Credit Control in Customer Order

Credit control involves various tests/checks and consideration of certain financial relationships between customers. The data setup consists of the following:

• A credit limit can be defined for a customer along with an allowed overdue amount and an allowed number of overdue days. But credit limit can also be defined on a company level, which will automatically be valid for all customers for whom a defined credit limit is not specified.
• It is also possible to define a corporate credit relationship with parent and child customers, which has an impact on how the credit check is executed.
• On the customer record there is also a credit-blocked check box. Selecting this check box will have a strong impact in the credit check.
• An invoice customer may be defined for a customer, either directly on the customer record, or in the customer order. The invoice customer is considered from a credit check perspective. Note: If the customer is credit-blocked, the check will be performed on the ordering customer first, and then followed by the check on the invoicing customer.

The credit check, when executed, performs the following checks to find out whether;

1. the customer is credit-blocked in the customer record.
2. the value of all outstanding orders and outstanding invoices (if IFS Financials is used) exceeds the customer's credit limit.
3. the total overdue amount (which has also exceeded the allowed overdue days) exceeds the allowed overdue amount

For a customer belonging to a corporate credit relationship the system will first check the credit limit or the total overdue amount stated for the child customer itself, if such values are defined. If found OK, or if no defined values exist, the system will continue to check the limit and the total overdue amount for the parent customer.

The credit check depends on both the type of the credit check and how the credit control group, connected to each customer, has been defined. Note, If the customer is credit-blocked the check will always be performed, independent of the settings of the credit control group. The following options are available when a credit control group is defined;

• Release Order
• Create Customer Order Reservations
• Create Pick List
• Deliver Order

Release Order is when a customer order has been created and then released, either manually by the user or automatically, like for example, when creating an order from a sales quotation or from an incoming customer order. If the customer is credit-blocked a check is also made directly when saving the customer order header and an information message is raised to inform that the order will be credit-blocked.

Create Customer Order Reservations is used when executing either the Create Customer Order Reservations or Reserve Customer Orders. Note: If the customer is credit-blocked, the check will also be performed when executing Manual Reservations of Customer Order Lines, Reserve Customer Order Lines or if the reservation is executed from a Shipment, since no new reservations are allowed.

Create Pick List is used when executing either Create Pick List for Customer Orders or Create Consolidated Pick List for Customer Orders or if pick list is created from a Shipment.

Deliver Order includes all windows where delivery can be executed, i.e. Deliver Customer Orders, Deliver Customer Order Lines, Deliver Customer Order with Differences, Deliver Customer Order Line with Differences or if delivery is executed from a Shipment.

A customer order that fails the credit check will be set to status Blocked. In this status the order cannot be further processed in the customer order flow except for allowing to create an invoice for anything that is ready for invoicing. This applies to already delivered order lines as well as a charge line not connected to any customer order line. Instead, the customer order must be handled in the Handle Blocked Customer Orders window where the options Release Blocked Order and Release from Credit Check exist. The difference between the two options is that when executing Release from Credit Check, the order will not be blocked again in any of the steps defined in the credit control group whereas when Release Blocked Order is being executed, there is a possibility of the order being checked and blocked again. Note: if the customer is credit-blocked it will not be possible to release the order in either way before the check box is cleared in the customer record. But after that the order can be released and will not be checked again, even if the Credit Blocked check box is selected again.

One way to overrule the credit check is to use a payment term that has the check box  Exclude from Credit Limit Control selected in the customer order. The customer order will then be excluded from the credit check independent of the settings of the credit control group. Note: This does not apply if the customer is credit-blocked.