I need to seek the attention of credit experts out there and give your opinion on this; potentially is a big issue for Oracle, but would like input from Credit Management people.
- In the credit check rules there is shipping horizon days, this allows for future orders to be excluded from credit exposure value.
- Our company is set to 22 days
- We have credit check set to check all orders at pick release - after pick release there is no further financial system control, goods normally delivered within 2 days, sometimes same day.
- We supply to up to 500 national locations for a single customer and each shipment has separate invoice and normal value is $500 to $2000 USD each shipment
- So we a receive a national order which splits in our system to 500 separate sales orders, the order has a scheduled shipping date of 30 days from now.
- The customer has not paid for two months and the available credit limit is approx $50k, the orders we received is valued at approximately $700k but does not go on credit hold, as the credit exposure calculation excludes it as the order scheduled shipping date is over 22 days.
- The customer contacts us a few days later and requests urgent shipment for the $700k order (which is scheduled for 26 days time)
- The Order management/logistics team pick release the orders and then dispatch all orders to the customer
- Oracle finalises its processes overnight and the next day the account balance exceeds the credit limit by $650k because the $700k was invoiced.