The Documented Credit Decision (DCD) functionality is a case-based solution to track credit decisions. The traditional method to approve a blocked sales order would be for sales administrator clerks to review the order and make a decision. If it fell out of their approval level, they may make a phone call to seek further approval. The sales order would be approved, and run through into billing. If there was an issue with the customer paying the invoice, a review may take place to identify why the sales order was unblocked. Depending on the industry and type of customer, the volume of these approvals may be high, leading to uncertainty as to the true reason for the decision. Some clients may have a paper-based solution, or keep email approvals; however, none of these is system generated or held centrally.

Moreover, a secondary decision following the unblocking of the sales order is to change it (i.e., increase the credit limit). The credit limit approval itself may allow the sales order to proceed through the credit-checking process, meaning that approval is no longer required. The ability to link all these tasks together provides more insight to the credit management team. Lastly, certain industries may spend a few weeks to seek approval, so being able to see the current credit position of a customer is beneficial for future decision making.

An Event-Driven Solution

SAP has provided flexibility to allow events to be built to define a particular scenario. A sales order can be blocked for many different reasons, such as the following:

• The credit limit may be exceeded
• The customer may have unpaid invoices older than a defined limit
• The customer may have reached a certain dunning level

If one of these criteria is met when a new sales order is raised, or an existing one is changed, then a sales order block is applied, meaning that the goods cannot be shipped. A DCD is created, but it may be for customers who have an overdue debt or who have reached a certain dunning level. The DCD is sent to the AR team for approval. However, if the sales order entry team has created a new sales order that has blocked the creation of a DCD, the SAP system may require the sales team to pass the DCD to the sales manager for approval. Certain processes could have different approval levels as well.

A Simple Scenario

A standard process starts with a sales order being created for a customer. Each customer is assigned to a credit segment (which is linked to a company code or sales org) and a credit risk category. The combination of the two determines the types of measures set in the Automatic Credit Control process that is used both by standard SAP FI-AR and SAP Financial Supply Chain Management (FSCM) Credit Management.

For example, consider a case in which a customer has a sales order for £31,029.03 (Figure 1). This amount is greater than the permitted value for a single document.

Figure 1

A sample sales order

When the AR team tries to process the sales order, the SAP system sends a message notifying the user that the credit check has failed owing to the value of the document being greater than the permitted value (Figure 2).

Figure 2

A system message indicating that a credit check failed

The sales order entry team cannot process the sales order any further until the credit block has been removed. If the user ignores or misses the system message, the sales order entry team might look at the Credit Management profile within the business partner record to receive a better overview of the account (Figure 3). The Credit Segment view of the customer account enables the relevant user to view the credit limit and the credit exposure. It also enables the credit control team to drill down to document level information if required.

Figure 3

The Credit Segment view of the business partner

The business partner record details that only 66.1 percent of the credit exposure has been consumed, so the user can rule out an issue around credit limit exposure.

By clicking the information icon on the Credit Exposure line, the user can now drill down a level to see details about what transactions make up the total of £33,052.59 (Figure 4).

Figure 4

Credit exposure total by transaction type

The user can now clearly see that the credit exposure is made up of some open billing documents worth £2023.56 as well as open sales orders worth £31,029.03. By selecting the Open Orders line, the user can navigate further into the detail of the credit exposure of the customer to see all the open sales orders that make up £31,029.03 (Figure 5).

Figure 5

A list of all open sales orders

Although two open orders are shown in the display, only one has a value. By clicking the search  icon, the user can find out the sales order number. In this case it is 70000064.

It should now be clear that the issue with the account relates to the sales order 70000064 and the user should try to find the Credit Decision Document case within the system.

The following examples are based on a scenario in which there is no workflow; in fact, none of the main fields has been derived to show the potential of how you can customize your solution to meet your individual requirements. For example, the collections specialist of the customer is defaulted into the Credit Specialist field — or the reason of the credit block — could be mapped to the reason code of the DCD.

To view credit management cases, including Documented Credit Decisions, follow menu path Accounting > Financial Supply Chain Management > Credit Management > Documented Credit Decisions > UKM_Case – Cases in SAP Credit Management. As with all case type functionality in SAP ERP, you can customize the search criteria to meet the requirements of the end user. There is also the function to select My Documented Credit Decisions in which only DCDs that are assigned to you are displayed. After selecting the highlighted search option Documented Credit Decision – Search and pressing Enter (Figure 6), the users receive a selection screen to view the relevant DCDs from their search.

Figure 6

Search for a DCD

In the next screen that appears (Figure 7), a user searched for a DCD against the date (the Created On field). However, users can also search by the customer number (business partner [BP] Number), the Credit Segment, or the Document Status – new, in progress, or escalated.

