Credit profiles define the maximum financial risk you are willing to withstand on your regular operations. The Credit Check check box in the credit region of the Standard Customer window (for the customer master record) must be enabled in
order to perform credit check. You can define the credit profile information at the following levels:
Customer and Customer Site:
This profile defines your credit policies for individual customers or customer sites. You can accept the default credit policies from a Customer Profile Class, or you can customize credit limits to fit the particular customer.
You can implement credit policy changes by modifying a Profile Class and cascading the changes to individual Customer Profiles. Check current limitations for multi-currency credit check set up.
Organization: This type of Credit Profile is used to define an organization's (operating unit) credit policy for credit control and credit checking. It is used as a default when customer/customer site credit profile is missing.
Organization Default provides a higher level in the customer profile hierarchy (customer site - customer - organization default), and the fulfilled credit profile at operating unit level enforces credit checking for any customer which does not
have credit limits defined at the customer or site level.
Item Category: Item Category Credit Profiles enables you to define credit information by Order Management Item Category. Item Category credit profile is completely independent from customer credit profiles. Item-category credit check will place a credit hold for transaction amounts over pre-defined category credit limits.
Item Category credit profiles can be used to model credit limits such as service line for insurance coverage which can prevent you from shipping materials that exceed a pre-defined monetary limit.
There is an embedded hierarchy provided by credit checking routines for establishing credit information between the following entities:
- Customer Site
- Organization Default
When customer site and customer credit profiles do not exist, the Organization Default credit profile is used, if it exists.
Credit Profile Types
Customer: Enables you to define credit limits by currency for Customers.
Customer Site: Enables you to define credit limits by currency for Customer Sites.
Operating Unit Default: Enables you to set credit limits and terms, by currency, within a given operating unit.
Operating Unit Default Credit Profiles enable you to effectively enforce a formal credit checking process for all order transactions/currencies from any customer, provided you define an Operating Unit Default Credit Profile for each currency you process order transactions for. For example, if a transaction is entered and no credit limits exist at the customer or customer site levels for the specified order currency, the Operating Unit Default Credit Profile for the transaction/currency entered will be used to determine credit availability.
Item Category: Enables you to set order credit limits, by currency, for one or more Item Categories. This type of profiles enables you to specify limits for the maximum amount on each order for an item category irrespective of a customer or site.
Unlike the Operating Unit Default Credit Profile that defines credit limits for specific operating units, Item Category Credit Profiles are applicable across operating units. Item Category profiles are global credit profiles and are transaction currency based: the credit limits defined for an item category are for individual transactions (orders) only. There is no overall system credit limit for a category.
Item Categories enable you to set order credit limits/profiles for one or more item category (applicable for all customers). For example, an Item Category Credit Profile can specify that the maximum order value cannot exceed $10,000 USD for any order lines that contain an item associated with the Item Category Computers. This is extremely useful if your business practice requires item-based insurance coverage.
Note: The Operating Unit Credit Profile is used as the default profile for all customers that do not have an individual credit profile either at customer or site level.
Note: Only categories associated with the default category set for the Order Management functional area are supported.
Defining Credit Profiles
Organization Credit Profiles are a set of criteria that define an operating unit’s credit policy for credit control and order credit checking. Credit Profiles include the credit limit and pertinent data needed to determine total credit exposure for orders undergoing credit checking.
The Credit Profile window enables users to create and maintain credit information for Operating Units and Item Categories.
Operating Unit Default Credit Profiles can assist in further defining your credit policies by providing global defaults if no other information is present during credit checking.
To create a new credit profile, users must specify what type of credit profile to create, and depending on the credit profile type chosen, appropriate fields within the window become updateable or non-updateable.
- You cannot define Credit Profiles for Customer or Customer Site by directly navigating to the Credit Profile window.
- Credit Profiles for Customer and Customer Sites are initially defined when entering credit information in the Credit section of the Profile-Transactions tab of the Customer and Customer Site windows.
- You must then assign a Credit Usage Rule to your Customer or Customer Site if you want to enable multi currency credit check.