Customer credit limits and order limits are set up in program CMCM, Customer Credit Maintenance.
The customer credit limit includes open order and open accounts receivable balances for the customer in all enterprises. The credit limit is reduced by open order balances and open accounts receivable balances. If the customer goes above the credit limit, the order is placed on hold.
The customer order limit is the highest dollar amount that the sales order total can be. If the order total goes above this amount, the sales order is put on hold.
For more information on placing orders on hold and hold codes, see the Hold Codes section of the Sales Order Entry Features.
Customer credit limits and order limits can be set up in two ways.
A static credit limit and order limit can be entered for the customer in program CMCM, Customer Credit Maintenance.
A variable credit limit and order limit can be determined for the customer based on the average days to pay for the customer.
Static credit limits and order limits remain as entered, until manually changed by the user.
To set up the static credit limit and order limit in program CMCM, Customer Credit Maintenance, enter the credit limit in the upper block for the customer. On the Enterprise Details Tab, enter the order limit for the customer in the current enterprise.
Variable credit limit and order limits change according to the customer's average days to pay.
To set up the variable credit limit and order limit for the customer, in program CMCM, Customer Credit Maintenance, set the Auto Credit/Order Limit flag to on. Enter the base credit limit in the upper block for the customer. Enter the base order limit for the customer on the Total Customer Tab and Enterprise Details Tab. In program CMLM, Variable Credit Limit Maintenance, set up the average days to pay ranges.
The customer's average days to pay changes when a payment is entered for the customer on a sales order, in program ARPE, Cash Receipts Entry, or in program ARAD, AR Adjustments Entry. When the average days to pay for the customer changes to a new range as entered in program CMLM, Variable Credit Limit Maintenance, the percentage assigned to the new range is multiplied by the customer's current credit limit and order limit.
If the range switch was to a shorter average days to pay, the percentage is then added to the current credit limit and order limit, increasing them.
If the range switch was to a longer average days to pay, the percentage is subtracted from the customer's current credit limit and order limit, decreasing them.
If the customer's average days to pay remains within the same range, the credit limit and order limit do not change.
The round to value determines to what value the result of the calculation will be rounded in whole dollars.
If the range switch was to a shorter average days to pay, the result will round up.
If the range switch was to a longer average days to pay, the result will round down.
For example, suppose that the ranges are set up in program CMLM, Variable Credit Limit Maintenance, as follows. The entered average days to pay is the highest average days to pay for which the adjustment percentage is applied.
Avg Days Pay |
Adjust % |
Round to Value |
5 |
1.5 |
1 |
10 |
2.5 |
1 |
20 |
3.5 |
1 |
30 |
4.5 |
1 |
The customer's base credit limit in program CMCM, Customer Credit Maintenance, is 10,000 and the order limit is 2,000.
Suppose the customer's average days to pay changes from 0 to 9. This moves the customer into the 10 range. The new credit and order limits are calculated as follows:
Credit Limit: 10,000 * 0.025 = 250. 10,000 - 250 = 9750.
Order Limit: 2,000 * 0.025 = 50. 2000 - 50 = 1950.
Now, suppose the customer's average days to pay changes from 9 to 5. This moves the customer into the 5 range. The new credit and order limits are calculated as follows:
Credit Limit: 9750 * 0.015 = 146.25. 9750 + 146.25 = 9896.25
Order Limit: 1950 * 0.015 = 29.25. 1950 + 29.25 = 1979.25
The credit limit and order limits have a round to value of 1. Since the range switch was to a shorter average days to pay, the results are rounded up to the nearest dollar.
Credit Limit: 9896.25 is now 9897
Order Limit: 1979.25 is now 1980
If the round to value had been 5, the results would have been rounded up to the nearest 5 dollar increment.
Credit Limit: 9896.25 is now 9900
Order Limit: 1979.25 is now 1980
If the range switch had been to a longer average days to pay, and the round to value had been 5, the results would have been rounded down to the nearest 5 dollar increment.
Credit Limit: 9896.25 is now 9895
Order Limit: 1979.25 is now 1975
For static credit limits, enter the credit limit for the customer in the header. For each enterprise, enter the order limit on the Enterprise Details Tab.
For variable credit limits, enter the base credit limit for the customer in the header. Enter the base order limit on the Total Customer Tab and Enterprise Details Tab. Set the Auto Credit/Order Limit flag to on.
Set up the average days to pay ranges with percentages and round to values for each financial enterprise.