Transcript for:
Best Use Cases for Credit Management in D365 Finance and Supply Chain

welcome everyone to our session this afternoon we're thrilled that you're joining us uh we are joined here by chris and sue and they're going to be talking about best use cases for credit management in d365 finance and supply chain a couple of quick reminders for us as we begin my name is jenna and i'll be your moderator today should you have any questions through the presentation please type those into the chat and we will hold those for the end i know that we have a little bit of time at the end for those questions so type them in also we want to make sure that you complete your session survey so there are three quick questions found on the survey agenda if you could fill those out we will get that back to our speakers and if you do need any cpe credits for any of the sessions you're attending we will be sending out a session survey for you to complete for those cpe credits lastly please be sure to check out our expo hall and visit all the great community supporters isvs partners and sponsors within the expo hall without further ado i would like to extend a huge thank you to our speakers today chris and sue chris i will hand it over to you to take it away thank you all right so i'm assuming everyone can see my screen and you can see this community summit um thanks for joining we are going to be talking about the best use cases for credit management indeed 365 finance and supply chain management i'm chris reussein and i'll be co-presenting with supase so again i'm chris russin i'm a senior consultant at logan consulting a little bit about logan logan consulting has over 28 years of experience implementing and supporting erp implementations upgrades and support we specialize in manufacturing distribution and service industries and we've been a erp or microsoft dynamics erp gold member since 2003 we've been involved with ag zug and now d365 ugg as a member and gold contributors since 2014 our core services include um dynamics ax and 365 assessment implementation optimization and support um we heavily focus on the business process design aspect of implementation and also program and project management and they'll hand it over to soup to introduce themselves thanks chris um i work at stein industries and i am the project manager for our dynamics 365 for finance and supply chain management implementation project which we are currently in the middle of so a little bit about stein industries it was founded back in 1907 uh in wisconsin actually the early years were spent in the hyde and fur industry uh we've since sort of evolved from uh hyde and firs and currently we're organized into four different operating divisions the first is carlson airflow merchandising systems um they design and manufacture perishable shelving display hardware for grocery stores and supermarkets uh the second is carlson fixtures they're a designer manufacturer of custom fixture solutions for retail stores uh such as gap and old navy the third is e-switch um they're a manufacturing distributor of electrical switches for computers peripherals and telecommunication equipment and the fourth is ten logistics uh there are 3pl a third-party logistics company offering transportation solutions for domestic and global shipments as you can see um a lot of different divisions that do different uh things different types of businesses um you know three of them are heavily involved in manufacturing processes um but definitely have a different uh sort of needs and requirements thanks sue so with that um this is our agenda for today i wanted to give you guys an upfront uh idea of what we're going to be covering first we're going to hand it over to sue so he can talk about dynamics 365 fine finance and supply chain management um the functionality of credit management and signed industries a little bit more so kind of you know why d365 works why did we decide to go with credit management and the business reasons behind stein industries using credit management just to get you an idea of the design that we decided to go with in this implementation and when we um get through those slides we'll get to talking more about the d365 setup and also showing some demos so the first thing we're going to show is how we track and maintain customer credit limits we're going to show the workflow configuration and we'll also have a quick couple slides on the demo of how we update customer credit limits uh the next couple slides we're going to be talking about the credit and collection parameters specifically the ones around credit management we're going to be talking a lot about document status check because that was a big uh design decision for this credit management and when sales orders will be blocked um leading into that we'll be talking about how we automatically block sales orders and the rules that we came up for blocking the sales orders and how we utilize those rules um again we'll show a couple slides of a demo of how a sales order does get blocked um in their system and then to finish it off and to kind of go through the whole life cycle of the process we're going to talk about how we automatically release sales orders and i'll show a couple slides on the demo for that right there so with that being said um first thing we're going to talk about is d365 credit management sign industries how does it all work together so with that i'm going to hand it back over to sue so he can uh continue on thanks chris so first of all uh some of the reasons that stein industries chose uh dynamics 365 for finance supply chain management um we are a multi-currency company um in addition multi-company each of the divisions is run as their their own business and they get consolidated up into a single uh you know financial uh consolidated financial results um in addition uh there's a lot of scheduling going on with uh um our divisions uh they build things uh sometimes