What is global collateral provision in SAP IS-B-RA-CL - Default Risk and Limit System?

SAP Term: global collateral provision

• Component: IS-B-RA-CL

• Component Name: Default Risk and Limit System

• Description: Can collateralize a range of financial transactions, which are defined by assigning the relevant characteristic values. Global collateral reduces the consumption of the limit in the context of the relevant limit characteristics. &EXAMPLE& You create a global collateral item for all the financial transactions of a particular business partner.

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• Key Concepts: 
  Global collateral provision is a component of the IS-B-RA-CL Default Risk and Limit System. It is a tool used to manage the risk of default on loans and other financial instruments. It allows for the setting of global collateral requirements for all loans and other financial instruments, as well as the ability to set individual collateral requirements for specific loans or instruments. 
  
  How to use it: 
  The global collateral provision component of the IS-B-RA-CL Default Risk and Limit System can be used to set global collateral requirements for all loans and other financial instruments. This can be done by setting a minimum amount of collateral that must be provided for each loan or instrument. Additionally, individual collateral requirements can be set for specific loans or instruments. 
  
  Tips & Tricks: 
  When setting global collateral requirements, it is important to consider the risk associated with each loan or instrument. Higher risk loans or instruments should have higher collateral requirements than lower risk ones. Additionally, it is important to ensure that the global collateral requirements are sufficient to cover any potential losses in the event of a default. 
  
  Related Information: 
  The IS-B-RA-CL Default Risk and Limit System also includes components such as credit limit management, credit exposure monitoring, and credit limit monitoring. These components can be used in conjunction with the global collateral provision component to further manage risk associated with loans and other financial instruments.