Credit Check Functionality in Order Management

1)  Overview:

The ultimate goal of Credit Management processes is to minimize the financial risk that your organization assumes as a result of day-to-day operations. Order Management's credit checking feature is the process by which orders are validated and released against your credit checking business rules. Using credit rules, system parameters, and credit profiles, Order Management credit checking verifies that your customer has sufficient credit availability with your organization to allow orders to be processed and shipped in advance of payment. Order Management enables you to perform credit checks on customer orders or order lines, and automatically hold orders or lines that violate your credit setup.

2) Credit check functionality can work at any of the following stages.

·         Order Entry

·         Picking

·         Packing

·         Shipping 

3) In order to trigger automatic Credit checking on sales orders it is necessary that the credit checking is enabled for the order type, customer profile and payment terms associated with the transaction.

Credit check set up involves the following setup steps:

·         Credit Check Rules Setup

·         Customer Profiles Setup

·         Payment Terms Setup

·         Order Types Setup

Sales orders that pass credit check at all the three points (Profile, Order Type and Payment Term) are allowed to progress normally. Those that fail will have credit check failure hold placed on either the order header or order lines.

4) Setups Involve enabling Credit Check Functionality:

              

5) Different Setup Levels
 

A.      Credit Check Rules Setup

SetupàRulesàCredit

Rule-- XX Credit Checking Rule

Credit Check Level- Sales Order / Sales Order Line

Credit Hold Level- Sales Order / Sales Order Line

Exposure Tab:

Check Use Pre-Calculated Exposure & Include External Credit Exposure

             

 

B.      Payment Terms Setup

SetupàOrdersàPayment Terms

Name: XX New

Check Box - Credit Check

             

 

C.      Order Types Setup

SetupàTransaction TypesàDefine

<Defining Line Type Transaction>

Transaction Type – XX Credit Line

Order Category- Order

Sales Document Type - Sales Order

Transaction type Code- LINE

Price List- XXPriceList

             

                               

<Defining Order Type Tansaction>

Transaction Type – XX Credit

Order Category- Order

Fulfillment Flow - Order Flow - Generic

Sales Document Type - Sales Order

Transaction type Code- LINE

Default Order Line Type- XX Credit Line

Price List- XXPriceList

Credit Check Rule-- XX Credit Checking Rule (Ordering Level)

             

 

D.     Customer Profiles Setup

Customerà Standard

Search Customer Nameà AccountsàClick Details

Select Bill to siteà Open Details

Profile TabàEnable Credit Check

 

            Oracle Order Entry automatically holds customer orders that exceed credit limits. You can control who is authorized to release Credit Check holds when you want to make an exception or the customer's credit balance is acceptable. You can use Credit Check and Order credit limit either in Customer level or Customer site level.

             

             

6) Entering Sales Order

Enter the sales Order with all the above setup criteria’s.

Order ReturnsàSales Order

            

            

            

 

7) Deactivating Credit Checking

There are three ways to deactivate Credit Checking on an order:

• You can use an Order Type that does not have an assigned credit check rule.
• You can define the Customer Profile with ‘Credit Check’ checkbox unchecked.
• You can setup Payment Terms on Order /Line with ‘Credit Check’ checkbox unchecked.

Deactivating Credit Checking does not automatically release orders previously on credit check failure hold.

8) Reports & Concurrent Programs Regarding Credit Check:

Credit Check Processor Concurrent Program:

• Credit Check Processor can automatically apply OR release order or order line credit holds.
• Best use of this program when you suspect your customers credit exposure has changed and you want to re-evaluate their sales order status.
• You can also use Credit check Processor whenever you change the customer credit profile or credit check rule set up and you want these changes to immediately take effect on your booked sales orders.
• Credit check processor "always" uses Booking Credit check rule to apply/release the holds.
• There is limitation for applying the hold through credit check processor it currently only considers exposure of the order lines which are in 'Booked' status.
• When using pre-calculated exposure in credit check rule, run the ‘Initialize credit summaries’ concurrent program every time before running the credit check processor.

Initialize Credit Summaries Table Concurrent Program:

·         This Program enables you to periodically rebuild a credit exposure image for all customers or customer sites for all possible credit rule definitions.

·         When you submit the ‘Initialize Credit Summaries’ program, the changes to customer or customer site credit exposure is calculated and updated in OE_CREDIT_SUMMARIES table.

·         Frequency to run Initialize Credit Summaries will be based on ones business needs. If customer's credit exposure is changing frequently, then probably you can run it frequently.

List of Credit Check Reports:

• Orders/Lines on Credit Check Hold Report:

The Orders/Lines on Credit Check Hold Report shows customer balances for customers with orders on credit hold to help you determine why their orders are on hold. It identifies all the credit holds currently outstanding for a customer within a date range, or identify why a particular order is on hold

• Outstanding Holds Report:

The Outstanding Holds report shows orders on hold, including credit check hold, for any or all customers. It reviews order holds for the customer or customers you choose. This report displays the order number, order date, ordered items, and order amount for each order line on hold for each customer you select.

• Credit Exposure Report
• Credit Order Detail Report
• Credit Limit Usage Report