What is external rating procedure in SAP (FS-BP - Business Partner)?

SAP Term: external rating procedure

• Component: FS-BP

• Component Name: Business Partner

• Description: A procedure conducted by an external provider to assess business partners in terms of their payment history, credit standing, and other criteria, for various business processes. The result of the business partner assessment is a rating that is valid for a fixed time period. &EXAMPLE& You want to check the credit standing for the business partner " Construction Ltd". To do this you establish a rating for the business partner using an external rating procedure conducted by the rating agency "Moodys".

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• Key Concepts: 
  External rating procedure is a feature of the FS-BP Business Partner component in SAP. It allows users to assign external ratings to business partners, such as customers or vendors, based on their creditworthiness. This rating is used to determine the credit limit for the business partner and can be used to assess the risk of doing business with them. 
  
  How to use it: 
  To use the external rating procedure, users must first define the external rating scale in the system. This scale can be based on a variety of criteria, such as credit score, payment history, or financial stability. Once the scale is defined, users can assign ratings to business partners based on their creditworthiness. The ratings are then used to determine the credit limit for each business partner. 
  
  Tips & Tricks: 
  When assigning ratings to business partners, it is important to ensure that they are accurate and up-to-date. This will help ensure that the credit limit assigned to each business partner is appropriate and that the risk of doing business with them is minimized. 
  
  Related Information: 
  The external rating procedure is closely related to the credit management feature in SAP. Credit management allows users to set up credit limits for customers and vendors and monitor their payment history. This information can then be used to determine whether or not a customer or vendor should be granted additional credit.