Credit checking customers

Credit Limit Checking

Credit Limit Checking, or CLC, checks the credit worthiness of a customer account and determines if further order lines can be accepted and processed.

It uses:

• a credit limit - the amount of credit the customer is allowed. This is held on the customer's Chart of Accounts record.
• the account balance - calculated at the present time from the credits and debits on the account.
• the on-order balance - the value of sales orders entered but not fully processed to payment
• the available credit amount - calculated from the above figures and compared to the size of the order line being entered. If the value of the order line being entered exceeds the available credit amount, it fails CLC.
• CLC override - any overrides set in the Operator Miscellaneous Permissions.

How is the Credit Limit Check Calculated?

The available credit amount equals the CLC limit plus account balance minus the on-order balance plus the CLC override.

The line fails the CLC if the available credit calculated is less than or equal to 0.

The line passes the CLC if the available credit calculated is greater than value of the order line.

Overdue Invoice Checking

Overdue Invoice Checking, or OIC, calculates the sum of outstanding financial transactions for the customer account and compares this figure to the specified OIC limit on the account. If the limit is exceeded, the order line being entered fails OIC. The financial transactions included in this calculation can be defined in the Ledger Allocation Indicators.

This check calculates the overdue amount as the sum of debits on the account with a due date prior to the current login date and with allocation indicators defined as being included in the OIC calculation.

How is the Overdue Invoice Check Calculated?

The available overdue amount for the account equals the OIC limit minus the overdue amount plus any OIC overrides.

The line fails the OIC if the available overdue amount is less than 0.

The line passes the OIC if the available overdue amount is greater than or equal to 0

Credit Warning and Blocking

The following types of credit warning and blocking can be defined. These determine what happens when an order line fails credit checking:

• Warn only - a warning message is displayed but processing of the line can continue.
• Warn and block - a warning message and processing cannot continue as the line is immediately put onto Credit Hold and Order Hold. Control Desk functionality is used to remove the Credit Hold. The Order Hold is removed by using the Release action on the sales order entry form.
• Block Only - no warning message is displayed and processing cannot continue as the line is immediately put onto Credit Hold and Order Hold. Control Desk functionality is used to remove the Credit Hold. The Order Hold is removed by using the Release action on the sales order entry form.
• Not set - the system looks at the equivalent flag on the next level of checking. That is, it checks the Sales Type then the Sales Business Setup.

The stages in the sales process where credit checking can be applied are:

• Entry
• Release.

Applying Credit Checking

Credit Checking actions can be set up so that they are applied in a number of places. That is, the customer record, the sales type or the sales business setup. The checking criteria are used in the following order:

• Customers

  The actions to be taken for Credit Checking can be defined on the customer record. If this is set to Not Set, the Sales Type is searched for a credit checking action.

• Sales Type

  The actions to be taken for Credit Checking can be defined for each sales type. If this is set to Not Set, the Sales Business Setup is searched for an action.

  A value label must be identified for use in Credit Limit Checking by the setting of the Sales Credit Balance flag in Value Labels (VLB). For example, a value label holding the gross line value could be used for CLC, but it is this value that is used in the CLC calculation. If this gross value label is above the available credit calculated, the line will fail CLC.

• Sales Business Setup

  OIC can be enabled or disabled in the Sales Business Setup. If it is disabled, no OIC is carried out even if OIC is enabled on the customer record.

Customer Credit Blocked

If a customer is marked as Credit Blocked on the customer record, credit checking is not performed. However, the warn and block actions are performed for the line. That is, you are warned and the line is put on Credit Hold awaiting approval as for other forms of credit failure.

Flags on the Sales Order Line

The following flags on the sales order line are relevant to credit checking:

• Credit Status
• Credit Cleared

  No credit checking has been performed, or credit checking has been passed.

• Credit Blocked

  Credit Limit Checking or Overdue Invoice Checking has been failed, or the customer is flagged as Credit Blocked.

• Credit Released

  The order has been approved via a control desk and no further credit checking will be performed.

• Overdue Invoice Held

  This flag changes when the line fails credit checking, and after approval.

• Credit Limit Check Held

  This flag changes when the line fails credit checking, and after approval.