Customer Credit Limit

Hi,

I know this post was a while back - did you ever find out if this worked for you? I’m coming up against a similar issue. I don’t want to increase credit limits, but we are having orders getting blocked when the sales team are working weekends. Nobody is available in Finance to release them.

Thanks

Hi! I’ll try to explain the differences between these attributes and how to use them: these should apply the same to IFS Applications 9 as well as IFS Cloud (23R2).

Credit Limit

The Credit Limit defines the overall credit limit for the Customer, meaning the amount you may have open with the customer considering Customer Invoices. In other words, the system calculates the amount from all of the customer invoice lines which have not yet been paid and compares that to the credit limit. If it is exceeded, the system will block customer orders at the events specified in the Credit Control Group (e.g. when releasing the order) defined for the customer on the Order tab (or Sales tab in IFS Cloud) of the customer record.

For example, if the customer has a credit limit of 10 000 € and the there are unpaid invoices worth of 9 500 €, placing a 400 € customer order would be fine, but placing a 600 € order would be blocked.

Allowed Overdue Amount & Days

While the credit limit is an overall limit, the Allowed Overdue Amount only considers customer invoice lines which are overdue, i.e. whose Due Date has passed. Optionally, it is possible to also define Allowed Overdue Days to exceed the due date. The logic with the overdue amount is that you can allow a larger credit limit for the customer in general but in order to make sure that invoices are paid on time, define a more strict amount for overdue invoices. While you can set the allowed overdue amount to be larger than the credit limit, it would have no effect on the system, as it would never be reached due to the credit limit being met first. In other words, the allowed overdue amount & days are used to narrow the credit limit, not to extend it.

For example, if the customer has a credit limit of 10 000 €, an allowed overdue amount of 5 000 € and there are unpaid invoices worth of 9 500 € which are not due yet, then placing a 400 € customer order would be fine. However, let’s say that after some time a few of those invoices become overdue, making the situation like this: 9 500 € in total, but 5 100 € of that is overdue. Then, placing a 400 € customer order would be blocked, as the overdue amount is already reached, even though the 400 € would not exceed the overall 10 000 € credit limit.

Continuing with that example, let’s say that the overdue invoices are two days overdue, i.e. the due date was the day before yesterday. If the allowed overdue days is then set to 10, it means that there are still 8 more days for the customer to pay the invoices before they are considered overdue, and then placing the 400 € customer order would fine.

Other Things to note

It is also possible to initiate the credit check manually on the customer order header, block a customer order manually and set a credit block for the customer record with the switch on the customer record regardless of the limit values; these functionalities will have effect on how the credit limit and allowed overdue amount & days behave.

If you define a corporate credit relationship, the parent customer’s credit settings will affect the child customer as it will also be checked along with the child customer’s own credit settings, if applicable.

If the customer order uses a different invoice customer, that one is used for the credit check.

A Payment Term can be defined to be excluded from Credit Check (Exclude from Credit Limit Control), meaning that using that payment term on a customer order will skip all credit checks for the order, which is something that may mix up your testing if you haven’t checked it:

While you can see the credit limits for the customers on the Handle Blocked Customer Orders page, it does not tell you the whole truth: there is no attribute in system standard which would show you the total amount open on the invoices, i.e. which would tell you how much is already used against the credit limit besides the current order that is blocked, and this can be a bit misguiding. For example, if you look at the screenshot below, you can see that the credit limit is 300 € and that the order is for 424,81 €, but can’t tell if the order itself was too much or if there are open invoices that would have resulted in the order being blocked anyway, not to mention the effect of the possible allowed overdue amount & days. I guess a custom attribute calculating the total amounts open on the invoices could be added as well if needed, though I haven’t tried creating any.

Regards,

Lauri