Credit and Comittment Limit

Hi,
What is the difference between credit limit and comittment limit?

Hello vasanthi,
CREDIT LIMIT
This is the amount of credit allowed/extended to the Business Partner.
The remaining credit is calculated as:
Remaining Credit = Credit Limit - Account Balance
COMMITMENT LIMIT:
This is the 'Credit Limit' plus undeposited cheques and predated cheques
which have already been deposited, but their payment date has not yet
been reached.
The remaining commitment is calculated as:
Remaining Credit = Credit Limit - [Account Balance + Undeposited
Collections + Deposited (Predated) Cheques]
The 'Account Balance' is typically based on the invoiced transactions
from the 'Account Balance' field of the Business Partner Master Data. To
include the delivered transactions in the 'Account Balance' computation,
tick the 'Consider Deliveries Balance' option in the General Settings ->
BP tab of the Administration module.
Cheques and cash from 'Incoming Payment' are 'deposited' in the system
using the 'Deposit' function of the Banking module.
Regards,
Wilma Wang
SAP Business One Forums team

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