specific to what their customers need and we definitely don't want to just keep inventory on hand for uh in case someone might use that particular version so the capable and available to promise uh capabilities were very important in making our decision um we did a 10-year cost comparison when we were looking at different erp solutions um and when we looked at it you know the implementation as well as the ongoing annual cost over 10 years it was competitive with the other solutions that we looked at the advanced warehousing functionality was an important part of our decision as well um we have three very large warehouses that we need to manage uh moving inventory around and tracking that and that it was built into the system uh versus an add-on that we had to add on after the fact was important to us um being able to get data in and out of the system uh in a variety of fashions was also very important um our current system it makes it very difficult to get information back in and make sort of mass updates um the cloud-based technology behind it was uh also a key factor we looked a lot of different solutions that were either only on premise or if they offered a cloud-based solution it was essentially just an on-premise solution hosted somewhere else and we also uh part of what played in our decision was the no code low-cut options the more that we can extend capabilities to our business users the better off we are we have a fairly small it department and we want to let the people that are are close to the business process be more involved in developing solutions that they need to do to run the business so most of our sales uh within stock industries are from our business to other businesses so the customers are the businesses it's very rare that we sell directly to the consumer um but the the customer size can vary uh we can sell to a single location that uh you know only it's a chain with one location it could be um a chain you know local chain with ten locations um it could be as large as a national chain with 2000 locations um as well as multinationals so there's no guarantee that we're dealing with a a very sophisticated business but generally all businesses um the credit terms that we offer to the customers very significantly uh with their creditworthiness um the the single locations may not have very good credit with us they may not uh pay their vendors very well and and we need to be able to track that where our larger customers are probably much more creditworthy um even within the same customer it could be that tho those large chains um sometimes they're just ordering a onesie twosie kind of orders ordering a a piece that's you know just a fill-in for one thing or they might be doing a large rollout so the total dollar amount of the order can vary significantly and it not necessarily matched up to the amount of credit that that we offer that customer in addition to that there may be customers that sort of have a regular amount of business they do from year to year and month to month and then at a certain point in time they have a need to do a large rollout going to all their locations and uh the order size may be more than what we typically offer um in that case we generally review their credit um and what we'd like to do is only have a temporary increase to their credit limit for that project that would go back down afterward because we don't want to extend credit to that level permanently basically and in addition to that um you know our customers are are generally retailers and their credit ratings can change significantly from one month to the next or or one year the next and and so being able to sort of uh handle that in a reasonable fashion is important to us so in addition our credit management is having handled corporately our divisions process the orders um but everything all the credit decisions come back to our corporate finance team um we want that those decisions on whether we should extend credit uh to a customer or on an order is based on our data rather than someone in the operating division saying hey we really need to make this sale um in addition to that trying to coordinate between those different departments between the sales in the division sales department division between the customer service department of the division the operations department division and also corporate credit management can be very cumbersome if we have to do it manually i'm sure you're all used to sending a ton of emails back and forth we'd like to avoid doing that um something specific to the stein industries businesses is that um we have uh long lead times on our orders so a customer may place an order and we're not fulfilling that order um for a long period of time it could be uh 30 to 120 days after uh they initially placed the order um beyond that uh we also want to check credit uh when they initially place the order but again make sure that the credit situation hasn't changed prior to shipping which again is is not in a day or two it's 30 to 120 days later um and you know situations can change during that time period thanks sue so i hope you guys all uh had a nice rundown of a lot of the different uh challenges that stein industries was facing and how we're looking to you know resolve and provide a solution for those uh those challenges so the first thing we're gonna now discuss going into d365 and credit management is uh tracking and maintaining customer credit limits so in this slide right here we have the workflow configuration there is a new workflow a specific workflow that's for credit management it's just brand new with the functionality that allows you to direct approvals of a new credit limit for a customer one important setting is in the credit collection parameters there is a a switch called allow manual editing of credit limit we have that set to no so essentially no one can just go ahead and click and change a credit limit it has to go through a process and