Managing Customer Credit
Credit checking lets you monitor overdue payments and customer account balances, and place further sales orders and invoices for this customer on hold when a specified credit limit has been exceeded. The system checks all AR activity for this customer, across all entities in the database.
You define one or a combination of credit limits on the Credit Limit tab of the Customer screen. Once defined and saved, these credit limits are automatically applied to this customer, and enable credit checking on the customer’s transactions.
The following types of limit are configurable:
• A fixed maximum limit on the customer opening balance. This maximum applies for all entities using this customer.
• A percentage of the gross customer turnover for the most recent fiscal year.
• A maximum number of days overdue. This limit applies to invoices that have exceeded their overdue date.
For a description of the Credit Limit tab fields, and details on how to configure these credit limits, see
Credit Limit Tab.
The credit limit you set for the customer is measured against the customer AR activity for all entities in the database. The total of customer AR activity is calculated in the following way:
• The total of AR balances for all entities, plus
• The total of open item balances, plus
• The value of the current AR activity such as sales order or invoice
This AR activity includes the following types of transactions:
• Customer invoices
• Customer opening balances
• Open item adjustments
• Banking entries (for direct debit prepayments)
• Customer payments (also for direct debit prepayments)
The credit check totals these amounts and compares them against the set credit limit. When the AR total exceeds the credit limits, the system warns you of the overrun. You can ignore the warning and continue with the transaction, if required.
The Customer Credit Limit Maintain activity also lets you adjust customer credit limits before and after creating a transaction, which then lets you complete the transaction posting.
The Customer Turnover Report details customer activity over a given period. For credit purposes, a Turnover Report for the customer over the previous 12-month period shows the amount to which the percentage turnover credit check is to be applied. The Customer turnover includes sales orders and invoices for the selected customers from all entities.
The maximum days overdue credit check monitors the due dates on open items, and marks those items that have exceeded the period allowed for payment. Due dates for customers and invoices are based on the associated credit terms.