What is credit equivalent factor in SAP FS-BA-PM-CR - Credit Risk?

SAP Term: credit equivalent factor

• Component: FS-BA-PM-CR

• Component Name: Credit Risk

• Description: Key figure as a percentage that specifies which proportion of a receivable is to be included in the calculation of the exposure. The credit equivalent factor is dependent on the template type and a any business partner information.

Smart SAP Assistant

• Key Concepts: 
  The credit equivalent factor (CEF) is a component of the SAP FS-BA-PM-CR Credit Risk module. It is used to calculate the credit risk of a customer or counterparty. The CEF is calculated by taking into account the customer's creditworthiness, the amount of credit extended, and the length of time the credit is extended. 
  
  How to use it: 
  The CEF can be used to assess the risk associated with a customer or counterparty. It can be used to determine whether or not to extend credit, and if so, how much and for how long. The CEF can also be used to monitor existing customers and counterparties to ensure that their creditworthiness remains within acceptable limits. 
  
  Tips & Tricks: 
  When calculating the CEF, it is important to consider all relevant factors, such as the customer's creditworthiness, the amount of credit extended, and the length of time the credit is extended. Additionally, it is important to regularly monitor existing customers and counterparties to ensure that their creditworthiness remains within acceptable limits. 
  
  Related Information: 
  The CEF is just one component of the SAP FS-BA-PM-CR Credit Risk module. Other components include Credit Risk Analysis, Credit Risk Monitoring, and Credit Risk Reporting. Additionally, there are other tools available for assessing and managing credit risk, such as credit scoring models and stress testing.