Use this activity to enter customer credit information and corporate credit relationship, if one exists. This information is used for customer credit management such as sending messages to credit analysts and follow-up on customer credit info in the Customer Credit Information process.
Corporate credit association permits the creation of a parent/child (who are also known as Customers) relationship for credit-limit checking. To avoid a child with multiple branch locations companies under the same corporate number, you can enter a parent credit limit and link the companies to that limit.
With regard to this matter, there are three scenarios to be considered. In the first scenario a credit limit is specified only for the parent company. Therefore each company/customer is allowed to use the credit facility as long as the cumulative credit amount used does not exceed the amount specified for the parent company. Therefore, the remaining credit limit will depend upon the sum of the credit used by all companies.
In the second scenario credit limits are specified for the parent and child companies. This means, the child companies are not allowed to go over their limits, and the remaining credit available to each individual child company will be determined by the credit already used by the respective company. However, when deciding the remaining credit limit for the parent company, credit used for the whole group of companies is reduced from the total credit limit assigned for the parent since the parent credit limit is linked to other companies.
The above two scenarios are also applicable to overdue credit control. That is, in the first scenario, the allowed overdue amount is specified only for the parent company. Therefore each company or customer is allowed to use the credit facility as long as the cumulative overdue amount (the total of unpaid invoices that exceed the allowed overdue days) does not exceed the specified allowed overdue amount for the parent company.
In the second scenario the allowed overdue amount is specified for the parent and child companies. This means, the child companies are not allowed to go over their allowed overdue amounts, and the remaining overdue amounts available to the child companies are determined by the total current overdue amount (that has also exceeded the allowed overdue days) of the respective company. However, when deciding the remaining overdue amount available for the parent company, the total current overdue amount (that has also exceeded the allowed overdue days) of the whole group of the companies is reduced from the allowed overdue amount specified for the parent.
In the third scenario, credit limits are not specified for the customer or parent company (if any). In such a case, the amount specified in the Company Credit Limit specified in the Company/Invoice/General tab page will apply.
This activity requires that information have been entered and saved in both the Customer/General and Customer/Address tabs. Message groups and credit analysts must have been set up according to activities defined in Basic Data Required for Customer Credit Information.
As a result of this activity, messages to the credit analyst can be generated. For example, the message might specify that one customer has exceeded the credit limit and the credit for another is on hold.