In Part 1 of this series, I demonstrated how to automatically assign a credit limit using the new credit management feature. In this post, I will cover how to adjust a customer’s credit limit using a journal and how to recognise credit guarantees and insurance within a customer’s credit limit.
A temporary credit limit allows you to support short term situations like product sales, without impacting the long-term credit limits. It is similar to the credit limit and is defined in the same way. However, it has an interval of time for which is active. A temporary credit limit can be created in the credit adjustments journal (Credit and Collections > Credit limit adjustments). During that time, a temporary credit limit overwrites the credit limit.
Let us look at an example:
A temporary credit limit can be very useful in a situation of business stress such as an economic crisis when companies do not have the flexibility to give as much credit to their customers as normal and want to reduce their credit risk.
It is also possible to add additional information to the customer’s credit limit such as Insurance policy and guarantee and to include them when calculating the credit exposure that the company has when it offers credit to a customer. Credit exposure is a component of credit risk. It indicates the maximum loss of the company if a customer defaults on a payment. Continue using the example above,
The system provides a quick overview of some credit statistics for each customer. In the customer form, under the related information tab on the right side, there is a new group of FactBoxes call Credit statistics that gives information about the credit and the current situation of the customer. Which is basically a sum up of the customer’s credit information, up to date each time that the credit statistics are refreshed.
There is a new process in the Credit and Collections > Periodic tasks > Credit management > Calculate balance statistic that can be used to update the values that are shown in the FactBoxes.
This periodic task can also be used to update the calculation of balance statistics that are shown in a new report called Customer Balance Statistics (Credit and Collections > Inquiries and reports > Credit management > Customer balance statistics). In this report, it is possible to see the value of the credit limit and the actual balance of the customer. The system also allows you to calculate the balance statistics for a specific customer or customer group, by the button “calculate” on top.
Stay tuned for part 3 where I will cover the creation of blocking rules and how to dynamically put and release order holds.