Hi Nic,
1. Use of Risk Classes: Depending on the kind of customer behavior be it on time payment , the number of dunning notices , the number of dispute cases raised against the customer , the amount overdue the customers are categorized into different kinds like Low risk customers , high risk customers .
Low risk customers : are the ones who have maintained good business and hence are reliable which means a higher credit limit can be assigned to such customers.
High risk customers: are the ones who have not maintained good business in the past and who do not hold good business and hence assigned lower credit limit.
OVA8: In OVA8 for a credit control area for each credit group and risk category checks are define which defines where exactly the credit checks needs to be applied.
Please let me know if any other information is required.
Best Regards,
Pallavi