Defining a Scoring Model Calculation for Credit Management in Oracle Fusion Applications

Scoring Models help your organization calculate a credit score for customers. That credit score, in turn, will allow your credit analyst, your credit manager, to arrive at a decision. Scoring model calculation involves several data points connected to ranges. In addition, these data points are rated in terms of importance, referred to as the Weight.  From these variables, we will arrive at a credit score that we assign to the Customer.

Data Point Ranges

·       As the name implies, Data point ranges provide a range that the data point will be assigned a Score. Take the example below:

Range	From	To	Score
Current Balance	$0	$1000	10
Current Balance	$1000	$2000	20
Current Balance	$2000	$3000	30

If the customer's balance falls between $0 to $1000 then the score would be 10, and if the customer's balance is within $2000 to $3000 then the score would be 30. A data point range can be numeric or alphanumeric. For numeric ranges, note that there shouldn't be any gaps to ensure the customer gets assigned a score. 

For alphanumeric data point ranges, its a bit more complex. The way it works is that the From and the To range must be the same. Below is an example:

Range	From	To	Score
Range 1	A2B	A2B	10
Range 2	B3B	B3B	20

This means if the data point is exactly "A2B" it gets assigned a score of 10 and if the customer's balance exactly "B3B" then score would be 20.

Data Point Weight

Defining the Data Point Weights should be thought out carefully. Spend some time thinking about the importance of the different data points as that's going to impact the score that the customers are going to receive. Data Point Weights should reflect your organizational policy as you define the scoring model. Depending on how your organization see things, it may assign more weight to the Day Sales Outstanding metric versus the Overdue Amount, or the number of delinquent transactions.

Data Point	Weight in Percentage
Number of Invoices Paid Late	25
Days Sales Outstanding	25
Total Amount Due	50

In the example shown above, the Total Amount Due holds the highest importance, hence it is given the largest weight in percentage. As for the other data points, they are equally important and are assigned only 25% of the total data point weight.

Data Point Score

A sample Data Point score in a Case Folder would be shown below:

Data Point Category	Data Point	Value	Points Earned
Billing and Payments	Percentage of Invoices Paid Late	57	50
Billing and Payments	Days Sales Outstanding	15	60

The value corresponds to the Data Point range below:

Data Point	From	To	Score
Percentage of Invoices Paid Late	0	50	50
Percentage of Invoices Paid Late	51	100	100
Days Sales Outstanding	0	3	10
Days Sales Outstanding	3	6	20
Days Sales Outstanding	6	10	30
Days Sales Outstanding	10	15	60

Below is a quick demonstration of Defining a Scoring Model for Credit Management in Oracle Fusion Applications:

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