Project Description
Credit limit checking of new online customers in SAP
Results of the project
- More security due to an improved and automated identity and creditworthiness check of customers during order creation, goods issue and delivery
- Adjustment to user-specific testing modalities
- Reduction of payment defaults
- Customized credit limit check on criteria such as maximum dunning level, overdue open items, oldest open item, etc.
- Decline of risk evaluation costs and loss of accounts receivables
- Automated credit limit check minimizes time and effort
Frankonia
The whole story
Frankonia – The Customer
Founded in 1908 as a local retailer, Frankonia now is European market leader in hunting gear.
Besides stationary retail in Germany and France, Frankonia reaches out to its European customers (Germany, France and Switzerland) via catalogues and the internet.
In its online shop Frankonia offers a wide range of hunting apparel, equipment, optics, ammunition, weapons, outdoor equipment and clothes to hunters, shooters and trekking- and outdoor enthusiasts.
The Challenge: At a glance
- Integration of sales orders from the WEB shop
- Adjustment of risk groups in customer master data
- Prioritization of credit limit check criteria
Frankonia – The Challenge
The company’s strategic direction in e-commerce is a main factor for its success in Europe.
The online shop, with its variety of payment options and anonymity of clients, increases the risk of payment default and bad debt loss. Especially with new customers, who generated 1/3 of all sales in 2012, the company has no experienced data or information for rating its financial standing.
Until now Frankonia had to manually adjust the credit limit for each customer in order to reduce the nonpayment risk. Due to a raising number of customers, Frankonia needs to be able to rate the new customer’s credit limit more efficiently and therefore the credit check needs to be optimized.
Frankonia
Automated credit limit check in SAP
Frankonia – The Project
With the help of SAP ERP Credit Management the credit rating and identity check of Frankonia clients gets automated and the nonpayment risk is minimized precociously and reliably.
Automated tests in the background during the order transaction
Already during the order transaction the software checks in the background. To do so Frankonia uses internal experience and external information, e.g. Bürgel business information and debt collection.
Different criterias for the credit limit check
As criteria for the credit limit check, the company uses a static credit limit check on open sales documents, open deliveries and open billing documents, open items, as well as a maximum dunning level and a score value from the Bürgel check.
Classification of customers into different risk groups
The classification of customers into different risk groups as well as customized credit regulations, that can be displayed individually, offer transparency: if customers are not credit-worthy, sales documents are reported in purpose-built operations for Credit Management and have to be approved manually.
- When entering an invoice, a message is triggered by the automatic credit check, if the credit limit for the account is exceeded. In addition to the account number and the exceeded area, the message number is included.
- Information about creditworthiness for each customer is deposited in the credit management master data. In addition to the credit limit the total liability, credit exposure and the level are stated. There also is information about payment behavior, payment data, dunning history and dispute management.
- In credit limit, additional information about requirements, special liability, sales value, total liability and secured receivables, can be displayed. Internal and external data serve as a basis for calculation; with the help of internal data an assignment of the customer to a risk group is possible, via external data a rating is created.
- When recording an open item – sales documents, deliveries, billing documents, items, etc. – automatic credit limit checks are performed based on the parameters defined in Customizing. The test is performed automatically in the background during the order process.
The Result
The SAP ERP Credit Management solution – developed together with SERKEM – provides a comprehensive picture of the nonpayment risk of Frankonia’s customers. In particular, when purchasing on account for the first time and installment purchases, address and security data is used in order to estimate the risk in individual cases.
he SAP ERP Credit Management solution by SERKEM enables Frankonia a reliable evaluation of customers as well as a fast and secure check of new and existing customers: payment defaults are avoided, the company’s risk sinks.
The optimized and automated credit limit check minimizes time and effort and therefore reduces costs for risk evaluation and decreases loss of accounts receivables.
