Credit Check for Customer Order

Outcome

Customer orders are checked to prevent orders from being delivered if the payer's credit is bad.

Uses

A stopped customer order provides the opportunity to check the payer and to decide whether or not the customer should be allowed to order.

How the system is affected

When an order header and an order line are specified or a picking list is printed, a check is done to ensure that the payer is reliable and liquid according to our definitions.
A customer order is stopped if the payer's credit limits have been exceeded. A customer order stop caused by a credit check should not be confused with a customer stop, which is set manually for the customer on 'Customer. Open' (CRS610/J).

Before you start

Credit check must have been activated on 'CO Type. Open' (OIS010/F).
Credit limits must have been specified per customer on 'Customer. Open' (CRS610/J). Credit limits may also be defined for a credit group, to which the customer, or payer, is connected in 'Customer Credit Group. Connect' (CRS316). See Credit Limit at Grouped Customer Level.

There are optional settings for the credit check on 'Settings - General Ledger' (CRS750/F). These are the related optional settings:

'Cr chk incl VAT', which determines if VAT or Sales tax will be included in the accumulated value in the backlog.
'Cr chk incl blk', which determines if the backlog should include invoices that are blocked.
'Cr chk incl prl', which determines if the normal credit logic will be applied to preliminary orders.
'Cred time fence', a time fence for credit limit 3. The time fence is the number of days calculated backwards from the requested delivery dates of customer orders when these customer orders will update the customer's consumed credit limit 3.

Note: The functionality for time fence for credit limit 3 cannot be used in combination with credit groups defined in (CRS316).

Description

Purpose

A credit check is used to help avoiding future bad debt losses. The customer order type defines whether a credit check is activated, as well as when it is done. The check is made against the payer's credit limits.

When

Credit check is activated on 'CO Type. Open' (OIS010/F). Credit check can be activated at four different points in the customer order flow:

When specifying and changing customer order header in 'Customer Order. Open' (OIS100).
When specifying and changing customer order lines in 'Customer Order. Open Line' (OIS101).
When the customer order is closed after it has been specified or changed. That is, when exiting the customer order in 'Customer Order. Open' (OIS100).
When printing picking list. This is activated on 'Dispatch policy' (MWS010/E) that is connected to the CO type on (OIS010/J).

How

The credit check is made against the payer's credit limits specified on 'Customer. Open' (CRS610/J). If the payer is connected to a credit group in 'Customer Credit Group. Connect' (CRS316), the credit check is performed against the credit limits defined for the credit group on (CRS610/J).

A payer is retrieved automatically to the customer order from the ordering customer on 'Customer. Open' (CRS610/J). If the payer field is blank on (CRS610/J), the customer becomes the payer. A payer can also be changed or specified manually during customer order entry on 'Customer Order. Open' (OIS100/A)or (OIS100/E).

Credit limits are specified in the customer's currency on 'Customer. Open' (CRS610/J). The customer's currency is used.

There are four types of credit limits that check different values:

Past due amount in accounts receivable
Amount outstanding in accounts receivable
Amount outstanding in accounts receivable, plus the value of current, non-invoiced customer orders
Number of days past due for the invoice in accounts receivable with the oldest due date.

Credit limits can be left without values by specifying 0.00 as the amount or 0 as the number of days. In this case, the credit limit is not checked.

When a limit is exceeded

The point at which a credit check is made is defined on 'CO Type. Open' (OIS010/F) for each customer order type.

If a credit limit is exceeded, a warning is issued in 'Customer Order. Open' (OIS100) and 'Customer Order. Open Lines' (OIS101)The functionality for time fence for credit limit 3 cannot be used in combination with. The warning can be ignored, but the customer order is assigned a stop code and the picking list is prevented from being printed.

Customer order stop

When a limit is exceeded, the 'Customer order stop' field in the programs listed below indicates which credit limits have been exceeded. The number 1, 2, 3, or 4 is displayed to indicate which type of credit limit is set for the customer. See the list above for a description of credit limit types.

The 'Customer order stop' field is displayed as information in these programs:

'Customer Order. Open' (OIS100)
'Customer Order. Open Line' (OIS101)
'Customer Order. Copy' (OIS106)
'Customer Order. Simulate Totals' (OIS110)
'Customer Order. Stop' (OIS120)
'Batch Order. Open Lines' (OIS276)
'Customer Order. Change Line Price' (OIS29)
'Customer Order. Connect B/C Recipients' (OIS400).

Release a stopped customer order

A stopped customer order must be released on 'Customer Order. Stop' (OIS120/E) before a picking list can be printed. An order is released by changing the 'Customer order stop' field on (OIS120/E).

The E panel in (OIS120) displays a compilation of defined credit limits and current amounts for the comparison values for the customer order's payer. The same information is available in 'Customer Credit Limit. Open' (CRS315). Action F15='Refresh invoice amount' is available both on (OIS120/E) and (CRS315/E). This action triggers a recalculation of the outstanding and overdue invoice amounts, something that otherwise is only done by the night job.

If the payer is connected to a credit group in (CRS316), the credit limits and current amounts for the comparison values that are displayed on (OIS120/E) are retrieved from the credit group, not from the payer. If action F15='Refresh invoice amount' is used on (OIS120/E) for a payer that is connected to a credit group, the comparison values are recalculated both for the payer, and for the credit group.

Block addition to manually released order

Select the check box 'Blk add man rel' in 'Settings - Customer Order Entry' (CRS720) to block additions to manually released customer orders, that is, orders with 'CO stop' set to 9='Man rel order' in (OIS120).

When selected, these are not allowed:

Adding new customer order lines, except for packaging order lines created from 'Packaging action'. See the help texts for parameters '265 Automatic execution of packaging actions' on (MWS010/G) and 'Packaging act' on (OIS010/J) if you want to know more.
Increasing the order quantity on an existing order line.

Other changes that increase the order value, such as increasing the price, reducing discounts, and adding charges are allowed.