Maintaining a set of credit and commitment limits on your company's customers is an important safeguard. You will probably want to assign rational limits to your customers coupled with a complete credit check. Credit and commitment limits exist to limit the risk of a customer not being able to pay. SAP Business One has a full featured system to help you manage this process.
Credit and Commitment Limits
Credit limits in SAP Business One define the maximum a customer may have on terms with you. It is a check that happens when you add a BP to a sales document or adding a sales document to the system. The credit limit equation is as follows: The customer's account balance + the amount of the current document.
Commitment limits in SAP Business One define basically the same thing as credit limits but with one additional piece. The commitment limit is as follows: The customer's account balance + the total amount in undeposited checks + the amount of the current document.
Depending on the settings around credit and commitment checks will determine if you can add a sales document to the system for that customer. If you intend to use these checks you will have to set up each individual business partner that needs a limit in the business partner master data.
To set a BP's credit or commitment limit head over to BP master data at Business Partners -> Business Partner Master Data on the main menu. Load up your business partner and click on the Payment Terms tab. The two fields are right there in the first column. We can see here that Earthshaker Corporation has a $2000 credit limit and a $2000 commitment limit.
Setting Default Credit and Commitment Limits
We can setup default credit and commitment limits on the actual payment terms. Navigate on the main menu to Administration -> Setup -> Business Partners -> Payment Terms. Click the green arrows until you find the payment term you'd like to apply a default limit. On the payment terms setup window you'll see two fields for credit and commitment limit. Hit update to save your changes.
When this is done, every time you update or add a customer with these terms it will use these as the default credit and commitment limit automatically.
Credit and Commitment Limit Restriction
Setting up restrictions based on credit or commitment limit is easy to do. Following these procedures will prevent your sales people from entering in documents that violate credit or commitment terms according to the settings.
Navigate on the SAP Business One main menu to Administration -> System Initialization -> General Settings. Click the BP tab and find the series of check boxes pictured. If you set the setting to include the delivery balance, this will be more restrictive. These settings will affect all users.
Once you complete that step a warning message will appear on the screen any time you add an over limit customer to a sales document. The warning box will ask you do you want to confirm Yes/No. This can serve as a warning to sales people if you still would like to allow them to add documents. To complete the restriction of adding marketing documents for over limit customers there is one more step.
Each user that should be prevented from adding documents for over limit customers should have no authorization on the authorization called Confirm Credit Line Deviation.