Recently had a chance to engage with an LSP client who was keen to understand how their credit Business line for Transportation and Trucking could be better controlled with the standard features that TM and FSCM credit management offers. They have almost 300+ customers running on credit and wanted to stop taking new Indents in TM whenever the credit amount for that customer is completely utilized.
We will dwell deeper into the complexities of this requirement later but first, let us understand the basics.
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Consultants who are familiar with LSP scenario in Transportation Management would have noticed a simple yet powerful configuration when you define the forwarding order type.
1. Enable Credit Limit Check
2. Action if Credit Limit check failed
So what happens when you enable CLC and define an action? The charges in your forwarding order and settlement document in TM is communicated to credit management system as credit commitment and will eventually consume the credit available under the credit segment. Similarly when payment is received against the Billing document generated, the available credit would increase.
Interfaces in SAP Credit Management System
There are 2 interfaces in SAP Credit Management System (FIN-FSCM-CR)/ Contract Accounts Receivable and Payable (FI-CA) System which gets triggered whenever the documents in scope as per the exposure category undergoes CRUD operations.
Below are the Service Interfaces
Update credit exposure CreditCommitmentNotification_In
Send credit exposure CreditCommitmentNotification_Out
Rest of the configurations lies entirely in FSCM Credit management and there are lots of automation that can be setup in order to dynamically determine the credit limit value under the credit segment of your BP.
You may read in detail about FSCM credit management here
https://help.sap.com/doc/c575d7531a4d424de10000000a174cb4/3.6/en-US/frameset.htm
We will just consider a simple scenario here to help you understand the flow.
BP role Credit management needs to be extended against the Customer that’s in scope. You will also have to define a credit segment under which you will be defining your credit limit and the validity.
The interesting part lies in defining your credit exposure value and what all categories system should consider in calculating this exposure value. There are standard exposure categories like open orders and open invoices as shown below.
In our case, client didn’t want their customers credit to be consumed whenever a forwarding order is generated. By standard design, the open orders exposure category would get updated whenever a forwarding order is created. So we have the next exposure category, i.e., open invoices. You would need to rebuild the credit exposure accordingly which we will see later.
When the settlement document is pushed to ECC and billing document is generated , the credit exposure would be consumed under the category open invoices. Eventually whenever a forwarding order is created, check would happen against the total outstanding billing amount rather than the open orders + open invoices. If the credit utilization % is equal to or greater than 100%, credit check would fail in TM and the orders will either get blocked or error message will be thrown as per the configuration done.
Understanding Blocking Mechanism
Let us now see a simple flow to understand the blocking mechanism.
Set the credit data under the BP of customer in ECC. Current utilization is 98.7%:
Created a forwarding order with charges which would exceed the credit utilization of 100%. Still The order will get saved without any blocks.
Created FWSD post execution, save and transfer to ECC to create billing document. Transfer billing document to accounting.
Credit exposure value exceeded 100% and set credit block in ECC BP. You can see the credit block being set with block reason .
You can see the exposure values as well under open invoices.
Once the block is set and if the exposure value is beyond 100%, credit limit check at Forwarding order level will fail and credit limit block will be set at Order level and order cant be saved. As per client requirement, additionally there was a central sales block as well set in TM as shown below:-
Similarly when you make payment against the billing document or cancel an FWSD, an xml will get generated with credit commitment notification of cancelled amount. This would bring down the exposure values and credit block would be removed.
Few pointers if you are keen to setup this in system.
- To enable auto update of exposure to credit management from FI-AR , you would need to activate the BADI UKM_R3_ACTIVATE.
- Also so as to rebuild the credit exposure values with open invoices (credit exposure category 200) run program UKM_COMMTS_DELETE for respective credit segment and exposure category. Followed by executing the program UKM_TRANSFER_ITEMS for customers in scope and rebuild credit exposure with outstanding open invoices value (credit exposure category 200) in ECC.
- Automatic Blocking and unblocking at BP level in ECC can be set by using standard events and follow on process with BADI UKM_PROCESSES.
Like I said earlier there is scope of deriving and setting the credit limit dynamically from various sources and as per the credit risk against customers profile. There can be more automation done and more ideal way of configuring FSCM credit management which is left for your exploration.
The above scenario explained doesn’t refer to any SAP best practice guides and the reference is taken from an internal sandbox system. In our case, SAP credit management was in a different system which is connected to TM standalone 9.5 version. So webservices was the obvious choice for interaction between TM and Credit Management.
If you would like to know more on this setup kindly DM.
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