it has to go through this workflow again like i said we have a new workflow form and credit management workflows so you can see that once the functionality is turned on and you know this goes right back to what suff was just saying we wanted this workflow so we could approve efficiency um and have it go directed you know to the people that need to see it to approve it and not just have it be approved by you know just by needing a sale it also makes it more efficient by um we have a setting to automatically post the journal so essentially once once it's approved once this credit limit's approved uh it's automatically posted and that credit limit is updated for that customer so taking a look at what these fields look like in d365 if you're not familiar with customer record this is the credit collections fast side of the customer record um this credit collections tab has completely been revamped with the addition of the credit management functionality um so we have a bunch of new fields i'm just going to highlight a couple of them the first one is that total credit limit so again that's not edible based on that parameter that we set prior to and then we have the credit limit expiration date so this will factor in uh blocking rules uh for you know if a if a credit limit is expired then we would block a sales order from processing if it's past that expiration date um and i want to hand it over to sue to just give that a little bit more color into that uh expiration date thanks chris uh so right now on our current system we don't have any expiration on the credit limit so we could have a customer that hasn't purchased anything from us for three or four years and we've extended credit to them well all of a sudden an or an order comes in it processes through because four years ago they had a credit limit of fifteen thousand dollars well their credit situations change so what we want to do is make sure that we're reviewing credit limits generally on an annual basis and also means that older customers who we have extended credit to no longer sort of continue to carry that credit through um without being reviewed on annual basis so this is sort of going to protect us from ourselves and make sure we're not blindly extending credit to a customer that shouldn't have it thanks sue and you know piggyback on that and going to the next field we have that credit limit change date so this gives stein uh you know the view and the transparency of when the credit limit was last changed so we can keep track of all the information it's not through emails it's all right there on the customer record so right here uh we have the credit limit adjustments form so this is basically your typical form where you have the header and lines you know you're creating a header of a credit limit adjustment type of credit limit um we can use also a temporary credit limit but we're currently not using that we're trying to uh you know walk before we can run um but this credit limit adjustment is workload enabled so this is where the workflow comes in uh and we can see how that works with a couple other slides right here so before we get to the workflow um when you create a new credit limit adjustment you can do a lot of different things with it uh the first option and you can see that top uh the top picture is the generate option so you can generate essentially credit limits from existing customers so you can see any customer that has a credit limit out there you can go ahead and just pull in what their credit limit is you can generate from existing customer groups we're currently still trying to figure out if we want to use customer credit groups but this is something that they're going to be growing into and allows them to grow into it and again you know with stein being new to the system and new to using this credit management functionality the automatic credit limits um allows the system to automatically increase credit limits if we wanted to again that's something that we want to um be sure we want to move into and think about and see how it's working the system before we turn on things that start automating credit limits right um so we just want to be careful with that but i wanted to call it out as an option in the second uh picture of the form you can see basically what it looks like when you're the parameters of adjusting that credit limit the first thing is the adjustment value so in this instance i'm increasing this credit limit of a customer by 5 000 um honestly if you wanted to decrease you could just put in that negative amount in there um excuse me we have also the expiration date so we're putting in an expiration date that we can uh keep track of um like like sue said that's really important to stein just to maintain transparency for stein internally and also um keep track of that and then um you know like any kind of parameters of a batch job or whatever kind of periodic tasks you're running in d365 you have the filter records so obviously we can choose which customers we want to change this for we can filter by customers or customer group or any kind of you know field that's available on the customer you can use that to filter so in this instance we just had that credit limit of that specific customer that was fifteen thousand and we added the five thousand uh to increase the new credit limit to twenty thousand and you can see the expiration date is uh available there at twelve thirty one twenty twenty so once you get to a point of increasing that credit limit you want to verify your new credit limit and then submit it to the credit limit adjustment workflow and once this is approved it will be automatically posted so taking a look back at the credit and collections fast tab of the customer we now see a total credit limit of 20 000 because we increased that 5000 right and now we have a new credit limit expiration date of 12 31 2020 and we have a credit limit change date of when we actually change this