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MSDyn365FO Credit Management, Part 5 – What are Automatic credit limits?

Credit Management for D365FO

Automatic credit limits are another useful tool to keep in your back pocket when working with customers. With Automatic credit limits, you can set up rules by Risk group to calculate what the customer’s credit should be based on the criteria and then assign Credit limit to the customer(s).

This process falls hand-in-hand with our previous blogs covering the Customer Screen, Credit Limits, and Risk Scores. As D365F&O’s new Credit Management features are a hefty topic, this blog is Part 5 of our multi-part series detailing the new Credit Management Functionality in D365 F&O. If you’re interested in learning more, check out last week’s blog for more information on Risk Scores and how they’re updated here!

Setting up Automatic Credit Limits

To set up the Automatic credit limits rules, go to Credit and collections > Setup > Credit management setup > Risk > Automatic credit limits (see example below).setting up automatic credit limits

To add a new Automatic credit limit, click New > select the Risk group and  Currency > in the Lines section click Add.  Here, you’re going to add lines to make up the rule.

To execute the logic so that the Automatic credit limit rules are applied to selected customers or groups of customers, use the Generate > Automatic credit limits option in the Credit limit adjustments program.

For example, if a customer has a D&B (Dunn and Bradstreet) value of A1, then, they get an Automatic credit limit of $400K.  If a customer has a D&B value of A2, then, they get an Automatic credit limit of $300K. If a customer has a D&B value greater than A2, then, they get an Automatic credit limit of $10K.

D&B Value

What’s new in the Customer Fact Box?

A new Credit statistics fact box has also been added to the customer record.  The fact box shows key information.  One thing to keep in mind, you do need to click the Refresh button (the Refresh was added for performance).

  • Highest balance date – This is the date where the customer owed you the most money.
  • DSO (6 months) – This is the average Days Sales Outstanding (DSO) for the timeframe in parentheses. The setup for this logic is in Credit and collections management parameters.
  • DSO (12 months) – This is the average Days Sales Outstanding (DSO) for the timeframe in parentheses. The setup for this logic is in Credit and collections management parameters.
  • Average payment days – This is the average number of days it takes this customer to pay their invoices.
  • Avg balance (6 mths)– This is the average balance for the timeframe in parentheses. The setup for this logic is in Credit and collections management parameters.
  • Avg balance (12 mths)– This is the average balance for the timeframe in parentheses. The setup for this logic is in Credit and collections management parameters.
  • Credit rating – This is the user-defined field that shows on the Credit and collections fast tab.
  • Risk score – This is the Risk score from the Risk scores
  • Risk group – This is the Risk group from the Risk scores
  • Credit limit – This is the Total credit limit that shows on the Credit and collections fast tab.
  • Exposure – This is the Credit limit that shows on the Credit and collections fast tab.
  • Average % of credit limit – Based on the amount of money the customer has spent, this is the average percentage they have used of their Total credit limit.

For example, if a customer’s Total credit limit is $650,000, and on average they’ve spent $200,000, then their Average % of credit limit would be 30.77%.

  • Average % of exposure – Based on the amount of money the customer has spent, this is the average percentage they have used of their Credit limit.

For example, if a customer’s Credit limit is $550,000, and on average they’ve spent $200,000, then their Average % of exposure would be 36.36%.

Average % of exposure

 

This blog is the next part of a multi-part blog series detailing the new Credit Management functionality in Dynamics 365 for Finance and Operations.  Look for additional releases in this series in the coming weeks.

Looking for the other posts?

MSDyn365FO Credit Management, Overview – Credit Management Overview
MSDyn365FO Credit Management, Part 1 – Is Credit Management enabled in your environment?
MSDyn365FO Credit Management, Part 1 – Are there any new security roles for Credit Management?
MSDyn365FO Credit Management, Part 1 – Are there any new workflows available?
MSDyn365FO Credit Management, Part 2 – What are the new parameters?
MSDyn365FO Credit Management, Part 3 – What’s new on the Customer screen?
MSDyn365FO Credit Management, Part 4 – What are Risk Scores and how are they updated?

 

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