Credit management is new functionality that significantly enhances your ability to manage credit for sales orders. We will discuss various aspects of this new functionality released by Microsoft, in this blog, including:
- Enabling credit management its setup process
- Managing credit limits using a business process
- Enabling blocking rules and risk assessments
- Placing orders on hold and release it
To enable Credit Management, you just need to go to the feature management and enable credit management feature. Credit Management is not a new module but a part of credit and collections module. All the stars marked is the extra functions you will get as part of credit management.
Credit Management Capabilities of Dynamics 365 Finance
- Customer credit limit management
- Additional credit information on the customer page.
On the customer card, you will see all the customer credit fields and information. Look inside credit and collections tab, you will see 20 additional fields related to customer credit information.
- Workflow enabled credit limit changes
- Temporary credit limits and insurance. So apart from regular limits, you can also assign temporary credit limit, with expiration dates, if you specify the temporary limits, these limits will override the standard credit limits.
You can also specify, if you have insurance for the products shipped to the customer, on the customer card itself and add these insurance limits to the credit available to the customer.
- Automatic credit limits
- Creation of Customer credit groups
You can create credit management customer groups and assign rules and policies to these groups.
- Enabling risk assessments based on customer attributes. On the right-hand side of the card you see whole lot of information about the customer in credit statistics.
Credit limit information Credit management setup
- Customer fast tab has more detailed credit information
- Credit limit in company currency and customer currency
- Credit limits update for temporary credit limits and insurance
- Expiration date and date of last change
- Risk attributes for years in business and years as a customer
- Memo fields for notes, eligible credit limits, and review dates
- Fact boxes with credit statistics
- Customer credit groups for shared credit limits
- Parameters and setup information
- Days sales outstanding, average balance, average credit limit for credit statistics
- Checkpoints for where orders are in the order to invoice process
- Reasons, statuses, insurance types
- Default reasons when orders are cancelled, modified, or automatically released.
In fact, through credit and collections parameters you can set up whole bunch of options for credit management, set credit management checkpoints, credit management statistics and credit limit parameters.
How to create Credit Limits?
You can create automatic credit limits, if you want to, but necessary mandatory on the basis of risk scores. User can create as many scoring groups and assign scoring values, there are a few pre-defined scoring groups in the system. All these values of risk contribution, contribute to risk score.
All the elements have a risk score associated with them, it is up to you to define these scores.
Based on these scores, you can have a risk classification, and based on this classification, you can have credit limits defined.
It is very hard to analyse each customer, when you have very large customer base, so it is better that you have these risk values, and based on customer risk profile, the system will assign automatic credit limits.
Now what happens, if you wish to change the credit limits for a whole bunch of customers, the system allows you to do that from “credit limit adjustments”. You can change credit limits, add/change temporary credit limits and a very valuable feature for generating list of customer limits.
Here you can adjust credit limits, bring in an expiration date, you can make it relative to a certain date or add filters to exclude certain customer data.
Once this list is generated, you can send this for approval through a work-flow, so the person approving can approve each individual credit limits, do adjustment, or approve and post all of it as it is.
To be continued in the next blog!