What is SAP Credit Management?

Overview: SAP Credit Management

SAP Credit Management is an SAP S/4HANA solution from SAP that allows companies to effectively monitor and manage credit risks. The solution helps businesses reduce risks from receivables defaults and make efficient, partially automated decisions regarding credit.

What is SAP Credit Management?

With SAP Credit Management, companies can control their credit risk in dealings with customers. The application ensures that businesses keep track of their open receivables and minimize financial losses due to payment defaults.

The solution is especially useful for companies that extend credit to their customers, i.e., deliver products or services before payment is made. SAP Credit Management helps ensure that customers are capable of paying their invoices and supports decision-making when setting credit limits.

SAP Credit Management is available for SAP S/4HANA in both Basic Credit Management (license-free) and Advanced Credit Management (requires a separate license).

Master data maintenance is handled through the Business Partner, and unlike the previous Credit Management solution, it is no longer done at the customer level.

Additionally, the solution is now suitable for companies with heterogeneous system landscapes. SAP Credit Management allows businesses to run a central credit management system even across distributed systems. Using XML interfaces, companies can connect external non-SAP systems to SAP Credit Management.

SAP Credit Management (FIN-FSCM-CR) is part of the comprehensive SAP Financial Supply Chain Management (FIN-FSCM) solution.

What is FSCM Credit Management?

SAP Financial Supply Chain Management (FIN-FSCM) is an SAP solution that helps companies optimize their financial and information flows within the company and with their business partners.

The solution includes, in addition to Credit Management in SAP, the components SAP Dispute Management, SAP Collections Management, SAP Treasury and Risk Management, SAP In-House Cash, SAP Cash and Liquidity Management, SAP Biller Direct, and SAP Bank Relationship Management.

What happens with classic Credit Management?

The R/3 or ECC solution Credit Management (FI-AR-CR) is no longer available for SAP S/4HANA. The successor solution is SAP Credit Management. The new solution is fully integrated into SAP S/4HANA and offers all existing and additional functionalities.

What core features does the solution include?

A central function of Credit Management in SAP is comprehensive credit checking. Before a customer is granted a payment term, the system checks their creditworthiness based on internal data, such as payment history, or external information from credit agencies. This check forms the basis for setting an individual credit limit that is precisely tailored to the customer's financial situation.

The credit limit is continuously monitored to ensure that customers pay their invoices on time and adhere to the agreed limits. If a customer exceeds the limit or experiences payment issues, the system sends automatic alerts, allowing companies to take timely action.

SAP Credit Management is seamlessly integrated with other processes, such as order processing. When a customer places an order, the system checks in real-time whether the credit limit is being adhered to. Only after approval by the system is the order processed. This ensures the financial security of the company without slowing down business processes.

By automating credit checks and monitoring processes, SAP Credit Management saves valuable time and increases efficiency. At the same time, it provides full transparency for companies by making all relevant credit information centrally available and easily accessible. This allows companies to stay on top of things and make informed decisions.

With Credit Management in SAP, companies minimize their risks, secure liquidity, and create a solid foundation for long-term growth – an SAP solution to future-proof financial processes.

SAP Credit Management helps businesses manage their customer relationships in a way that ensures financial security without having to give up growth through credit. It is an effective tool for managing risks while promoting business success.

How does Credit Management in SAP work?

Credit Checking:

Before granting a customer credit (e.g., a payment term), the system checks their creditworthiness. Both internal data (e.g., payment history) and external data (e.g., from credit agencies) can be used.

Credit Limit Management:

Based on the check, an individual credit limit is set for each customer. This is the maximum amount a customer can owe without requiring further action.

Credit Risk Monitoring:

The system constantly monitors whether customers pay their invoices on time or exceed the credit limit. In case of issues, such as late payments, alerts or restrictions can be triggered automatically.

Integration with Other Processes:

SAP Credit Management is integrated with other SAP modules, such as order processing. When a customer places an order, the system checks in real-time whether the credit limit is adhered to before the order is approved.

What benefits does SAP Credit Management offer?

Without integrated credit management, businesses lack visibility into their customers' financial obligations.

Companies are unable to track which customers already have high credit amounts or may exceed their limits.

This can result in credit limits being exceeded without timely recognition. Customer payment defaults or delays can impair the company's liquidity.

Without a system to monitor cash flows, a company may fail to meet its own financial obligations, such as paying suppliers or salaries, on time.

With Credit Management in SAP, companies have a suitable tool to help them effectively manage credit risks and avoid financial losses due to payment defaults.

The solution helps companies keep track of open receivables and make informed decisions when granting credit to their customers.

The benefits of SAP Credit Management at a glance:

• Risk Minimization: Companies can identify and avoid payment defaults early.
• Automation: Credit checks and monitoring are automated, saving time.
• Efficiency: Relevant data is provided in real-time, enabling quick decisions.
• Transparency: All credit information is centrally available and easy to track.