so everything's tracked in this customer record and basically if you have access that customer record then you have you can see all this uh information take a quick drink of water here so next we want to talk about the credit and collections uh parameters so with the credit management checkpoints um this what this is what we wanted to focus on within the credit collection parameters there's other settings in here but we don't want to go through each one of these switches we felt like the credit management checkpoint was the thing that we took the most time discussing during our design session and we consider it probably one of the most important aspects of credit management and essentially what this checkpoint um means is that at what point is the credit of a customer checked so at what point is the system going to say i need to look at this customer's credit and evaluate if the sales order can be uh processed through or does the media need to be blocked um we also have the concept of grace days our d365 has a concept of grace days which gives the customer um whatever number of days you want to let the order go through without checking again so um for example when you confirm the sales order um and it got it went through the current management if we did it we did some changes and we confirmed it again um it wouldn't have to go through credit management again because we have a number of grace days to allow for that so um the two checkpoints that we decided for stein and what made sense for them is at confirmation at civilizator confirmation and at release the warehouse and we have those grace days in there and i just want to hand it over to sue so he can give a little bit more reason uh for the business case of why we decided these two checkpoints thanks chris um so so initially you know again a lot of uh the items that we produce and sell to our customers are either custom or semi-custom configurations and before we bring in the raw materials or we start manufacturing the specific uh version of of our products that they're looking for we want to make sure that the customer is credit worthy because if they're not and we're not going to go forward with that we'd rather not even start that process but again because the lead time from when we start that when we actually fulfill the customer's order could be 30 to 120 days before we let the goods out of our hands we want to make a check and make sure that that again they're still credit worthy if we run into an issue let's say that uh they were credit worthy when we confirmed the order but something changed before we released the warehouse and start to ship the order out um we might make a decision at that point um perhaps we're going to ask for a prepayment before we ship or perhaps we're going to ask for you know 50 down it gives us a chance before the goods have left our our facility um to to do a check before we just sort of uh blindly uh you know extend that credit again um it's not really worthwhile for us in our businesses to worry about it sort of in between um in general we don't have a ton of credit issues um but those are sort of the two areas where we've seen um times when we would have wanted to stop orders from either going forward or or shipping out to our customers thanks sue so with that being said we're going to kind of get into more of the meat and potatoes of um this functionality and that really is talking about the automatically blocking sales orders and specifically the rules for blocking sales orders so there is uh right here the seven seven standard rules i guess that um are out of the blocks um we have uh a bunch of i'm not gonna go through and name every single one because we're gonna talk about each one but these are the seven standard so we're gonna talk about um why or why not did we set up this rule and how did we set it up and what does the rule mean so to start off we have the days over do overdue rule which basically means that um all customer sales orders are blocked for invoices 30 days or greater overdue so essentially if you look at a customer account and they are trying to confirm that sales order but they have invoices that are overdue past 30 days then that sales order is going to be flagged and then subsequently blocked um the next one is account status currently we're not using this but we have had some discussions of possibly using this um just to flag maybe a customer that uh you know it may not show up through uh pass through invoices or other blocking rules but maybe we just want to block everything that's coming through for the customer we're talking about possibly using that so currently it's not set up but it's something that we're considering uh changing the next two terms of payment incredibly expired terms of payment essentially uh kind of what sue talked about earlier essentially is that we have a terms of payment of credit card or prepay which essentially is that you know this sales order or invoice would be due um as soon as we posted it right so we would want to just flag that make sure that we have a prepayment for that sales order um for that sales order before we go ahead and confirm it likely as the document says checkpoint that we're looking to you know enforce this rule on the next thing is the credit limit expired so um essentially uh we have that expiration date right and for that customer that we showed previously the expiration date was 12 31 2020 um and what we decided is that we would have a grace period of seven days for that credit credit limit of uh being expired so you know it's new year's eve and you know we get back new year's day obviously you know we're getting back the day after it might be a couple days maybe someone's on vacation um they're out of town right they're not going to be able to check that credit um until they get back to work but sales orders could still be being processed so we want to make sure that we have some kind of leeway we're not