Credit Limit - Re Assign

[former_member301027]

Dear Gurus,

I have the following credit management scenari, where as per my knowledge I have suggest the standard solution, but looking for the gurus input or any other good way, as the suggested solution is very difficult for client to carry.

Customer credit limit is $10,000, customer place first order of $15,000, so order is block, concern from finance release the order by vkm3. So far customer consume more limit than assign.

But customer get the partial delivery which value is just $5,000, and ask the company that he will not intrested to get further dispatch against above order, but in the above order we release it of value $15,000.

No customer place the 2nd order of value $2,000 so now this order is block again.

Client is looking credit only consume as per the dispatch quantity, but credit management run on the sales order as per Company SOP.

Solution: I ask them to go on the previous (1st) order and save it again system again run the credit management again, but you don't need to release the same order again, but this should be done before creating the 2nd sales order, so your 2nd sales order will not get block as we will have the limit available of $5,000.

Is there any other way so that client can use that for removing hte excess exposure assign against a sales order which is close now, and customer not interested to take or continue that order.

Please ask if have any query or scenario is not understood.

Looking for the gurus feedback.

Regards,

Imran khan

[VeselinaPeykova]

In most companies there are established procedures for cleaning obsolete documents/document items. Has your client already implemented that?

The idea is the following - in case an already released from credit sales order would be partially delivered and the client is informed and accepted that he will receive only part of the products, the rest of the items should be rejected with an appropriate rejection reason.

By rejecting the obsolete items you reduce the confirmed order quantity (most companies use confirmed quantity as a basis for credit check) and thus decrease the credit value.

In your case initially the sales order gets credit status B, the credit clerk releases it against the original credit value 15000 and it receives status D. At a later time a user rejects part of the items and the order credit value becomes 5000 (the credit status is still D, but the exposure is now 5000). So if the customer places a second sales order with credit value 2000, it will be approved automatically from credit limit perspective (credit staus of the second order will be A).

Some companies rely on the recheck functionality for documents relevant for credit management - in this case for the first order after rejecting the items and executing recheck, the credit status would be A instead of D). On top of that - even if the second order was already created and blocked for credit limit, after rejecting the obsolete items from the first one and rechecking both orders, they would receive credit status A.

You may also wish to check with the business when exactly, at which document processing stage, it is known that only part of the products will be delivered, whether multiple partial deliveries per order item/per order are allowed/acceptable, which department is responsible for taking this decision etc.