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Jyoti Singh's Blog

Traditional Credit Management and FSCM Credit

Management: Comparative Analysis
Posted by Jyoti Singh in Jyoti Singh's Blog on Apr 21, 2012 10:17:36 AM
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The payment behavior and credit worthiness of the business partner/customer have immediate impact on
the business result of an organization. Efficient credit management reduces the risk of business losses,
optimizes the credit risk and improves relationship with the business partner.
The traditional credit management has been stayed for a longtime. Most of the companies using FI-AR and
SD have implemented the traditional credit management to avoid the losses because of credit risk. The FINFSCM-CR takes the credit management to a different level. The FSCM credit management (FIN-FSCM-CR)
provides enhanced functionality to monitor credit and exposure risk of a company. It is an extension over the
traditional credit management (FI/SD-CM), which enables the user to have better control and more
transparent view on receivables. Based on my experience, I have summarized the basic differences
between the two ways of managing the credit in SAP.
Area

Traditional

Architecture

Credit

FSCM

Credit

Management

Management

Distributed as well as

Distributed Architecture

centralized structure

Remarks
The

distributed

architecture

of

FSCM-CR
necessary

FIN-

makes it
to
have

interfacing.
Organization

Credit Control Area

element

Credit Segment Many

The credit segment is

segments can be linked

associated with a credit

to a main segment

control

area.

Each

credit control area can

be assigned to one
credit segment only.
Master data

Uses AR master data

Requires

creation

of

Business partner master

data

Based

on

the

customizing setting the

business
partner
master data is synched
up with the customer
master data.

Types of credit

Automatic Check and

Only Automatic credit

The

basic

credit

check

Static Credit Check

control will be available

management

setting

available

remain same in both

FI/SD-CR and
FSCM-CR.

Storing credit
rating
of

Not Available.

external rating

FIN-

Can store credit rating of

many
companies
in

An interface can be setup to get the data from

business partner.

credit rating company.

Possible through XML

Not

interface

traditional credit rating

companies
Interfacing
with

Not Available.

credit

Applicable

for

rating

company as there is no

company

possibility to store the

credit rating of various
rating companies.

Defining
blocking

Not Available.

Available.

FIN-FSCM-AR provides
blocking

of

business

reason

https://scn.sap.com/blogs/jyoti/2012/04/21/traditional-credit-management-and-fscm-credi... 12/18/2015

Traditional Credit Management and FSCM Credit M... | SCN

Page 2 of 3

partner data providing a

reason code.
Credit
Exposure data

Available
at
credit
control area level.

Available
at
credit
segment level with the
breakup

under

each

category.
Credit

limit

data

Needs to collect from

Can be derived based

FIN-FSCM-CR,

external company and

on

limit

uploaded

external data.

based

manually
on

both

internal

and

data

credit

can

be

requested within SAP

manual

and based on external

calculation

and internal rating the

limit can be calculated
within SAP system.

Reviewing

Intermittent

limit

review

is

derive

and

manual
set-up

Can

to

reclassify

be

done

Improved

and

automatically within SAP

automated process in

by

FSCM

utilizing

the

live/

the credit limit.

internal data along with

Not Required

Maintaining

credit

management.

the external rating.

Additional Setup requires

interface

WS-RM can be used

through XI/PI or point to

from

point interface.

The interface is used

for real-time exposure
and

ECC6.0

EHP5.

transaction

data

flow between AR and

FSCM

credit

management. This is
required

because

of

distributed architecture
of FSCM.
As we have seen here, the FSCM-Credit management has same underlying functionality as that of the
traditional credit management. FIN-FSCM_AR doesn't replace the traditional credit management but is
simply is an extension over the existing credit management. With the implementation of the FIN-FSCM-CR,
the companies are able to reduce the manual work, streamline adhoc work, and make better decision for
credit management based on the internal as well external data.

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Tags: fscm, credit_management, fin-fscm-cr_, comparision_fi/sd-cr

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2 Comments
NITESH PATEL Feb 5, 2015 12:27 AM

Good comparison.
It will be great if you can add one example of use case for each major difference e.g. for Blocking
reason update, use of Credit segment etc.
Like (0)

Sean House Apr 2, 2015 10:13 PM

This post has been around for a while (April 2012) and I really found it valuable, but I do think there are
a couple of items misstated with respect to Traditional Credit Management.
For example, there is a field for maintaining a credit rating of external rating companies - KNKKDBRTG (as you can see from the field name, it was originally meant to hold the D&B Rating). This can
be used to hold any external credit rating, you just can't maintain ratings from multiple agencies.
Same for the interface with the Credit Rating agency - as far back as R/3 3.1 you could connect to D&B
via the certified interface D&B for R/3. This predated the need to install PI/XI.
Like (0)

https://scn.sap.com/blogs/jyoti/2012/04/21/traditional-credit-management-and-fscm-credi... 12/18/2015

Traditional Credit Management and FSCM Credit M... | SCN

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