going to be super strict on that expiration date uh the next two is overdue amount and then the sales order so overdue amount essentially is a combination of two things it's a question of how much uh the customers overdue and then at what percentage of the credit limit is used so both of these criteria have to be met in order for this black and rule to be initiated um so currently right now we just have if it's if they're overdue a thousand dollars and the credit limit is over 100 use then it will um block a sales order the next one is just kind of a check that you know if we have a really big order which is over a hundred grand let's say um for this blocking rule then we just want to just double check that hey we're doing a big sale let's just make sure that we really want to move forward with this and everything is looking okay with uh that customer's credit and i think sue had a you know a little bit more uh he wanted to explain with that 100k yeah sure so uh most of the orders that come in are generally i would say in the 20 000 to 40 000 range so most of the things that we process aren't ever gonna to run into that limit um it just gives us a chance to um have our credit manager review or or speak up you know before it goes and processes through um the idea here is not to have a lot of things go through the review but uh you know a handful a year uh that they just get a second look at um you know just makes sense in terms of our business all right and then the last one that we have is uh pretty obvious a credit limit used uh blocking rules so again we have that if the credit limit is over 100 use then we're going to block that sales order um they've ran out of their credit limit and so we want to block that sales order and then evaluate you know um should we let it go through or do we need to increase our credit limit um just gives us another set of eyes on it so we have that standard seven blocking rules but we also d365 offers two additional blocking rules and it's based on a ranking method um so we're basically going to be ranking payment terms which is in combination of that previous one where we have that credit card and prepayments that would block it's it's in addition to that rule and then also settlement discounts and so excuse me um the payment terms is pretty straightforward uh essentially these this uh picture right here you can see all the terms of payment that stein currently has um and this will populate automatically but what you need to do is manually configure the rank of each one of these terms of payment so the user would go in and mainly change i mean let's say a user on a sales order could change in terms of payment from something that was let's say net 30 days to something more favorable like in that seven days currently in net 30 days is a rank 70 and that seven days is rank 20. so if that payment terms um is oh i'm saying it actually the opposite way sorry so let's say we have a net 30 days and the rank is 70 but we're increasing their terms to net 60 days which is a rank 100 so essentially if it's a higher rank than the previous one then it's going to automatically block that sales order so sorry i didn't mean to be confusing but essentially if you're offering the customer better terms of payment then we're going to block that sales order so it's per sales order obviously we have the terms of payments coming across the felting from the customer so um if there is a reason why that uh customer service rep is changing the terms of payment to something to give them better terms and we kind of want to take a look at that and determine why that's the case obviously um like if i said the opposite if you're at net 30 days and you're changing the net seven days and the terms are much stricter that's not going to block the sales order it's going to let it go through um because the terms of payment are actually more favorable in stein's perspective and we have the same concept for the cash discounts um again all the cash discounts that we have in stein are automatically just populating this table but the user will have to go in and configure the rank um so again if a discount is more favorable to the customer and has changed on that sales order then it will get automatically blocked um during testing we realized that um if there was a customer that just didn't have the cash discount and then they received the cash discount so it was basically like a blank field and then they received a cash discount the system wasn't recognizing a blank um and uh so that's just what we kind of figured out so we put in just a zero percent cash discount in defaulting our customers that don't have cash discounts to zero percent and so if that's changed anything additional then um it will get blocked so that that zero percent is rank zero that's the lowest rank and then anything above that will then um block that so here's just a demo screenshots of what happens um during a blocking of a sales order um in screenshot one what happened is that at the sales order confirmation this sales order was blocked you can see the error messages that um you can see the error has been sent to credit management and um it's basically just been the posting has been cancelled right you cannot confirm that purchase order if you go to the credit management hold excuse me take a drink of water if you go to the credit management hold this you can view the blocking reasons um and then that with the three right there you can see the blocking reasons for why the sales order got blocked it was uh the customer was exceeding the credit limit and they had invoices that were overdue and so um the last slide deck uh i mean part of the slides that we're gonna go through is automatically releasing sales orders and so um we have you know a process of uh met manual method of releasing a credit hold or evaluating for release and um basically with the manual method someone can go in with the credit management functionality