Checking Credit Limit and Overdue Invoice in Distribution Companies

The large number of transactions in distribution companies requires fast handling in the Credit Limit and Overdue Invoice checking process for each customer before the order is ready to be shipped so that every incoming order can be immediately realized into revenue and cash inflow. In setting a business policy for checking credit limits and overdue invoices, the Distribution Company should consider the sequential transactions in the Order to Cash business process.

Some companies may require a Delivery Order transaction for reservations or stock bookings after the order receipt process (Sales Order) and before the goods are ready to be shipped, so the Order to Cash business process can have the following sequence:

Option 1: Sales Order → Delivery Order → Loading Sheet → Sales Shipment → Sales Invoice.
Option 2: Sales Order → Sales Shipment → Loading Sheet → Sales Invoice.

Apart from that, companies also need to consider the following issues before determining business policies for the process of checking credit limits and overdue invoices:

• Is checking credit limits and overdue invoices performed in the Sales Order transaction approval process or Delivery Order transaction approval?
• A separate Credit Exception process is required because the Person in Charge with the authority to release orders with an over-credit limit differs from the Person in Charge with the authority to release orders from customers with an Overdue Invoice.
• Does the Overdue invoice calculation for each customer refer to transactions within each branch office only, or does it apply globally to transactions from all branch offices?
• Does the Used Credit Limit value calculation refer to all transactions for each customer only, or do you also have to apply the salesman code limits according to the product division?
• Is there a difference in the maximum order transaction value that can be released by the Person in Charge at the Branch Office compared to the maximum order transaction value that can be released by the Person in Charge at the Head Office when approving a credit exception ?

Orlansoft Bill to Customer ID with multiple entity ID makes it easy to determine the branch office code that can be accessed for each Person in Charge when approving a Credit Exception. Orlansoft Setting Privilege makes it easy to separate or unify the credit exception approval process for cases of over credit limit and overdue invoices. Orlansoft Approval Set provides a feature for setting the maximum order transaction value that can be released for each user.