New developments in Credit Management
In the previous publication about credit management, we looked at blocking rules, paying special attention to the blocking of changes in payment terms and the blocking of settlement discounts.
In this publication, we will address the remaining blocking rules, which can be applied both to an individual customer and to a group of customers.
• Number of days past due
• Account status
• Payment terms
• Overdue credit limit
• Amount overdue
• Sales order amount
• Used portion of available credit
When a sales order is generated for a customer, Dyn365FnO checks a set of blocking rules, in order to help make the decision whether or not to extend credit to the customer and process the sales order.
Exclusions to the blocking rules can also be configured to allow a sales order to be processed, this would be useful, for example, for larger customers who need to be served under almost any circumstances. Exclusion rules are executed after blocking rules and only affect the rule in which they are defined, except for the exclusion of sales orders, which will be discussed later.
Blocking rules are configured from Credit management > Configuration > Credit management configuration > Blocking rules.
Days since due date
Apply the rule if the customer has one or more invoices overdue for a given number of days.
Like many other configuration forms, we can define it by table, to specify the customer, by group, for rating groups, or for all, as always it runs from most restrictive to least restrictive, first for table, then for group and finally for all.
It is important to specify when we talk about group, it is not customer group, but classification group for credit, they are created in Credit management > Configuration > Credit management configuration > Credit management groups, in our example, we have a very simple classification, only with three groups.
These groups created are available from the customer master in the Credit and Collections section.
A risk group can be added, the purpose of which is to apply a credit management retention to customers grouped by a set of common factors and assess their risk based on a score, configured in Credit and collections > Configuration > Credit management configuration > Risk > Risk classification.
The risk score is calculated by comparing the customer’s information with each score group. The scores are summed and the total score is compared with the values in the risk group settings to identify the risk group to which the customer belongs.
The next field “Rule type” will offer the options to block the order, or to make that rule exclusionary, useful to exclude certain customers from the general rule. It is related to the next field “Operator” so if the rule type is blocking, the operator will be “Greater than or equal to” and if it is set to excluding, the operator will be “Less than or equal to”.
The last three columns are related, if the “Type of value” is Days, in the next column the number of days overdue shall be indicated, in the case, if the type of value is amount, in the column “Overdue” the amount and currency shall be indicated.
Statement of accounts
Indicates whether the blocking rule applies to a customer with the selected account status, the Block option will create a rule that blocks the order, and the Exclusion option excludes the rule from blocking the order.
Terms of payment
Here we configure the payment conditions, which either block the order or exclude it from the blocking rules.
Overdue credit limit
This rule applies to customers with expired credit limits, the way to configure it is also by group, table and all, in this case the days of expired credit limit refers to the additional grace days that are added to the number of days expired credit limit.
Same as the previous block, but in this case, by amount overdue, before the blocking rule places the order on credit management hold.
The value type relates to the credit limit threshold, it defines the value that will be used to check how much of the credit limit has been used, before a customer is put on credit management hold.
This rule checks the overdue amount and the credit limit threshold.
This rule is used to configure the rules by order, also by table, group and all.
It should be noted that this rule, if you check the Unblock sales order checkbox, overrides all other rules, for example, if we exclude all orders under €100.00 and we check the checkbox, all sales orders with an amount less than this amount, will be automatically released from the rest of the blocking rules.
Credit limit used
This rule applies to the amount of credit limit used by the customer.
Credit and collection parameters
In order for the above rules to be executed, you would have to check the checks for Check credit limit on sales order, Check credit limit on service invoice.
The message can be a warning, then you will receive a warning when the credit limit is exceeded and if set to error, Dyn365FnO will check the credit limit and the order will be put on hold if it exceeds the credit limit.
Release of orders
The control of the credit management, is done on the options that are marked in the Credit and collection parameters > Credit management checkpoints, as soon as there is an order that does not meet the requirements, it will be taken to the credit management.
From Credit and collections > Credit management hold list > All credit holds or Open credit holds, you can see all the blocked orders, after creating an example, in this form you can see the blocked order, the state it was in when it was blocked and the reason for blocking, in this case, we can see that the reasons are multiple.
To see the reasons why the sales order has been blocked, we have to click on the button at the top Reasons for blocking. In this case it does not meet the payment terms, as I put in the order 120D, and the days since maturity, as in their open transactions, we find an invoice that has not been charged and more than 15 days have passed (see configuration in images of the previous points).
To unblock it, you would have to do the same points as those seen in the article “Blocking orders I”, launch the workflow and select whether you want to approve, deny, request a change or delegate.
It is necessary to take into account that this process will unblock the state in which it is, that is to say, in this example the confirmation has been unblocked, but the following step, either delivery note or invoice, if the order or the rules are not modified, the sales order will be blocked again, following the same example, if we try to invoice this order without modifying anything, we will see two lines in this form, one for the confirmation and the other for the invoice:
We did not go over the Evaluate for Unblock button in the previous article, this button processes the blocking rules again, in case in the course of time that an order is put into credit management and is manually unblocked, the order is modified, in our example, by modifying the payment condition, this process understands that the order has already been updated and will unblock the sales order. If we have many orders, this process can take a long time, so in order to continue working, the system executes it in batches.
To finish with the blocks, based on these seven rules, plus the two that were seen in the previous article, together with the customer credit limit, we can get an idea of the potential of Dyn365FnO, in terms of security that offers us, much greater than in previous versions, which was a simple manual control to block customers.
I hope you liked it and that it will help you in your credit management.