Customer Credit Checking

April 17, 2016 in Accounts Receivable,Library,Order Management

Before allowing a Sales Order Entry to be processed through the Order Management system, a ‘credit check’ is performed on the customer’s account.

The following outlines the logic of the credit checking ‘rules’ used:

  1. If the customer’s credit flag is not ‘Credit Approved’ i.e. is ‘Stopped’, ‘Held’ or ‘Unapproved’, the order goes on credit stop
  2. If the customer’s terms are ‘COD’ (Cash On Delivery), the order may be processed assuming the Trading Terms for the customer are not set to ‘limited delivery’
  3. If the customer’s terms are ‘CSH’ (Cash Up Front) and there is an Outstanding Order Value i.e. Order Value less Payments so far, the order goes on credit stop
  4. If the customer has unlimited credit i.e. No Credit Limit figure on the Customer Details and there are no Trading Terms, the order may be processed
    • Credit Limit – this is taken from the Head Office account if the customer is designated a subsidiary account, or the customer’s account details if there is no Head Office account involved
    • Trading Terms – these are taken from the Head Office account if defined, or the customer account if there is no Head Office Account. If there are no trading terms defined on the customer master details, the Standard Trading Terms defined in System Options are used
  5. If the customer has a credit limit, and the customer’s ‘Outstanding Value’ is greater than the credit limit, the order goes on stop credit. ‘Outstanding Value’ is the sum of:
    • Outstanding Sales Order value
    • Outstanding Back Order value
    • Retentions value
    • Aged balances value – including Forward, Current, Periods 1 to 4 and Unallocated Credits
    • Note: the value of the order being placed is NOT included in this total
  6. If the order passes the credit limit check, and there are Trading Terms defined, then if there are any outstanding ledger items on the account that do not meet the terms i.e. number of days credit allowed, the order goes on credit stop

 

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