Figure 7

Standard search criteria for a DCD

In my example, the user’s search has brought back a single DCD with its own unique case ID (10054). The status is listed under the Descript. column as Open/New (Figure 8).

Figure 8

Results from a DCD search by date

The user can drill directly into the DCD to see more information. However, the user can use a few icons to speed up the processing of the case. For example, by clicking the Change Field Content button, the user can update the value of the DCD for the fields defined in the drop-down list of options (Figure 9). The user might want to assign the credit specialist (to process the DCD) or change the person responsible.

Figure 9

Optional fields available to change in a DCD

If users do not want to update a specific field, but do want to view the DCD in more detail, they can double-click the case line (Case ID) from the search result page (Figure 8) to view the details shown in Figure 10.

Figure 10

Details of a standard DCD

The credit analyst and person responsible need to be current users of the SAP system. The DCD’s reason code is a way to define the reason for the creation of the case. You can define your own reason types to align with your specific business processes (Figure 11).

Figure 11

Reason of the DCD and the standard reason types

Escalating a DCD enables the case to have a processing deadline, and where elapsed, the case can be escalated. For example, a service level agreement might require that a DCD be turned around in two days. Once this time has passed, the DCD could be escalated to a credit manager for review and further action (Figure 12).

Figure 12

Escalation field in the DCD with the standard escalation reasons

To edit the case users click the display and edit icon . Users can add notes, enter any missing information (e.g., the credit specialist), or input the reason code (Figure 13).

Figure 13

Process a DCD

Within the DCD, there are some useful icons (see the icons at the top of the screen shown in Figure 13). For example, a dispute holds up a payment, leading to the credit exposure being high. SAP Collections Management may inform the user that the customer has a broken promise to pay that indicates that there is a potential credit risk with the customer.

By selecting the display process receivables icon  that is found at the top of the DCD (Figure 13), the user is then taken from the DCD into the Process Receivables screen (Figure 14). This screen is used within Collections Management to record customer contacts. Therefore, the user who is accessing the DCD can check on the performance of the customer through the eyes of the collections team.

Figure 14

The Process Receivables screen

Having access to this information joins the credit and the collection teams together by sharing common information to make an informed decision. For example, one of the common issues for a sales order to be blocked is that the credit exposure is above the credit limit or is higher than a percentage of the credit limit as defined in the Credit Risk Category.

If this occurs there are two common processes. The first process involves contacting customers to see if they could make a payment to reduce their credit exposure. The second process is to review the existing credit limit of the customer to see if a new limit could be assigned to a customer. An example of the latter process is if the customer has been purchasing more than normal owing to a special event or if the company has grown. The credit manager may decide to review the account, and either provide a temporary increase to the credit limit to satisfy seasonal requirements or make a full-time increase to map to the growing business.

Within SAP FSCM Credit Management, users can create a case to manage credit limit requests. This function is not new within SAP FSCM Credit Management; however, users can now access and link to a documented credit request. The Credit Limit Request button (Figure 13) enables the user to navigate to an open credit limit request assigned to the business partner. After clicking this button, users can view the details of a credit limit request (Figure 15).

Figure 15

A credit limit request case

The credit limit request shown in Figure 15 provides details related to the business partner (BP Number), the current credit limit, and the requested amount. This screen also includes a field for an approved amount. This amount can contain a value that differs from the requested amount and the current credit limit. Knowing that there is a credit limit request could influence the decision making within the DCD.

Users can also click a new Sales Document button (Figure 16) to check, release, or cancel a sales document. By choosing Check from this list of options in the drop-down menu, users can check the sales order to see if the criteria that blocked the sales order have changed. For example, a payment might be received, reducing the credit exposure. Consequently, the sales order does not need to be blocked any more.

Figure 16

The Sales Document button with the various options the user can select

One of the options the user can perform is to check the sales document by clicking the Check button that is found in the DCD Search screen (Figure 8). This is a way the user can confirm the status of the sales order before opening up the DCD. After users click the Check button, a pop-up screen appears that lists the status of the sales documents that they checked (Figure 17).

Figure 17

The confirmation from the check of the sales document

Users also have the option to release the sales order by clicking the Release button that is found in the DCD Search screen (Figure 8). This action releases the credit block and enables the sales order to be processed through delivery and billing. The user receives a prompt to confirm that the sales document is to be released. By clicking the Yes button, the sales document is released (Figure 18).

Figure 18

A confirmation of the release of a sales order

Now the user sees a pop-up box that includes confirmation of the release of the sales order (Figure 19).

Figure 19

Confirmation of the credit block being released for a specific sales document