Lecture on Credit Management

Jul 1, 2024

Lecture on Credit Management

Personal Background

  • Working in Dynamics space since 2009
  • Focus areas: finance, manufacturing, supply chain, project management, accounting & asset management
  • Worked with over 90 customers in 14 countries
  • Experienced in various industries: apparel, textiles, agricultural, pharmaceuticals, retail, medical devices
  • Blog: Intra Cloud Dynamics (Tips on Dynamics finance & supply chain)
  • Active on LinkedIn: encourages connection

Purpose of Credit Management

  • Mitigate risk for businesses
  • Essential to determine how customers can be extended credit
  • Important parts of credit management: risk scores, risk groups, credit limits, insurance
  • Ensure sales orders are processed or put on hold based on risk evaluations

Managing Credit in d365

Key Components

  • Risk Scores: User-defined measures for risk evaluation
    • Includes duration of business, industry type, company type, employee number, DM rating
    • Configured within d365 with options like averages balances, payment days, etc.
  • Blocking Rules: Developed to place sales orders on hold for evaluation
    • Rules created based on criteria like overdue days, credit amount used, terms of payment
    • Ensures tighter control over new and existing customers

Setup and Parameters

  • Parameters Table: Key configurations affecting system behavior
    • Examples of parameters: allowing sales order value changes, handling expired credit limits
    • Credit Checks: Various stages of posting in the sales process (confirmation, packing, etc.) and impact on credit limits

Using Risk Scores & Groups

  • Risk Scores: Set for various customer attributes, used for automatic updates
  • Blocking Rules: Setup criteria to trigger credit holds on sales orders
    • Can be user-defined; involves days overdue, sales order amount, credit limit used
    • Importance of configuration impact for processing orders

Practical Application in d365

Setting Up Credit Limits

  • Configure credit limits per customer; temporary credit limits can be set
  • Insurance and Guarantees: Used for additional credit limit coverage

Sales Order Processing

  • Sales Order Holds: Sales orders can be held for various reasons based upon credit/risk evaluations
    • Example shown for processing a sales order in d365

Credit Management Inquiries

  • Notifications: Currently no direct customer notification for credit hold
  • Adjustment Import: No direct method discussed for importing bulk adjustments; Excel add-in or custom solution possible
  • Automatic Credit Limits: Defined based on risk scores, can automate credit limit assignments

Advanced Considerations

  • Hierarchy in Customer Credit Groups: Evaluates credit limits first at group level then at individual customer level
  • End-to-End Process Awareness: Ensured by periodic updates and review of the credit management holds and workflow steps

Workflow and Reporting

  • Workflows: Allow credit limit changes to go through predefined approval steps
    • Certain data entities relevant for bulk updates and managing adjustments
  • Inquiries and Reporting: Focus on using inquiry screens rather than formal reports for credit management status

Q&A Highlights

Practical Scenarios & Best Practices

  • Temporary Credit Limits: Used for short-term needs; scenario-based setup
  • Notifications to Customers: Possible through customization, not standard feature
  • Releasing Credit Limits for Partial Fulfillment: Manual handling by splitting the order
  • Bulk Credit Adjustments: Suggested looking into Excel add-in/import functionality
  • Understanding Hierarchies: Importance of understanding rule priorities for practical troubleshooting

This lecture provided an insightful overview of credit management—including risk assessment, sales order holds, configuration in d365, and practical utilities for implementation. The Q&A clarified specific scenarios and provided guidance on managing credits effectively in complex business environments.