What is credit control area in SAP and what does it do?

What is credit control area in SAP and what does it do?

Credit control area in SAP is an organizational element that controls and monitors credit limits of customers. A credit control area can consists one or more company codes, but you can not assign company code to more than one credit control area in SAP.

What is credit control Example?

Put simply; credit control is in charge of trade credit and recovering unpaid debts. For example, there may be dispatch approvals, credit limit approvals, and collections sub-sections. Good credit control is vital for a company’s survival. For businesses to succeed, they need make sure their customers pay them.

How do you assign a credit control area to a customer?

How to define a Credit Control area for a customer in SAP FI?

  1. Enter Customer Id for the Customer for which you want display the Credit Limits.
  2. Enter the Credit Control Area.
  3. Check Central data section and press Enter.

How many credit control area can be assigned to a company code?

One credit control area can be assigned to one or more company codes, but one company code is applicable to use only one credit control area in SAP system.

What is SAP risk category?

SAP provides an option called risk category to categorize the customers. The customers can divide into various categories like low risk customers, medium risk customer, high risk customers, etc. If any customer reaches to high risk category, system blocks the customer for the further purchases.

What is a controlling area in SAP?

A controlling area is a closed entity used for cost accounting. You can allocate costs only within a controlling area. These allocations cannot affect objects in other controlling areas. The controlling area “0001” is created in the SAP standard version.

How many credit control areas can be assigned to a company code?

How can we maintain credit control area in customer master?

We can Maintain Credit Control Area Master Data for a customer :

  1. Step 1) Enter Transaction Code FD32 in SAP Command Field.
  2. Step 3) In the next screen ,Maintain the Credit Management Data for the Customer.
  3. Step 4) Press “Save” button from the SAP Standard Toolbar for save the changes made in the credit limits.

How do you assign credit control area to sales organization?

You can assign credit control area to sales area by using the following navigation method.

  1. Transaction code: – SPRO.
  2. Menu path: – SPRO > SAP Customizing implementation Guide > Enterprise Structure > Assignment > Sales & Distribution >Assign sales area to credit control area.

What is SAP credit control area?

The Credit Control Area in SAP helps administer credit management functions relating to customers. This organizational unit is used both in SD and FI-AR modules. By definition, you can have more than one credit control area in a Client, but each Company Code is assigned to one credit control area.

How is Credit Control determined?

Credit policy or credit control primarily focus on the four following factors: Credit period: Which is the length of time a customer has to pay Cash discounts: Some businesses offer a percentage reduction of discount from the sales price if the purchaser pays in cash before the end of the discount period. Credit standards: Includes the required financial strength a customer must possess to qualify for credit.

What is the meaning of credit control?

Credit control, also called credit policy, includes the strategies employed by businesses to accelerate sales of products or services through the extension of credit to potential customers or clients .