Understanding Customer Credit Limits and Currency in Sage X3
Configurations of Parameters and General Parameters relating to Currency and Credit Control/Management for Customers

By: | Category: ERP

A critical part of managing risk within an organization is managing the credit available to customers. If you give a customer who may not be in the best financial position credit terms, or too much credit, you may have a hard time collecting what they owe. In addition, you do not want to provide a customer with more or less credit than they have been approved for, as this could trigger similar problems. You can monitor this process and prevent these situations with Sage X3 ERP credit limit and credit review capabilities.

To ensure that Customer Credit Control Management is configured correctly and that the authorized limits do yield the correct results, the following setups are important to understand how Sage X3 checks the specified authorized credit limits and prevents possible anomalies or negative balances showing up in Customer Situation inquiries, etc.

Folder Currency = RPTCUR:
The X3 folder currency is configured at folder setup and is usually that of the “holding” or main system currency for all currency transactions that will occur in the folder and is also the currency against which currency conversions will occur in conjunction with other currency parameters.

Account Core Model Ledger Currency:
The Account Core Model can contain several ledgers with variances in currency, specific to each ledger defined/specified. The Local/Legal ledger is the currency of the country in which the entity operates, which is in turn connected to (a) Chart(s) of Accounts and then further to a Company containing a Company Currency.

For each ledger defined/specified in the Account Core Model, the amounts are made available in transaction currency and its countervalue, in the specified ledger keeping currency.

When the Account Core Model is associated with a company, the accounting currency is derived from the currency in which the Main General (Legal) ledger of the core model is kept:

Customer Credit Limits and Currency

Company Currency:
The currency of the Legal Entity/Company is derived from the Account Core Model to which it has been linked.

Accounting transactions/movements are recorded in this currency, and for transactions with a different currency, it uses the transaction currency and the reporting currency.

Customer Credit Limits and Currency

Currency Rate Table – Utilized for API Feeds from Forex Websites into Sage X3:
For the conversion between currency rates the Currency rate table is used to make the “real time” rate conversions for transactions in any currency other than the local “main” currency.

This rate table must be maintained to ensure correct currency conversions. It is also the table used for the Customer Credit Management functionality to determine whether the credit limit has been reached or not. Bear in mind that the Customer Credit Limit must be set in accordance with the Folder and Account Core Model currency.

Customer Credit Limits and Currency

Customer Credit Limits and Currency

Parameter Value: TC>CUR:

Parameter – CURSHRFLD:
This is the currency in which the amounts of the base accounting records (folder currency) are expressed.

If the authorized credit control is carried out using the updated rate (in the currency rate table) and it is performed by Folder, then said control will be performed in the currency defined in the CURSHRFLD field.

The CURSHRFLD parameter currency must match that of the Folder currency to ensure that credit limit authorizations are not incorrectly calculated, which may result in credit limits being displayed with negative balances or exceeding the actual credit limit if expressed in a different currency than that of the Folder.

Even though a Customer may have a different currency than that of the Folder, the system will evaluate the authorized credit limit expressed in USD to determine if the limit is reached or not.

For example:
A BP Customer having a EUR currency is set up as such but their Authorized Credit Limit amount is not set in EUR but in USD (since my folder currency is USD). So, when I transact with this customer, the transaction date, the currency rate as specified in the currency rate table for the relevant date and the converted amount (between EUR and USD) is considered during the calculation performed by the system to determine whether the Authorized Credit Limit is reached or not and then to allow further transactions or not.

Parameter – OSTTYPCUR:
The OSTTYPCUR parameter, ‘Revised customer credit rate type’, is used to consider the Folder rate type to be used, i.e., daily, monthly, monthly average, etc. The authorized credit control amounts stored in transaction currency will then be converted to the folder currency based on the rate type selected with respect to the date of the day as explained above.

Parameter – OSTCTL:
This parameter specifies whether the authorized credit control for customers must be made by each company in turn or for all companies together (folder level). The list of possible values is: Folder, Company.
Folder: the credit control is carried out by comparing the folder credit (all companies) and the authorized credit for the customer.
Company: the credit control is carried out by comparing the company credit and the authorized credit for the customer.

Customer Credit Limits and Currency

The above highlighted parameter value is set at that of the Folder. The meaning of this setting are as follows:

When the control on credit is done at the ‘Folder’ level, the control is always applied based on the updated rate, regardless of the value of the OSTCHGTYP parameter – Rate origin WIP ctrl. parameter.
When at Folder level the CURSHRFLD parameter is used and the credit amounts stored in transaction currency are then converted into the folder currency based on the rate type selected for the current date (currency rate table and date).

When the control on credit is done at ‘Company’ level, the control/check is applied to the defined Company Currency. The specified OSTTYPCUR parameter rate type is used by the Company level control. The credit amounts stored in transaction currency are then converted into the Company currency based on the rate type (daily, monthly, etc.) selected for the current date.

The WIP is controlled with respect to the risk BP of the customer. If the risk BP is shared by several customers, it means that the WIP of each customer will be controlled the same way with respect to the risk BP by cumulating the total of the different customers movements. When the customer is associated to a different risk BP, the amount of the authorized WIP cannot be accessed. It can be viewed on the risk BP record. The displayed WIP is that of the risk BP.

BP Customer Authorized Credit Management
Maximum credit amount authorized for this customer. It is used if the customer is declared as ‘Controlled’ in the WIP control field.

Customer Credit Limits and Currency

This amount is expressed in the currency of:
• The Folder when the control is at Folder level; (OSTCTL as shown above)
• The currency of the default Common Data site of the user when the credit control applies at the Company level. The amounts are displayed in Folder currency if the user does not have a default site.

For more information on Understanding Customer Credit Limits and Currency in Sage X3, please contact us.