and release a credit hold manually and the options then pop up to say with or without posting which means that you know the documentation of that sales order confirmation would automatically be created or not and i'm just going to hand it back to sue to talk a little bit more about that with or without posting uh functionality and decision points that we made at the time thanks chris so again because our customer service departments are in the divisions and our credit management is in our corporate facility um we chose to use without posting and mostly so that the when the order is confirmed the customer service people have an opportunity to to sort of do whatever they want to do next with that sales order um again we're setting the system up and a lot of our current customers are not set up to receive automatic emails of sales order confirmations and this gives our customer service department a chance to say okay got released from credit hold and now it's posting and i'm posting it and now i know that it's it's available and can do the next step if we did that with posting um they'd have to sort of check or look at a tile and then sort of see oh this order's out here i might want to do something next with it but because of that because they're they're sort of different facilities in different areas and we wanted to do without hosting and sort of give it back to the customer service department um to post and then process whatever they want to do next with that sales order confirmation thanks sue so another part of uh that manual method of releasing the credit hold is the other part which is more automated which is evaluating for release um and you can always evaluate for release and process the blocking rules at any time you know like throughout the day maybe we have more cash receipts come in and the customer is no longer overdue on uh invoices which would then you know prompt a sales order to be automatic release but another part of this uh process blocking rules is to turn it on for batch jobs so what we have is um this block and rules fast job turned on for batch processing so what that means is that it's going to be running just every day so right now we're just going to have it run i think around uh the afternoon time uh just to set up that recurrence every single day to process it and uh this just is a step that we felt more comfortable with automation-wise um to not have that person that's in charge of releasing those sales orders from the credit management hold list and letting it go to d365 just naturally as the day progresses of collecting on uh past due invoices or possibly increasing credit limits whatever it is right that would remove the blocking rule for that sales order um that would uh that would release it so what does that look like when we release a sales order essentially the blocking rule that was originally there for that sales order is no longer active you can see that invoice overdue there's no check mark next to there and then the sales order has now this ready for release which is active so we then can look at this sales order and determine that it's been ready for release and it will continue processing and that concludes our presentation um here is uh information on uh for both suff and i uh if you want to reach out to us check out our websites anything you guys want if you have more additional questions that maybe you want to ask afterwards um maybe an email or phone call would work better there's our information and now we will open it up to q a if there is any there are yeah thank you for that great presentation it's awesome to hear both the customer and partner side so thank you both um the first question that we had was back a little bit they were asking about the expiration dates are expiration dates required for credit checks and blocking rules exclusions to run um no so one of the blocking rules is um you know that expiration date blocking rule right any of those seven blocking rules and actually the other two as well those are all optional like we decided at first that maybe we didn't want to go with account status so if you didn't want to block a sales order based on expiration date you just don't create a rule for that simply so the blocking rules wouldn't apply for the expiration date all right great we had two more are the terms listed in the table shared with ap terms in d365 yeah we did actually come across that the the terms of payment and the cash discounts um i think that's just like an ax 2012 thing that maybe has gone over to 365 but it was pulling both the terms of payment for uh ap and ar and as well the cash discounts so good question all right great and then we had another question is there any place before order confirmation that credit rules can be applied we don't want the sales order to be created if the credit blocks would occur yes so um you know that document status check that's the first one sales order confirmation but there always is the possibility of blocking a sales order um automatic well i guess from the from a process standpoint that the sales order confirmation clearly is the first one um so yeah you can't really go you can't go at like time of sales order creation or something like that um regardless of what rules you have right because it something needs to prompt the system so that sales are confirmation is out of the box the first one um that you can do okay great those were our questions last call for any additional questions that you want to type into the q a panel while we're waiting for that just a friendly reminder to fill out your session survey and we do still have a couple of sessions this afternoon so head back to your agenda and and decide what your next session will be i don't see any other questions so chris and sue thank you both for joining us and taking the time to share your knowledge with us today we greatly appreciate it all right thank you have a great afternoon everyone thank you