Business specific Credit Checking in Oracle Order Management Cloud

Abstract

Credit Check is one of the most important aspects in 'Order to cash' flow. A diligent credit check on the front end of O2C minimizes issues that could occur as you reach the end of the process. It is an on-going process where customer's credit worthiness should be monitored continuously during the entire fulfillment cycle.

Oracle Cloud Order Management provides Credit check feature to help streamline the ordering process and minimize the financial risk that an organization can assume. Though it provides a robust automated credit check mechanism, the out of the box feature may not be able to address some business specific credit monitoring requirements. This blog highlights some common business requirements in Oracle Cloud Order Management credit check that can't be fulfilled using product's standard functionalities. Then it focuses on some solutioning ideas which can help achieving those requirements.

Credit Check in Oracle Order Management Cloud: Introduction

Oracle Cloud Order Management screens each sales order and verify that the customer has credit available that's sufficient to cover the cost of purchase. This screening can be done on each sales order or on each order line, and can hold order lines that failing credit check. Credit authorization failure sends notification to receivables credit management and creates a case folder which can be accessed by the credit analysts. case folder is a place in Accounts Receivable that includes customer information such as credit limit, credit rating, etc. and the sales order. Credit Analyst can approve or decline the authorization request for the order transaction based on financial risk assessment of customer profile. An approval or increasing credit limit can release the order from hold and lines can be progress forward. Whereas No action or decline will retain the order hold.

While the Order is on credit hold or if the hold is released manually in OM without authorization approval, processing of revisions is not allowed. Submitting any revision sends a notification to the Receivables Credit Management for pending authorization and puts the sales order on 'Credit Review Pending' status. At this point of time, either available credit needs to exceed open authorization or credit analyst needs to approved that to release order from hold.

Use cases and Challenges with OM Cloud Standard feature

Fusion Cloud out of the Box feature needs Credit Management functions enabled to validate credit worthiness of customer for a sales order transaction during the entire Order fulfillment cycle. This may not be able to cater the business requirements for some organizations having different process for credit authorization. Some of the common challenges with Cloud credit check may arise as:

• Credit Management module can't be used due to licensing or any other reason. That means the credit hold should be managed within Order Management.
• Credit Hold should stop only a specific set of fulfillment activities but not all. Some business processes want to prevent only Picking, Shipping and Invoicing tasks with credit hold. Material planning tasks such as scheduling, reservation, supply order creation should be allowed to support a long fulfillment cycle. Stopping initial activities can delay the fulfillment process.
• Credit Hold should not stop revisions while the order has failed credit check. Standard functionality needs credit Management if authorization fails at order revision resulting in a deadlock situation. That can impact reporting, planning or procurement.
• Credit re-authorization should not block revisions after the hold is released once. In case re-authorization fails here, the order goes on deadlock and needs Credit Management module.
• Once the credit hold is released, Credit check and hold process should re-trigger only if order total changes.
• Credit Hold should be applied at the order header level but not at line level. Organizations having orders with large number of lines may find it difficult to validate holds on lines and not like to release hold selecting all the lines across orders together. Instead, it would be easier to apply the hold at the header level.
• Sales Order has long fulfillment cycle where credit check needs to be re-triggered on real-time before arranging shipments to check if credit authorization has expired. This process should work on revisions also without using credit management module.

Solution for business specific credit checking

The Out of the Box Credit Check functionality in OM Cloud can't be customized to address the business challenges mentioned above. Following options can be considered to overcome the limitations discussed and adopt business specific credit checking:

·         Verify Credit authorization during fulfillment:

When: This approach can be considered if

o   Picking and shipping tasks have to be prevented for failed credit authorization.
o   Screening needs to be done at the line level.
o   Credit authorization has expired for a pre-credit checked order.
o   Revisions should be made while line has failed credit check.
o   Activities such as scheduling, reservation, supply creation should be always allowed.

o   Use of Receivables Credit Management feature is not scope.

o   Hold only a specific set of activities.
o   Allow order revisions with hold.
o   Re-apply the hold only if order total change fails re-authorization on revision.
o   Apply the hold on header level.

o   Use of Receivables Credit Management feature is not in scope.

1.       Turn Off Out of Box Credit Checking in OM.
2.       Define a custom credit hold that can temporarily stop only a specific task like shipping and invoicing.

3.       Use extension for credit checking:

a.       If credit hold is already present, then don't do anything.

b.       If credit hold was applied earlier but released, then check if the current order total is same as previous version's total. If not same then check credit.

c.       If credit hold wasn't applied earlier, then check credit worthiness.

d.       Check Credit worthiness calling webservice in the same extension.

 4.       If authorization fails, then call another webservice to apply custom credit hold.

o   Customization is not in scope.

o   Number of revisions that can re-trigger credit check again are usually less.

o   Credit hold should prevent all orchestration activities.
o   Revision creation is required without re-authorization.

o   Use of Receivables Credit Management feature is not in scope.

o   Sales Order has long fulfillment cycle where credit check needs to be re-triggered before arranging shipments to check if credit authorization has expired.
o   Credit checking is needed at the order booking also for initial screening.
o   Revisions should be allowed while line has failed credit check.
o   Use of Receivables Credit Management feature is not in scope.
o   Finance business doesn't want to increase the credit limit for the customer.

o   An external integrating application such as SOA or OIC can be used.