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Add credit management information for customers

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After you've set up the parameters that control credit management, you can add more details for each customer. These details control the credit management processes, and they also provide additional information that helps members of the collections team manage customers.

Customer information

You can add the customer details on the Credit and collections FastTab of the All customers page (Account receivable > Customers > All customers).

  1. Set the Unlimited credit limit option to Yes if the customer should not be limited by any credit limit tests.
  2. Set the Exclude from credit management option to Yes to exclude the customer from any actions that usually occur during credit management processes.
  3. Select the credit management group for the customer.
  4. To calculate the credit limit in the customer's currency, in the Credit limit in customer's currency field, enter the customer's credit limit. The credit limit in the company currency will be converted by using the exchange rates that are defined by the credit limit exchange rate type that is selected in the Credit management parameters.
  5. In the Last review date field, enter the date when the customer's credit limit was last reviewed by a credit manager.
  6. In the Next scheduled review date field, enter the date when the customer is scheduled for credit review and update.
  7. In the Eligible credit limit field, enter the highest credit limit that can be assigned to the customer, based on your review of that customer's credit history. The eligible credit limit can differ from the credit limit that is shown on the Credit and collections FastTab.
  8. In the Eligible credit limit currency field, enter the currency of the eligible credit limit.
  9. In the Eligible credit limit date field, enter the date when the eligible credit limit was created.
  10. In the Credit account status field, enter the credit account status of the customer.
  11. In the Status reason field, enter the reason that is associated the account status.
  12. Set the With agency option to Yes to indicate that the customer is currently assigned to a credit agency. This value is for informational purposes only. It isn't used in any credit management processes.
  13. Set the Title held option to Yes to indicate that a title is held for the company. This value is for informational purposes only. It isn't used in any credit management process.
  14. In the Business started date field, enter the date when the customer first started to do business. This information is used when risk scores are created.
  15. In the Customer since field, enter the date when the first transactions were processed for the customer. This information is used when risk scores are created.
  16. Enter notes that the credit team can use to further evaluate the customer's credit worthiness.

Note

Some of the information that is shown on the Customer page is created by another process:

  • The Credit limit expiration date field shows the date when the credit limit will expire. If you don't set this field, the customer's credit limit won't expire.
  • The Credit limit date field shows the date when the credit limit was created. This field is updated whenever the credit limit is adjusted.
  • Temporary credit limits override the customer credit limit for a period. They are used instead of the credit limit to calculate the total credit limit. This information is shown only if there is an active credit limit. You can add temporary credit limits through credit limit adjustments.
  • The Insurance and guarantees field shows the total value of insurance and guarantees that can increase the credit limit for the customer.
  • The Total credit limit field shows the final credit limit for the customer. The total credit limit includes insurance and guarantees, and temporary credit limits.

Temporary credit limits

Temporary credit limits override customer credit limits for a defined period. You can add temporary credit limits by using credit limit adjustments. Credit limit adjustments let credit managers update the credit limits and expiration dates of a single customer, a group of customers, or all customers through a posting process.

You can create credit limit adjustment entries on the Credit limit adjustments page (Credit management > Credit limit adjustments > Credit limit adjustments).

Create insurance policies and guarantees

You can create one or more insurance policies and guarantees for each customer. You can then use them to calculate the exposure that your company has when it offers credit to a customer. Insurance policies and guarantees can also be included in the credit limit for a customer.

You can create insurance policies and guarantees on the All customers page (Accounts receivable > Customers > All customers). Select a customer, and then, on the Action Pane, on the Credit management tab, select Insurance and guarantees.

Note

In the following procedure, you select an insurer or guarantor from the global address book. Therefore, before you begin this procedure, you must make sure that the insurers and guarantors have been added to the global address book.

  1. In the Identifier field, enter Guarantee or Insurance.

  2. In the Guarantee/Insurance type field, select one of the guarantee or insurance types that you previously set up.

  3. In the Insurer/Guarantor field, select the insurer or guarantor from the global address book.

  4. If you selected Insurance in the Identifier field, in the Policy coverage type field, select one of the coverage types that you previously set up. You can't select a policy coverage type for a guarantee.

  5. In the Identification field, enter the ID of the policy. This ID is usually a policy number.

  6. In the Effective field, enter the start date of the insurance policy or guarantee.

  7. In the Expiration field, enter the date when the insurance policy or guarantee. expires.

  8. In the Value field, enter the value of the insurance policy or guarantee. This value is the full value of the policy.

  9. In the Currency field, select the currency for the policy value.

  10. In the Update credit limit field, specify a percentage between 0 and 100. This percentage will be applied to the policy value, and the resulting amount will be used to increase the credit limit that is used in credit limit calculations. The calculated value is shown under Total credit limit, Insurance and Guarantees on the Credit and collections FastTab of the Customers page.

    Here is an example:

    • The credit limit (A) is 100,000.
    • The policy value (B) is 50,000.
    • The Update credit limit percentage (C) is 50.00.

    In this case, the effective credit limit is 125,000 (= A + [B × C]).

  11. Select the Included in exposure check box to reduce the credit limit that is used in credit limit calculations by the full value of the policy. If this check box is selected, the value that is calculated when the Update credit limit percentage is specified won't be used in credit limit calculations.

    Here is an example:

    • The credit limit (A) is 100,000.
    • The policy value (B) is 50,000.
    • The Update credit limit percentage (C) is 50.00.

    In this case, the effective credit limit is 125,000 (= A + [B × C]).

    However, if you select the Included in exposure check box, the Update credit limit value of 50,000 (= 50.00 percent of 100,000) is removed, and the exposure value is 75,000 (= A + [B × C] – B).