Skip to Content

Traditional Credit Management and FSCM Credit Management: Comparative Analysis

The payment behavior and credit worthiness of the business partner/customer have immediate impact on the business result of an organization. Efficient credit management reduces the risk of business losses, optimizes the credit risk and improves relationship with the business partner.

The traditional credit management has been stayed for a longtime. Most of the companies using FI-AR and SD have implemented the traditional credit management to avoid the losses because of credit risk. The FIN-FSCM-CR takes the credit management to a different level. The FSCM credit management (FIN-FSCM-CR) provides enhanced functionality to monitor credit and exposure risk of a company. It is an extension over the traditional credit management (FI/SD-CM), which enables the user to have better control and more transparent view on receivables. Based on my experience, I have summarized the basic differences between the two ways of managing the credit in SAP.


Traditional Credit Management

FSCM Credit Management



Distributed as well as centralized structure

Distributed Architecture

The distributed architecture of FIN-FSCM-CR makes it necessary to have interfacing.

Organization element

Credit Control Area

Credit Segment – Many segments can be linked to a main segment

The credit segment is associated with a credit control area. Each credit control area can be assigned to one credit segment only.

Master data

Uses AR master data

Requires creation of Business partner master data

Based on the customizing setting the business partner master data is synched up with the customer master data.

Types of credit check available

Automatic Check and Static Credit Check

Only “Automatic credit control” will be available

The basic credit management setting remain same in both FI/SD-CR and FIN-FSCM-CR.

Storing credit rating of external rating companies

Not Available.

Can store credit rating of many companies in business partner.

An interface can be set-up to get the data from credit rating company.

Interfacing with credit rating company

Not Available.

Possible through XML interface

Not Applicable for traditional credit rating company as there is no possibility to store the credit rating of various rating companies.

Defining blocking reason

Not Available.


FIN-FSCM-AR provides blocking of business partner data providing a reason code.

Credit Exposure data

Available at credit control area level.

Available at credit segment level with the breakup under each category.

Credit limit data

Needs to collect from external company and uploaded manually based on manual calculation

Can be derived based on both internal and external data.

FIN-FSCM-CR, credit limit data can be requested within SAP and based on external and internal rating the limit can be calculated within SAP system.

Reviewing limit

Intermittent manual review is set-up to derive and reclassify the credit limit.

Can be done automatically within SAP by utilizing the live/ internal data along with the external rating.

Improved and automated process in FSCM credit management.

Additional Set-up requires

Not Required

Maintaining interface through XI/PI or point to point interface.

WS-RM can be used from ECC6.0 EHP5. The interface is used for real-time exposure and transaction data flow between AR and FSCM credit management. This is required because of distributed architecture of FSCM.

As we have seen here, the FSCM-Credit management has same underlying functionality as that of the traditional credit management. FIN-FSCM_AR doesn’t replace the traditional credit management but is simply is an extension over the existing credit management. With the implementation of the FIN-FSCM-CR, the companies are able to reduce the manual work, streamline adhoc work, and make better decision for credit management based on the internal as well external data.

You must be Logged on to comment or reply to a post.
  • Good comparison.

    It will be great if you can add one example of use case for each major difference e.g. for Blocking reason update, use of Credit segment etc.

  • This post has been around for a while (April 2012) and I really found it valuable, but I do think there are a couple of items misstated with respect to Traditional Credit Management.

    For example, there is a field for maintaining a credit rating of external rating companies – KNKK-DBRTG (as you can see from the field name, it was originally meant to hold the D&B Rating).  This can be used to hold any external credit rating, you just can’t maintain ratings from multiple agencies. 

    Same for the interface with the Credit Rating agency – as far back as R/3 3.1 you could connect to D&B via the certified interface D&B for R/3.  This predated the need to install PI/XI.