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MSDyn365FO Credit Management, Part 9 – What are Blocking Rules?

Credit Management for D365FO

Blocking rules are rules that are set up to determine if an order will be put on hold. In our last blog, we reviewed credit limit adjustments. In this blog, we’ll be reviewing the specifics of Blocking rules and how to set them up.

Introduction to Blocking Rules

To setup Blocking rules, go to Credit and collections > Setup > Credit management setup > Blocking rules.

Blocking Rules

There are 9 Blocking Rules. Blocking Rules are setup based on the Customer (Table), and/or Account/Group (Group), and/or Risk Group (Group), or All.

Here’s the hierarchy of how the credit process reads the table (notice that blocking always takes precedence over exclusion):

    • Table look at Blocking
      • Table look at Exclusion
        • Group look at Blocking
          • Group look at Exclusion
            • All look at Blocking
              • All look at Exclusion

Blocking Rules #1-7

  • Days Overdue – Looks at how many days past due the customer account is to determine if the Sales Order should be put on hold.

Blocking Rules, days overdue

  • Account Status – Looks at the customer’s account status to determine if the Sales Order should be put on hold.

Account Status

  • Terms of Payment – Looks at the Sales Order Terms of Payment to determine if the Sales Order should be put on hold. This is in addition to payment terms ranking. This rule checks for specific payment terms.

Terms of Payment

  • Credit Limit Expired – This looks at the customer’s credit limit expiration date and adds grace days. If the credit limit has expired and the added grace days are exceeded,  the Sales Order will be put on hold if the rule type in = blocking.
    • Note: This is an important point to pay attention to. . .just because a customer’s credit limit has expired does not cause an order to go on hold. The setup of these rules is what determines if the credit expiration date causes the order to go on hold.

Credit Limit Expired

  • Overdue Amount – This is a combination of how much the customer is overdue and how much of their credit limit they have used by percent or amount.
    • This is saying, if US-001 is overdue $10K and over 80% of their credit limit has been used, then, put the order on hold.

Overdue Amount

  • Sales Order – This looks at the Sales Order amount. The first rule that is looked at is AllExclusionRelease Sales Order. The AllExclusionRelease Sales Order combination is unique to this rule because it tells the credit hold logic to look at it first. The reason for this special combination is so that you can set up a “golden rule” so that certain order amounts are never put on hold regardless of how the other 9 rules are setup.

In this example, we’re saying:

    • If the Sales Order is $1K or less, do not put the Sales Order on hold.
    • If the customer is US-001 and the Sales Order is $20K or less, do not put the Sales Order on hold.
    • If the customer is in account/group number = major, and the order is $10K or less, do not put the Sales Order on hold.
    • If the order is $500K or more, put the Sales Order on hold.

Sales Order

 

  • Credit Limit Used – This looks at the customer’s credit limit and calculates the percent used to determine if the order should be put on hold. If the percent of the credit limit has been exceeded,  the Sales Order will be put on hold if the rule type in = blocking. If you don’t have this rule setup, then, the customer’s credit limit is not going to be checked even though there’s a credit limit set up on the customer’s record.
    • Note: This is an important point to pay attention to. . .just because a customer has not used all their credit limit does not mean they can continue to place orders. The setup of this rule is what determines if the customer has enough credit for the order.

In this example, we’re saying:

    • If the customer has used 90% or more of their credit limit but the order on hold.

Credit Limit Used

Block Rule #8

  • Rank Payment Terms – If the user changes the default Payment Terms on the Sales Order, the hold process looks to see what the new Payment Terms is “ranked” as. . .if the “rank” on the new Payment Terms is different from the “ranking” on the default Payment Terms, this can trigger the Sales Order to be put on hold so that the order has to be reviewed before the order can be processed.

Here you will see a list of the payment terms that you’ve set up in Accounts Receivable. Besides each of the payment terms, you can enter the rank.  The rank is used to determine if the sales order should go on an automatic hold.

For example, if the customer’s default payment terms are Net 1 and the payment terms on the order are changed to Net 10.  Since both payment terms have a rank of 1, the system will not trigger a sales order hold.  However, if the payment terms on the order are changed to Net 45.  Since the customer’s default payment terms has a rank of 1, and the new payment terms have a rank of 4, the system will trigger a sales order hold.

Go to Credit and collections > Setup > Credit management setup > Rank payment terms.

Block Rule 8Rank Payment Terms

Block Rule #9

  • Rank Settlement Discounts – Here you will see a list of the cash discounts that you’ve set up in Accounts Receivable. Beside each of the cash discounts, you can enter the rank.  The rank is used to determine if the sales order should go on an automatic hold.

For example, if the customer’s default cash discount is 0.5%D10 and the cash discounts on the order are changed to 0.5%D30.  Since both cash discounts have a rank of 1, the system will not trigger a sales order hold.  However, if the cash discounts on the order are changed to 1%D07.  Since the customer’s default cash discounts has a rank of 1, and the new cash discounts have a rank of 2, the system will trigger a sales order hold.

Go to Credit and collections > Setup > Credit management setup > Rank settlement discounts.

Block Rule 9Rank Settlement Discounts

 

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?
MSDyn365FO Credit Management, Part 5 – What are Automatic credit limits?
MSDyn365FO Credit Management, Part 5 – What’s new in the Customer Fact Box?
MSDyn365FO Credit Management, Part 6 – What are Customer Credit Groups and how are they used?
MSDyn365FO Credit Management, Part 7 – What logic is used when looking at the customer credit limit?
MSDyn365FO Credit Management, Part 8 – What are Credit Limit Adjustments?

 

If you’re interested in learning more about Blocking Rules or have any comments, please Contact Us and feel free to connect on LinkedIn and Twitter!

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