FSCM - Credit Limit Requests Approval using Manage Credit Management Rules

[darrelzaulda]

In this blog post, we will cover the steps to set up the approval process for credit limit requests using the Manage Credit Management Rules app and notifications using the Situation Handling: Approve Credit Limit Requests. The information presented here, and screenshots are from SAP S/4HANA 2022 Best Practices CAL instance.

Depending on the business requirements, the definition of the approval hierarchy and conditions will vary. A business partner with role UKM000 - SAP Credit Management must exist to proceed. The information presented here is in a simplified format for illustration purposes only.

Manage Teams and Responsibilities (F2412)

In this app, we will define the authorised users to approve the credit limit requests. Go to Manage Teams and Responsibilities Fiori apps and choose Create. Enter the required general information and ensure that you have selected the Type Credit Limit Request (UKM_CLR). Maintain the credit segment, team owners, and team members. Save and make sure that you have enabled it.

Maintain the approvers

Manage Credit Management Rules (UKM_BRF_CONFIG)

This app is used to define hierarchies for the approval process in credit management, and to define settings that are applied for your formulas for credit limit calculation and for the calculation of the score. We will only cover the approval process for credit limit requests in this blog.

The approval hierarchy that you define allows you to ensure that only authorized persons can approve a credit limit request. Choose the rule for Credit Limit Request: Approval Hierarchy and maintain your approval steps in the table contents.

Define your approval steps

Hot Tip: Use the simulation function (Start Simulation) in this app to test your approval steps.

Enter your simulation data

Validate the result according to your defined approval steps.

Result

You can also choose to Execute and Display Processing Steps to evaluate how the result was determined.

Processing Steps based on simulation

Manage Situation Types (F2947)

Copy the Situation Template FIN_CLR_APPROVAL to create your own Approve Credit Limit Requests situation type. I have enabled Monitor Instances to view and edit the list of the active situation instances for the enabled situation type.

Conditions play an important role

Manage Credit Limit Requests (F5602)

In this app, create a credit limit request, edit, and save it.

Create credit limit request

Update the credit limit by changing the status to In Approval and save it.

Update credit limit request status

It will then trigger the determination of applicable approval hierarchy.

Approval steps determined

Approve Credit Limit Requests

A notification will be triggered to the recipients about the credit limit request pending their approval. Clicking on the notification will direct the approver to the credit limit request where it can be approved or rejected. When approving the credit limit, the approver can reduce or increase the requested credit limit.

Notification sent to approver

Clicking on the notification directs the approver to the credit limit request. The approver can enter the notes, limit approved, and limit validity date.

Approval

Manage Credit Accounts (F4596)

Open the Manage Credit Accounts Fiori app to verify that the credit limit is updated in the business partner.

Credit limit is maintained based on the approved amount

Monitor Situations (F3264)

Since we enabled the monitor instance in the step above, we can capture and monitor data for the situation type in this Fiori app.

Instances created

I hope the above steps give you an idea on how to use the Manage Credit Management Rules in conjunction with Situation Handling.

[hbos]

Hi Darrel,

 

Thanks for this excellent blog. Can you tell me which fields (next to credit segment, risk class and requested limit) are available to use in the conditions for an approval step?

Thanks,

Harold

 

[darrelzaulda]

Hi Harold,

There are many fields that can be used, and they have different types like amount, boolean, text, timepoint. These can be found in the business partner. Some examples based on the type I have provided are fields like credit limit, special attention, credit group, resubmission on, etc.

Regards,
Darrel

[Kim_Ciesla]

Great information - thank you!

[rwarri1]

Hi Darrel,

I have configured this in our Sandbox however it does not trigger the determination of the applicable approval hierarchy.

Am I missing something ? Any tips to troubleshoot.

Thanks,

Rajesh

[darrelzaulda]

Hi Rajesh,

Please use the simulation tool and ensure that your test data have the same values with what you used during simulation.

Regards,
Darrel

[rwarri1]

Thanks for the quick response Darrel. That worked.

Where does this fit in the ordering process ? My expectation is that a request is triggered when the sales order is blocked.

Rajesh

[darrelzaulda]

Hi Rajesh,

A blocked sales order does not necessarily lead to a credit limit request. It needs to go through an approval/rejection process and there could be various reasons why the block was triggered. Please refer to my other blog for the details. FSCM – Release Blocked Sales Orders using Manage Credit Management Rules | SAP Blogs. Nevertheless, you can show credit limit requests in a Credit Blocked Document.

Regards,
Darrel

[mats_andreasson]

Hi Darrel

Thanks for the nice blog!

We have done the set up as required and it is working fine for us using the Credit Limit Requests and Approval hierarchy for setting the credit limits.

The business requirement is that all Credit Limits must be approved by the correct Credit Manager before it is set for the Credit Segment.

But if we go to the Manage Credit Accounts app (F4596)  the field for Credit Limit is editable so anyone with change access can set another limit and thus bypassing the approval hierarchy.

To us that makes no sense, do you know the reasoning behind this from SAP?

From what I have understood it is possible to do "Metadata extension" to F4596 but there is no way to change the field to "Read only" in the Metadata extension.

 

Best Regards Mats

[manibudh_sankasem2]

Hi Darrel, @darrelzaulda 

Thanks for your excellent blog!

I could not create a new credit limit request using Fiori app as its error "No default case type assigned for credit segment SG01." (message id UKM_CLR_MSG014) in the backend.

Not sure if you encountered this before? Applicate if you can help on this. 

Thanks.

[darrelzaulda]

Hi @mats_andreasson,

Apologies for the very late response as I have been away for quite some time. The reasoning is that RAP extensibility works differently from the classic fields/dynpro controls. I'll see if it's something that is in the roadmap.

Regards,
Darrel 

[darrelzaulda]

Hi @manibudh_sankasem2,

No, I haven't encountered it but try checking your configurations against the standard case type F_CR.

Regards,
Darrel

[Norissa]

Hi @darrelzaulda , 

Thanks a lot for the detailed blog. 

We implemented the solution but we found that approval hiearchy can be bypassed by just opening on the app "Manage Credit Limit Requests (F5602) and it does not respect the approval teams /members defined in the credit management rules. 

Did we perhaps missed something on the configuration? Thanks for your advice. 

Norissa

[darrelzaulda]

Hi @Norissa ,

Please check if the user ID that you are using have super user access (auth object: F_UKM_SUP). Please refer to Super User in Credit Management | SAP Help Portal for more info.

Regards,
Darrel

[Norissa]

Hi @darrelzaulda , 

Thanks for answering on my question above. I have another one question - its regarding the approved amount an approver can fill in - is there a possibility to put in a tolerance of a % of how much it can deviate from the initial credit limit request? 

Thank you in advannce for your reply!

KR, 

Norissa

[darrelzaulda]

Hi @Norissa ,

Customers usually have a delegation/limits of authority, and they would be in an approved company policy. If something is beyond the authority of the first level, then you have the next level. Can you please share the rationale of having a tolerance?

Regards,
Darrel

[priya_sshekhar]

Hello ,

Great Blog. Is this functionality available in the Basic Credit Management or does it require additional license for Advanced Credit Management?

Thanks,

Priya

[darrelzaulda]

Hi @priya_sshekhar,

It requires an additional license as of writing. Please refer to note 2696793 - Licensing of SAP Credit Management in SAP S/4HANA On Premise for more details.

Regards,
Darrel