- ------------------USD 47.00 360.00 <313.00>
EXAMPLE 2.
==========
Do NOT Use Pre-Calculated Exposure
Include Open Receivables Balances
Include Uninvoiced Orders
Do Not Include Orders Currently On Hold
| |---------------Credit Limit Currency ---------------|
| Overall Limit Exposure Available
--- --------------------- -------------------- ------------------USD 47.00 354.39 <307.39>
EXAMPLE 3.
==========
Do NOT Use Pre-Calculated Exposure
Include Open Receivables Balances
Include Uninvoiced Orders
Include Orders Currently On Hold
| |---------------Credit Limit Currency ---------------|
| Overall Limit Exposure Available
--- --------------------- -------------------- ------------------USD 47.00 399.39 <352.39>
EXAMPLE 4.
==========
Use Pre-Calculated Exposure
Include Open Receivables Balances
Include Uninvoiced Orders
Include Orders Currently On Hold
At the point a number of orders have been created and booked in Order Management. The following
demonstrates how the Initialize Credit Summary process impacts Credit Exposure.
1. Value of orders created in OM, but not interfaced to AR is $225.
2. Initialize Credit Summary process is executed
3. Credit Exposure report shows exposure as $219.39 ($225 less $5.61 credit balance in AR)
4. New Orders created in OM to the value of $180
5. Credit Exposure Report re-run and this still shows the credit exposure as $219.39
6. Initialize Credit Summary Process is executed
7. Credit Exposure Report re-run and this now shows the credit exposure as $399.39 ($225 + $180 less
$5.61 credit balance in AR)
CREDIT EXPOSURE PRIOR to Initialize Credit Summary Process
| |---------------Credit Limit Currency ---------------|
| Overall Limit Exposure Available
--- --------------------- -------------------- ------------------USD 47.00 219.39 <172.39>
CREDIT EXPOSURE AFTER Initialize Credit Summary Process
| |---------------Credit Limit Currency ---------------|
| Overall Limit Exposure Available
--- --------------------- -------------------- ------------------USD 47.00 399.39 <352.39>
=============================
REPORTS / PROCESSES
Initialize Credit Summaries Table Concurrent Program
Order Management enables you to periodically rebuild a credit exposure image.
Credit Check Processor Concurrent Program
The Credit Check Processor program can be run on demand to re evaluate Booked orders that have not
been shipped yet.
Credit Exposure Report
The Credit Exposure Report can be used to analyze your customers total credit exposure.
Posted 14th December 2012 by Anonymous
Labels: Oracle Order Management Oracle Receivables
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