Compiere Business Solutions

Transcription

1 Compiere Business Solutions Compiere Credit Management Tenth Planet Technologies

2 Table of Contents Introduction:... 3 Compiere Credit Management:... 3 Additional Features:... 4 Flexibility:... 4 Conclusion:... 5

3 Introduction: In the current business scenario, credit is the lifeline of any business. Most of the transactions involve credit to Customers as there is severe competition among different business enterprises to capture new customers and improve their market share. In their keenness to attract new customers some businesses provide more credits than what can be managed and end up in huge loss of revenue. If you let people buy products or services on credit, you are essentially lending money. If that money is not paid back, you could find yourself in a place where you can t pay your rent or cover payroll, and then you re damaging your own business. So it has become imperative for any business nowadays to manage efficiently the Credits given to customers to avoid loss of profit. Compiere Credit Management: Compiere provides multi-level credit management facility to efficiently manage customer credits. Compiere s Credit Management is part of Business Partner Management module which helps you to improve cash flow, increase efficiencies, optimize customer relationships and instill corporate and fiscal discipline. The different levels of Credit Management in Compiere are No Credit Check When this level of Credit Management is chosen for a particular Business Partner, it means there is no credit limit check for this partner. This means there will not be any credit check or alert when sales orders, invoices, and shipments are made for this Partner. An enterprise can opt for this level of credit check for a partner (Customer) who is having a very good and long-term relationship with the enterprise in terms of prompt payments and has a very good Credit profile. This level has to be manually set for the specific Partners. Credit OK This level of Credit Management is set manually by users, for those Partners for whom the system should check the Credit Worthiness and provide alert before allowing transactions to be processed. This level is set by users for most of the customers who are new to them and the credit worthiness of that particular customer is not yet ascertained by the enterprise. Credit Watch Credit Watch is a level of Credit Management that is set by the system automatically when the Outstanding Balance of a Partner exceeds 90% of his/her Credit Limit. In this scenario, each and every sales order created for this partner will have an alert during order processing to show the credit limit of the partner, how much is the outstanding balance from the partner that is pending? In this scenario still the system will allow to process the sales order. This is a first level of alert for the order processing team to decide about giving further credit on sales for the partner. Credit Hold This level of Credit Management is also set by the system automatically when the outstanding balance of a partner exceeds the Credit Limit. This level prevents the Customer from receiving Shipments, Accessing Assets or processing Orders. Only when payments are received from this customer for previous invoices that reduces their outstanding balance below the credit limit amount, further sales can happen for these customers. This level ensures that over credit is not given to any partner and loss of revenue is avoided. The system sets the levels Credit Watch and Credit Hold automatically based on the particular customer s outstanding balance and their credit limit.

4 Credit Stop The level of Credit Management that is manually set to customers for whom further should not be given and no invoices should be generated for Credit. This level is similar to the Credit Hold level but it is manually set. This level ensures that no further transactions are done with the customer unless or until further payments are received from the customer. Credit Watch %: Compiere allows setting a credit watch percentage at the Business Partner group level. This represents the percentage of available credit that can be used, before a Business Partner is moved from Credit OK to Credit Watch. This percentage can be set according to the needs of the business to get the necessary alerts at the right time. Additional Features: For one of our clients, we enhanced the Credit Limit management feature so that Credit Limits can be increased on a temporary basis for customers based on request and approval. notifications will be sent when request is created to alert the approvers about the request for them to approve the same. The approvers can be of 2 levels with different authorization amounts. These levels are associated to a role. A credit limit request raised by order processing team can be authorized by Level 1 role if the sum of (Credit Limit + proposed credit limit) amount of customer is below the Level 1 limit. If the sum of (Credit Limit + proposed credit limit) is above the level 1 limit, then those requests can be approved only by Level 2 roles. The temporary credit limit is valid only for a certain time period. Orders processed within the valid range can use that extended credit limit. Another way of managing the credit limit is to have a 2 step order processing authorization system. During the sales order process, if the outstanding balance goes beyond the credit limit of the customer, then the system does not allow the order to be processed. Only authorized personnel can access these kinds of orders and approve or reject the orders based on case-by-case basis. Flexibility: This enhanced feature in credit limit management provides additional flexibility to authorize a particular customer s case where the outstanding balance goes beyond the credit limit amount. This customer might be a valued customer, but due to short term cash crunch, he might not have paid the dues on time. In this case there is a genuine reason behind the outstanding balance going beyond the credit limit amount. So there should be an option in the system to override the system logic and allow the sales to be processed. During times of peak season or campaigns customers tend to buy more than the normal sales volume. During these times, the system should allow to provide additional credit for the customer so that sales happen without any interruptions. This allows for improved customer relations and improved sales. The key Benefits achieved by any Enterprise

5 Make Consistent, Informed Credit Decisions Compiere Credit Management lets you reduce credit risk through standardized credit models. Effective business evaluation of the customer s and their management team. Ongoing customer and vendor management. Building information resources for future growth. Conclusion: Good credit and collection policies provide both a measure of insurance and the power of information to all businesses. Smart business owners integrate them into the fabric of their operations, regularly monitor accounts, and use the information collected to make better decisions about sales, customer management, credit limits, and other areas, while benefitting from better cash flow, as payment is often received more regularly and with less effort.