Credit Check Function. User Guide. Davisware 514 Market Loop West Dundee, IL Phone: (847) Fax: (847)

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1 Credit Check Function User Guide Davisware 514 Market Loop West Dundee, IL Phone: (847) Fax: (847) Contents are the exclusive property of Davisware. Copyright All Rights Reserved. Published DK/RL Revised

2 Table of Contents Credit Checking... 3 Credit check process...3 Credit check process for standard terms... 4 Credit check for non-standard terms... 5 Credit check exceptions... 8 Release a transaction from credit hold...9 Set up credit override privileges Customer hold status Davisware 2

3 Credit Checking Credit check process GlobalEdge performs customer credit checks for every new transaction created through Service Orders, Job Entry and Order Entry. New transactions can be placed on credit hold for the following reasons: Customer open A/R + Open Order Value exceeds its credit limit. Customer has at least one invoice that is past due. Customer average days to pay exceeds its allowed average days to pay. The credit check process is dependent upon the charge customer s term type. Payment term types are setup through the Accounts Receivable module. Important: The term type must equal the Standard option. Below is an example of the payment terms maintenance window for the term net 20 days: Note: When you hover over the term type field, a tooltip displays describing the available options. Davisware 3

4 Credit check process for standard terms A credit check is performed immediately on the charge customer for every new transaction such as a service order, a sales order, or a job order. The system performs three criteria checks as outlined in the following table: Sequence Credit Check If Yes, then 1 Is the Customer AR balance + Open Order Value greater than the Credit Limit? 2 Does the Customer have any past due invoices? Hint: Past due invoices are based on the due date of the invoice + the allowed grace period. The transaction status changes to HOLD 3 Is the Customer s Average Days to Pay greater than the Average Days Allowed? Hint: You can view these values on the Customer s Default tab. Note: To access the default A/R days to allow (grace period) checkbox, go to Order Entry> Setup Menu> Order Control Maintenance> Summary tab. This value applies to all customers. In the example below, the Order Control File Maintenance grace period is 30 days. Therefore the past due = Due date + 30 days. Davisware 4

5 You can override the grace period at the customer level by changing the AR Days value on the Defaults tab as seen in the example below: If the value is 999, then the customer uses the system grace period. o For example, grace period is 30 days, therefore the customer s AR days is 30. If the value is other than 999, then it indicates the number of days in the grace period for that customer. Credit check for non-standard terms The credit check process is slightly different if the Term Type = Deposit Required, COD or COD/On Account. The assumption is a customer required to pay for a transaction at time of service or a part upon delivery typically does not carry an accounts receivable balance. Therefore, if the Term Type is COD, Deposit Required or COD/On Account, then the following process applies: For every new transaction created (SO/Job/Order) a credit check is immediately done on the charge customer and the credit check only looks at one of the three conditions, as defined below: Credit Check Does the Customer have any past due invoices? Hint: Past due invoices are based on the due date of the invoice + the allowed grace period. If Yes, then The transaction status changes to HOLD Davisware 5

6 Note: The past due invoice check can be disabled for COD customers by selecting the Allow Past Due Invoices checkbox from the AR Control File as shown below. The customer must have a Term Type = Deposit Required, COD or COD/On Account. This does not apply to customers with the Term Type = Standard. In this example, the checkbox is not enabled. Notes: Davisware 6

7 Transaction status Once a transaction status changes to HOLD, it must be released from the Credit Release screen. It is recommended that you also enter an Approved Value at that time. The approved value is entered on the transaction and it becomes the new threshold for that transaction. As long as the total value of the transaction does not exceed the Approved Value, the transaction status does not go back on HOLD, regardless of the customer s overall account status. A credit check is performed after each item is entered on a service order as well as after each labor line is entered. The same statement is true for Jobs and Sales Orders. It is at this point that the value of the transaction is compared to the Approved Value. If you do not want the system to perform the credit check within the transaction, then you can disable the feature by unselecting the Check Approved Value checkbox in the Service Dispatch Control File accessed through the Service Management>Setup Menu. In this example, the checkbox is not selected. Notes: Davisware 7

