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How To Set Up Oracle Credit Management

Posted on February 3rd, 2013 by Sanjit Anand ||Email This Post Email This Post

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Here is a summary of steps to set up Oracle Credit Management

  1. Maintaining Customer Data :Oracle Credit Management employs the Data Quality Management (DQM) match rules to identify how search results should be displayed in the application’s search screens
    • DQM Match Rule
    • Run DQM Staging
  2. Defining Credit Analysts :Credit analysts assist in the resolution of credit-related issues and evaluate the creditworthiness of your customers and prospects. Credit analysts can view credit applications and case folders in Oracle Credit Management, and can submit recommendations after concluding a credit analysis.
    • Import/assign Credit Analysts – First define your credit analysts as employees in Oracle Human Resources Management System (HRMS).Next, import employees from HRMS into Resource Manager and assign roles.Two seeded roles exist for Credit Management:
      • Credit Analyst :You can assign the credit manager role to a credit analyst
      • Credit Manager : This is setup functionality
  3. Credit Mgmt System Options : You can define these Oracle Credit Management system options.
    • Aging Bucket :Specify which aging buckets to use when presenting aging data in Credit Management. Credit Management presents aging data as data points in several pages, such as from the Aging Details and Credit Summary pages.
      • Take a note, Credit Management calculates its own aging data after pulling certain pieces of information from Oracle Receivables tables.
      • Take a note , Credit Management and Oracle Receivables aging data can be different beacuse of due dates and collection dates.In Receivables, the primary concern is around collection
    • Default Customer Credit Classification :Credit classification assignments can either be assigned by a previously completed credit review, or assigned on the customer profile. Default Value is High Risk
    • Period for Time Sensitive Data :Select the period for which credit data will be collected into the summary tables and used in scoring during a credit analysis. Reviewing summarized order, invoice, and payment data over a period of time can provide you with an overall picture of a customer’s past credit relationship with you, and can help to predict future performance. Default Value is 12
    • Application Numbering Option :Indicate if you want Credit Management to automatically assign a number to each credit application.Default Value is YES
    • Exchange Rate Type :Pick either default exchange rate type that Credit Management will use to convert foreign currency data points to your credit currency during a credit analysis. You can select Corporate, Spot, or User.Default Value is Corporate
    • DSO Days : You have to indicate the time period that Credit Management uses to calculate Days Sales Outstanding (DSO) and Delinquent Days Sales Outstanding (DDSO).The default is 90 days.
  4. Define Hierarchical Relationship :To provide global credit limits that are shared by some or all entities within a complex, multinational organization, you can define credit relationships between parties using Oracle Trading Community Architecture Relationship Manager.
  5. Credit Mgmt Profile Options
  6. Populate Summary Tables
  7. Setup Credit Usage Rules
    • Credit usage rule sets are used as follows:
      • In Oracle Order Management, credit usage rule sets define the set of currencies that will share a predefined credit limit during the credit checking process, and enable the grouping currencies for global credit checking.
      • In Oracle Credit Management, credit usage rule sets ensure that all transactions for the specified currencies are converted to the credit currency and included in data point calculations in the case folder.
    • In Oracle Credit Management, credit usage rules are required. Even if you perform credit reviews in only one currency, or conduct your business in only one currency, you must still set up one credit usage rule.
  8. Remove existing credit limits from Profile Classes and propagate changes to all customers (Optional) : This setup is used to pull and tag dafault setting of customer master.
  9. Assign Credit Info to Profile Classes (Default Credit Analyst, Default Classification)
    • Updating Customer Profile Classes : in AR Customer Profile Classes window, use the Collectors region on the Profile Class tab to assign credit information to your customer profile classes:
    • Classification :use the Assign Customer Credit Classification program.
    • Periodic review cycle :Update Periodic Credit Review Program.
    • Analyst : you can assign credit analysts to indicate who is responsible for monitoring the creditworthiness of the account and for assisting in the resolution of credit-related issues.
      • Take a note, Oracle Credit Management looks for an assigned credit analyst at the customer profile, only after other locations fail to provide an assignment.
  10. Assign Credit Usage Rule
  11. Credit Management Application Workflow :The Credit Management Application workflow manages the process flow of gathering and analyzing account or prospect credit data, and making and implementing credit decisions.
    • Enable Workflow Agent Listener (If not enabled)
    • Schedule WF Agent Listener (WF_DEFERRED)
    • Schedule WF Background for Credit Management
  12. Create hierarchical Party Relationship (Optional) : This is required if you have requirement to keep the customer setup as-is, a hierarchical relationship was created between parent party and its customers.
  13. Define Scoring Model
    • A scoring model is one of the primary credit review tools that Oracle Credit Management uses to assess the creditworthiness of your customers
    • Scoring models include the data points and scoring method that are appropriate for a particular credit review. When defining scoring models, for each data point, (1) indicate a score for each range of values and (2) optionally assign a relative weighting factor.
    • During a credit analysis, Credit Management uses the scores that you assigned to each data point range of values to calculate a score. The lower the credit score, the greater the credit risk.
  14. Define Checklist
    • In Oracle Credit Management, you document your enterprise’s credit policies via user-defined credit checklists. Using various checklists, you manage the credit analysis process by defining the required and optional data points that are included in the credit review.
    • Defining a checklist is a multi-step process, during which you can select checklist criteria in the form of data points from a multitude of sources. Credit Management uses these checklists in two places:
      • Credit application – The checklist determines which fields are required on the application.
      • Credit analysis – The checklist identifies what data should be automatically collected and displayed in the case folder.
    • When defining a checklist, you select a credit review type and credit classification combination. During a credit review, Credit Management uses the intersection of the credit review type and the applicant’s credit classification to select the appropriate checklist to use for the credit analysis. The higher the customer credit classification risk, the more stringent the credit policy (scoring model).
    • Additionally, your enterprise defines these credit classifications:
      • High Risk
      • Moderate Risk
      • Low Risk
  15. Assign Credit Analyst
  16. Define Automation Rule :For any scoring model, you can define a set of automation rules to guide the implementation of credit recommendations without user intervention. Automation rules let a credit review proceed uninterrupted through the workflow, during which a credit recommendation is automatically implemented based on the score that the scoring model calculates.
  17. Define AME Rule :For credit recommendations that require approval, Credit Management works with Oracle Approvals Management (AME) to manage the list of required approvers.
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