Setting up Credit Policy in Dynamics 365 Finance and Operations: Credit Limits
This article will discuss setting up credit limits and temporary credit limits for your customers. When you are defining your policies in the system, one important policy is the credit policy. A credit policy is a great way to limit our unpaid debts or avoid having delinquent accounts. Setting up your credit limits is one step in achieving a successful credit policy.
Defining Customer Credit Limits
The credit and collection module offers a great way to define your credit limits for your single or group of customers. You can go to the credit limits adjustment page and select whether a single or a group of customers to define the credit limits.
The process works similarly to posting a journal where at the line level you can define customer accounts or credit groups for limit adjustments. The adjustments also let you renew the customer credit limit. Once posted, the credit limit becomes active for the defined parameters.
You can change this credit limit anytime on the customer form as well. Defining credit limits can help you in keeping your cash flow in adequate health.
Defining temporary credit limits
Temporary credit limits are a good tool if you intend to increase or decrease your customer’s limit for a set time. For example, the customer intends to make a one-time purchase where their credit limit needs to be increased. In this scenario, you can utilize the temporary credit limit functionality.
This can be accomplished through the same page: credit limit adjustments. You define the temporary increase or decrease in the customer’s credit limit. And then specify the period for this temporary limit. This also can be done for a single customer or a group of customers. After determining your parameters, the adjustment is posted. Now, making a transaction against this customer, the system will consider the temporary credit limit until the defined period.
Looking at my previous example, where I defined a new limit for my customer (Customer 1) of 5,000,000 USD. In the next image, I used the same customer to add a temporary credit limit of 67,000,000 USD. After posting, when I look at my customer form, I can see both its credit limit and temporary credit limits enabled.
Temporary credit limits can also be beneficial if your customer is showing alarming behavior and you intend to give them a grace period for testing. There can be many other scenarios where we can use this tool to run the temporary limits without adjusting the actual credit limit of the customer.
That’s it for today. See you in the next article!