8 Credit check exceptions There is one more option to consider. At times, you may have customers that are very close to hitting their credit limit or possibly even just a little bit over their limit and you would like to give some latitude to certain users so that new transactions don t go on hold until the credit limit has been exceeded by some set value. You can enter that allowed overage amount in the following User Maintenance fields: SO Approval Amt available for Service Orders Order Approval Amt available for Orders Below an example of how this works: Scenario 1: Customer A has a credit limit of $2,500 and their AR Balance + Open Order value = $2,600. This customer is over their limit by $100. Manager Jon has $0 in the Order Approval Amount field in User Maintenance. Jon creates a new order for Customer A and immediately he is asked to provide the credit password because the customer is over their limit. Scenario 2: Continuing with the scenario above, you go into User Maintenance for Manager Jon and enter $250 for his Order Approval Amt. Now when Jon creates an order for Customer A, he is not asked to provide the credit password. Based on the system calculations, this order does not go on HOLD until the value of the order exceeds $150. Customer s Credit Limit $2,500 + Jon s Order Approval Amount $250 = $2,750 available credit. Customer s AR Balance/Open Orders = $2,600 + New Order $150 = $2,750. Davisware 8

9 Release a transaction from credit hold There are two methods to release a transaction from credit hold: Accounts receivable release holds feature o Typically used by managers who are reviewing and releasing multiple transactions Transaction s release feature o Feature used to review and release credit hold from within the transaction To release a transaction through accounts receivable: 1. Access Accounts Receivable > AR Daily Processing > Release HOLDS. Result: The Credit Hold List grid displays. 2. Select the transaction you wish to release and then click Release. Result: The Credit Approval Required window displays. 3. In the Credit Approval section, enter your credit password, the approved value, and a note supporting this action. 4. Click F8-OK when done. Result: The credit hold is removed from the transaction. To release directly from the transaction: 1. Open the transaction (SO/Order/Job) and locate the order. 2. From the Navigation section, click Release. Result: The Credit Approval Required window displays. 3. In the Credit Approval section, enter your credit password, the approved value, and a note supporting this action. 4. Click F8-OK when done. Result: The credit hold is removed from the transaction. Note: In order for a user to override a credit HOLD prompt, he must be set up in Authorization Maintenance for AR Credit by Division and have a credit password in AR. Reference the Set up credit override privileges below to learn how to do this. Davisware 9

10 Set up credit override privileges There are two parts to setting up a user with credit override privileges. 1. Enable AR Credit by Division for the user through Authorization Maintenance. a. Open System Utilities >System Setup Menu >Authorization Maintenance b. Click the Details tab and then click F2-New. c. Enter the user ID into the field or click the browse folder to search and select the user and click F8-OK. d. From the Type drop-down list, select the AR Credit option. Hint: The AR Credit option allows a user to release transactions on credit hold. e. Select the Division checkbox. f. Click F8-OK and then click Close to exit the window. 2. Define a credit password in AR. a. Open Accounts Receivable >AR Setup Menu >Hold/Release Password Maintenance. b. Click F2-New. c. Enter the user ID into the field or click the browse folder to search and select the user. d. Enter a unique password and then reenter the password in the confirm password field. e. Click F8-OK and then click Esc-Close to exit the window. Hint: You can modify the Hold/Release credit password through User Maintenance on the Hold/Release Password tab for the user. Customer hold status In this document the focus has been on the hold status of a transaction (SO/Order/Job). So what does it mean when a customer is on hold? How do you flag a customer as hold? Unlike the credit check process for transactions, placing a customer on hold is a manual procedure. When a customer s status = Hold, it prevents any new transactions from being billed to that customer. This is commonly referred to as a hard hold. To place a customer on hold: 1. Go to Customer Maintenance and search/select the customer of interest. 2. From the Summary tab, click F3-Edit. 3. Click the Status drop-down and select the Hold option. 4. Click F8-OK to save. Result: Next time a user tries to add a new transaction for this customer, the error icon (!) displays next to the Charge Customer s Customer Number field. Hover over the icon to view the tooltip New Transaction Not Allowed. Customer has Hold Status. Davisware 10