Credit management prevents business beyond what a customer can pay for. It is also where sales, pursuing revenue, and finance, limiting exposure, come into tension.
What a credit limit is compared against
The limit is not compared only with the receivables balance. Orders and deliveries not yet invoiced count as future exposure.
| Component | Content | State |
|---|---|---|
| Receivables | Invoiced and uncollected | A confirmed claim |
| Unbilled deliveries | Delivered but not invoiced | Awaiting billing |
| Open orders | Ordered but not delivered | Awaiting delivery |
| Special G/L items | Bills of exchange and similar | Included by configuration |
Their sum is the exposure checked against the limit. Checking at order entry matters because that is the last point before goods leave.
The credit control area
The credit control area is the unit credit is managed in. Several company codes can share one, so a group-wide limit per customer is possible, as is a limit per company.
When checks run
| Point | What is blocked | Effect |
|---|---|---|
| Order entry | The order cannot be saved, or is held | The earliest possible stop |
| Delivery creation | No delivery can be created | Stops before goods leave the warehouse |
| Goods issue | Stock does not move | The last line of defence |
Strictness is configurable too: a simple check compares against the limit, while an automatic check also considers overdue items and how recently credit data was reviewed.
Reviewing and releasing blocks
| Code | Use |
|---|---|
| FD32 / UKM_BP | Maintain credit limits (ECC / S/4) |
| VKM1 | List and release blocked sales documents |
| VKM3 | Credit status of a sales order |
| VKM4 | Credit status of all sales documents |
| F.31 | Credit management reporting |
Credit management in S/4HANA
S/4HANA retires classic FI-AR credit management in favour of FSCM Credit Management.
Limits can now be derived from rules that score payment history and external credit information rather than being purely manual. Credit data sits on the business partner and is maintained with UKM_BP.
Migration from ECC means rebuilding credit master data and configuration rather than transporting it, and migration projects should budget for that.