How to Automatically Credit Check Order at Time of Pick Ticket
Modified Date: 07/16/20
Q - We have some type O orders that we enter and ship off of during the year. For example, we have an order entered as credit card terms and have it set to Hold When Enter Order. The order will go on hold when originally entered and must be released after we receive the credit card payment. We have found that after the order has line items filled, it does not go back on credit hold to be released again. This is a problem if the terms are a prepay method. We also have the situation where when a partially shipped order is filled before the back order is filled, the second shipment of the order is not put on hold even though it exceeds the credit limit. How do we handle situations like these?
A - The short answer is we can't automatically perform a credit check when you fill a back order. But we can check during the pick ticket time. In the past, Elliott Business Software performed a credit check of an order at the time of order entry and placed the order on hold if necessary. That may work if you intend to ship that order right away (the same day as you take the order.) But this method does not work well if you intend to ship the order sometime in the future. The back order process exacerbates the situation. In between the time of order entry and shipment, you may ship additional orders to customers and they can make additional payments as well. This will affect the account balance and make the credit situation different between the time of order entry and the time of shipping.
In our view, the universal way to perform credit checking of an order should take place at the time of pick ticket (shipping.) So new features have been added to Elliott to allow users to set up whether to perform credit checking at the time of order entry or at the time of pick ticket. We keep the credit checking at time of order entry an option for backward compatibility. In our opinion, performing credit checking at the time of pick ticket is a better method and we recommend it.
Global Setup Flags
If you go to Global Setup -> COP-Ctl -> Credit Check and Release, go to the first field, "1. Auto Hold Order/Warning For Credit Problem?" The value should be a "Y." Press Enter on that field, and you should see a popup window. There are two flags that are very important:
- Check in Order Entry - The possible values are Y, N or W(Warning)
- Check in Pick Ticket - The possible values are Y or N
You currently have the first flag set to “Y” and the second flag set to “N.” See the screen below.
If you start to back order for your customers, or if you don't always ship the order right away, then you may consider setting the first flag to “N” or “W” and the second flag to “Y.” You don’t want to set both flags to “Y” because your credit department won't want to release a customer's order when it is added, and then a few hours later release it again when it is printed with the pick ticket. Since the salesperson may need to know if the customer has a credit problem during order entry, we introduced the “warning” option during order entry.
The reason you may want to set "Check in Order Entry" to "W" and "Check in Pick Ticket" to "Y" is that when the order is taken, even though the order will not be put on hold, the salesman will be warned if the customer has a credit issue. The salesman can then advise the customer accordingly before the pick ticket is printed. Of course, you can relieve the salesman from such a duty and have your credit manager talk to the customer about the payment issue. In that case, you will set "Check in Order Entry" to "N" and "Check in Pick Ticket" to "Y."
Again, performing a credit check at the time of the pick ticket process is a universal solution. This will cover all conditions, such as if an order is changed later on, partially shipped, and/or any timing issue.
Terms Code Hold Flags
In addition to Global Setup, we also have two similar flags in Terms Code file maintenance. It is possible for certain terms codes (e.g., Credit Card), that you may want to put orders "ALWAYS" on hold. In the Terms Code, you can find the following two flags:
11. Hold When Enter Order
12. Hold When Pick Ticket
For example, you may want to let the credit department charge the credit card on file when you are ready to ship (printing the pick ticket). If you have such a scenario, then set flag 11 to "N" and flag 12 to “Y.” If you want the credit manager to process the credit card at the time of order entry instead, then you will set flag 11 to "Y" and flag 12 to "N." See sample screen below.
Just to further clarify, for open terms codes like Net 30 or Net 60, it would not make sense to set flag 11 or 12 to "Y." Normally, you will leave flag 11 and 12 in Terms Code as "N."
To summarize the difference of the Terms Code “hold” flag vs. the Global Setup “check” flag, the Terms Code “hold” flag is for “always” warning or holding orders regardless of the credit condition. The Global Setup “check” flag is "conditional" based on the customer's credit condition.