What is credit control in SAP FICO?

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In SAP FICO, credit control refers to the process of managing and monitoring a customer's credit limit to minimize the risk of bad debts. It ensures that customers do not exceed their credit limits when placing orders or making payments. SAP provides tools for defining credit control areas, which group customers and manage their credit exposure. Credit limits can be set at various levels (e.g., company code, credit control area). During sales order processing, the system checks the customer's credit against these limits. If exceeded, SAP can block the order or trigger alerts, helping businesses maintain healthy cash flow and reduce financial risk.

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