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Has SAP perfected Credit Management within SAP FSCM (Receivables Management)?

SAP has always had Credit Management processes within its core offering of
ERP within Sales & Distribution and Finance. The core objective is to manage
risk within the Accounts Receivable ledger and current and future sales orders.
The ability to record a credit limit against a different customer by business
unit is a given as well as being able to have real time analysis of their credit
exposure and to rate the risk of credit issues by different categorisation of
customers. The core of these objectives can be performed via standard FI-AR
Credit Management and for some SAP clients this meets their current
requirements. However to work out an accurate credit limits and to categorise
customers into risk groups offline processes would need to support the core.

How initial SAP FSCM helped

Nearly 8 years ago now SAP released SAP FSCM Credit Management to enhance
their core processes. The objective of the new solution was to remove the
offline processes and use SAP to manage the process end to end. In turn the new
solution provides users the control within the process and the reduction of
manual tasks and the reams of paper to control the process. By introducing the
ability to import data sources into SAP enables provides more accurate Credit
Risk categorisations. External data could be rating information from rating
agencies like Moody’s or D&B, or Financial data from published customer
accounts. By using key information from external sources and linking it to
internal data such as payment history provides users of SAP FSCM the ability to
score credit risk in an automated process as well as being more accurate.
Further to this Credit Limit allocation can be calculated with the same data,
even including the new Credit Risk categorisation or score. Again this process
is automated and depending on the rules that are defined more accurate. In turn
the core SAP FSCM solution provides more accurate credit scoring and credit
limit allocation in an automated process. This provides a reduction in manual
effort and should reduce the level of bad debt a client may have.

New functionality – just released

Over the past couple of years the product development team within SAP has
taken the solution to the next level. The core process has been maximised and so
new processes have been introduced. The processes focus on “credit decisions”
that are made and recording them in SAP. Currently if a sales order is blocked,
a decision is required how this should be dealt with. Should the order be
released, or should the Collections team request a payment, or perhaps the
Credit Limit should be increased. At the moment, these decisions are recorded
and processed outside of SAP and therefore not in SAP. When analysing the Credit
Exposure of a customer it is beneficial to have not only the information about
current issues, but also the ability to see the history of previous decisions.
The process of the “documented credit decision” was born and first released in
Enhancement Pack 6 which is currently in Ramp Up. Due to the benefits this could
provide and legal requirements within Germany, SAP decided to “down-port” this
functionality to Enhancement Pack 4 & 5 which can be accessed via a “BC
Set”. Surprisingly the news of this down-port has not been promoted that well.
There is an OSS note that covers this, as well as detailing the relevant support
pack the system needs to be on. Moving into April 2012, the number of SAP ERP 6
systems that are on Enhancement Pack 5 is approaching 20% so the number of
customers who could benefit from this new piece of functionality is slowly

Should you change your process?

Most of the Credit Managers I know that have implemented the basic SAP FSCM
Credit Management solution are content. They have realised the process
improvement and believe they run a steady ship. To some point they are correct,
however they are not striving to improve on their current process. Some clients
may be monitoring credit limit request outside of SAP and others may be manually
approving blocked sales orders, or deliveries and noting the outcome. Without
knowing that this is now available as standard within the later Enhancement
Packages, Credit Managers will be content, but will be making decisions without
having all of the information. Credit Managers need to make decisions throughout
the day and the more insight they have the more accurate they can be.

To summarise

When I introduce the new functionality to Credit Managers they seem to
recognise this as the missing piece of the jigsaw. Decisions need to be made
with information gathered over a period of time, and by collating this in a
single system (SAP) provides efficiency and accuracy. Further to this reports
can now be easily accessed to detail the number of sales orders that have evoked
a credit block, the number that were resolved by manual over ride, or credit
limit increase, or customer early payment. You can report on the number of
credit limits that were requested to be changed, the amount that were approved,
or rejected and in the process of being approved. With all of this insight the
Credit Manager and his team can be a more accurate picture of the true risk a
customer provides.

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  • Hi mark,

    i have a question how to achieve parallel implementation of FSCM credit management and FI-AR based on credit control areas

    Thanks & regards,


    • Hi Siva,

      One of core credit configuration is ‘Automatic credit control’ (t-code: OVA8)

      Once you activate FSCM-CR in ECC, OVA8 configuration screen will be changed accordingly. It means there is no way of parallel implementation

      also credit master is different.

      – Old credit control is based on customer credit master(t-code: FD32 )

      – New credit control is controlled by business partner(t-code: UKM_BP )


      • Hi Ted

        That is not the case. We have implemented FSCM Credit Management for a number of company codes, and others have used FI-AR Credit Management

        • Hi Mark,

          Thanks for your fresh update – parallel implementation case within ‘same client’.

          Could this be achieved by SAP standard process or needs any kinds of enhancement or modification ?

          Best regards,


          • This is standard functionality, we have done this a number of times where we have rolled out FSCM Credit Management into a full ERP solution, going live with a few Company codes (Credit Control Areas) at a time.

          • Hi Mark,

            Thanks for reply this is what i want to know can you please explain how this can be done based on company codes.What are the required configurations to achieve parallel FSCM credit management and FI-AR .

            Thanks & Regards,


          • I have checked with some of the team. As standard you cannot achieve the split.

            However we activated some BAdI’s, and set the config up to assign Credit Segments to Credit Control Areas, for the ones we wanted to use FIN-FSCM-CR and the ones we did not want to use it and just FI-AR-CR we left them blank.

            I think it was a bit fiddly – but it worked in the end.

          • Hi Mark ,

            If UKM_R3_ACTIVATE Badi is active credit check happens in FSCM side .If Credit segment is not assigned to CCarea credit check will not happen at FSCM but this does not mean credit check happens at AR how do you over come this issue .Can you please explain the necessary config and list the badis to implement .

            Thanks & Regards,


          • Hi Mark,

            SAP ‘formally’ declared that SAP Credit Management (FIN-FSCM-CR) will eventually replace the existing Credit Management (FI-AR-CR).

            – As you might know, actual internal processing still depends on existing(or old) function modules in SD side for credit checking and credit exposure behaviour.

            Let’s simply think of following business case in ECC 6.0 EHP5 or over within same client landscape.

            company code A,B,C would like to follow ‘FIN-FSCM-CR’ based control and reporting

            – credit master should be linked to business partner > credit view (t-code: UKM_BP )

            – all the SD side transaction(sale order, delivery, billing document) should be based on business partner in the area of credit control and credit exposure

            – and FSCM interface with SD via web service

            company code D,E would like to follow ‘FI-AR-CR’ based control and reporting

            – credit master should be linked to customer master > credit view (t-code: FD32 )

            – all the SD side transaction(sale order, delivery, billing document) should be based on customer master in the area of credit control and credit exposure

            – and FI-AR interface with SD via within ECC communication

            I judged that your  team or project was one step forward,because your approach has fulfilled the ‘individual’ and ‘separated’ requirements of two groups (company A,B,C vs company code D,E) as mentioned above, without any BAdi enhancement and modification.

            Please kindly share tips or tactics for your case, along with ‘boundary condition’ which might be given.

            Best regard,


          • Hi TED,

            There is a possibility to achieve this i mean SAP is providing a consulting note please go through sap note 1553999 – Parallel use of FIN-FSCM-CR and FI-AR-CR.I’m very curious to know how to implement this without using this note through Badis and some other configurations.

            Thanks & Regards ,