Under ‘STATIC Credit Check,’ the system calculates the credit exposure of a particular customer as the total of:

• Open order (delivery not yet done)
• Open delivery (value of deliveries yet to be invoiced)
• Open billing documents (not transferred to accounting)
• Open items (AR item not yet settled by the customer)

Customer’s credit exposure is not to exceed the ESTABLISHED credit limit.
The ‘Dynamic Credit Check’ is split into two parts:

• Static limit: Total of open items, open billing, and open delivery values.
• Dynamic limit (Open Order Value): The value of all undelivered and partially delivered orders TOTALLED and stored on a time-scale in the future (10 DAYS, 1 week, etc.) known as a ‘horizon date.’ During the ‘dynamic credit check,’ the system will ignore all orders beyond the ‘horizon date.’ The sum total of ‘static’ and ‘dynamic’ limits should not exceed the credit limit established for the customer.

Under ‘Static Credit Check,’ the system calculates the credit exposure of a particular customer as the total of:

Customer’s credit exposure is not to exceed the established credit limit.
The ‘Dynamic Credit Check’ is split into two parts: