Setting up Purchasing Thresholds

Thresholds in SAP Commerce Cloud play a crucial role in managing the purchasing process, with a significant impact on both merchant organizations and buyers. In the context of procurement, a threshold refers to a predefined limit or value that triggers specific actions, approvals, or procedures. These thresholds help enforce financial discipline and enable strategic negotiations with customers.

The three types of thresholds discussed in this lesson are:

1. Credit Limits – set for a specific B2B unit to restrict purchases beyond a defined amount.
2. Quote Negotiation Thresholds – establish a minimum order value required before a quote request can be initiated, preventing quote requests for low-value purchases.
3. Seller Approval Thresholds – prevent vendors from approving high-value discounts without proper authorization.

These features are designed to enhance operational efficiency and reduce costs across the purchasing workflow.

Customer-specific credit limits are intended to limit the merchant's credit exposure to the customer organization. Credit Limits can be assigned to any unit for any time span. Merchants can also create alerts when credit reaches a certain amount, but these do not require merchant approval.

Credit limits are managed by the merchant using the Backoffice, and not by the customer organization's B2B administrator. If an order exceeds the credit limit set by the merchant for the B2B Unit, the order status will change to Pending Merchant Approval. Simultaneously, the assigned account manager will be notified and must approve or reject the order through the Backoffice.

Let’s explore how to configure these credit limits. Account managers from the merchant organization are responsible for setting them. To assign account managers to Rustic, the merchant admin, Vada, logs into the Backoffice Administration Cockpit.

She navigates to B2B Commerce→B2B Units, searches for the desired unit, Rustic, by entering its Name or ID, clicks the Merchant Check tab, and selects Account Manager, Alistair Thompson, in the corresponding field. Optionally, she may also assign an Account Manager Group.

Once assigned, the Account Manager, Alistair, logs into the Backoffice Administration Cockpit, navigates to B2B Commerce→B2B Unit, and selects Rustic, clicks on the Merchant Check tab, and sets the appropriate credit limit.

We see a credit limit named Monthly40KAlert90Percent.

The credit limit was created by the Account Manager, "Alistair", through the "Create B2B Credit Limit" option, where the following details were configured:

1. ID was set to Monthly40KAlert90percent.
2. Active was set to True by default.
3. Amount was set to 40,000.
4. Currency was set to U.S. Dollars.
5. Date Range as Monthly, could also be Daily or Yearly.
6. Date Period with Start and End Date was left blank.
7. Alert Threshold was set to 90, and Alert Rate Type was measured in Percent.

After entering these details, the Account Manager clicked Save to apply the credit limit.

In this example, a monthly credit limit of 40,000 USD was created. The Start and End Date fields were left empty, making the monthly credit limit effective immediately and permanent.

An Alert Threshold of 90 was set, and the Alert Rate Type was specified as Percentage. This means an alert is triggered when the unit's usage reaches 90% of the credit limit.

Calculation: 90% of 40,000 USD = 36,000 USD.

When spending reaches $36,000, a credit limit alert is triggered for the B2B unit associated with this limit.

Assuming from our previous example, Rustic has a monthly credit limit of 40,000 USD, while its subunits (Rustic Services with subunits Services East and Services West) do not have individual credit limits assigned.

• If Alejandro Navarro from Services East places an order of 4,000 USD, the system first checks Services East’s credit limit (none), then its parent unit Rustic Services (none), and then its parent’s parent unit Rustic, which is 40,000 USD. Since no credit limit is defined at the subunit levels, the parent unit’s limit applies.
• If other buyers from any of these units recently placed orders totaling 36,001 USD, the combined order total becomes 40,001 USD, which exceeds Rustic’s monthly 40,000 USD limit. This breach triggers a requirement for approval from ACME’s account manager, Alistair Thompson.

• If none of the B2B units have a credit limit assigned, the order is created without requiring any approvals from the account manager on the merchant side.
• Credit limits can be created and viewed only by admins or account managers from the merchant side. Customer-side employees like Linda do not have access to the Backoffice Administration Cockpit and cannot view or modify credit limits.
• Once created, a single credit limit of, for example, 150,000 USD per year can be assigned to multiple units individually. If configured that way, Rustic Services, Services West, and Services East might each have an assigned limit of 150,000 USD.

In later lessons, we will explore the quotation feature in SAP Commerce Cloud. For a brief introduction, when a buyer has an active cart, they can choose to request a quote. Sellers, in turn, can edit the quote request, respond with a vendor quote, or even create a quote on behalf of the customer.

The quotation process facilitates negotiation, allowing both parties to reach a mutually beneficial agreement. To manage this effectively, a Quote Negotiation Threshold is implemented, by default set to 25,000 USD (though this value is configurable by the merchant).

If the cart total is below the configured threshold, the system prevents the buyer from submitting a quote request. This ensures that quote requests are limited to high-value transactions, avoiding unnecessary administrative effort for small orders and helping merchants focus on impactful negotiations.

The following system screenshot shows Alejandro Navarro attempting to submit a quote. After clicking Request a Quote from the cart page, he receives an error message indicating that the cart value does not meet the required quote negotiation threshold.

Approval from the seller is required when the vendor quote threshold is exceeded. This threshold determines the automatic approval limit for vendor quotes submitted by sales representatives. If the cart value surpasses this threshold, it must be approved by the seller approver through the Sales Internal Approval Process on the merchant side.

The default threshold is 75,000 USD, though this value is configurable.

For example, Alejandro Navarro submits a quote request for a purchase exceeding 75,000 USD. When the sales representative logs in to provide a discount on Alejandro's quote request, the system triggers an approval requirement executed by the seller's approver, as the transaction value exceeds the Seller Approval Threshold.

Let’s combine everything we have learned so far in this lesson in a typical example:​

If Alejandro Navarro places an order exceeding 25,000 USD, he can request a quote. Once he requests the quote, it is sent to the sales representative, who may choose to offer a discount.​

If the order value exceeds 75,000 USD and the sales representative decides to provide a discount, it will breach the Seller Approval Threshold. In this case, the quote must be reviewed by a member of the Sales Approver Group within ACME, who will decide whether to approve or reject the discount.​

Finally, Alejandro has the option to accept or reject the quote.

After successful quote negotiation on the cart stage, several internal checks are triggered when the order is placed:​

• The purchase limit assigned to Alejandro and the budget of his unit’s cost center (Services East) are verified automatically.
• If either of these thresholds is exceeded, the order itself needs approval from the assigned unit approver before fulfillment starts on the merchant side.​

If the credit limit of the B2B unit Alejandro is assigned to is also breached, the process also requires ACME's account manager's approval. Only after this final approval can fulfillment start on the merchant side.​

This example demonstrates how quote negotiation between the buyer and a sales representative, Alejandro's purchase limit, the budget from his cost center, and the credit limit of his B2B unit work together to enforce financial governance within the system.

• Credit Limit: The B2B account manager role on the merchant side is responsible for establishing customer credit limits, which define the maximum amount of credit an organization or unit can access. These customer-specific credit limits help manage credit usage and prevent overcommitment. The limits are configured through the Backoffice Administration Cockpit, ensuring efficient financial management and streamlined approval workflows. Credit limits must align with organizational policies and customer agreements to mitigate operational risks.

• Quote Negotiation Threshold: A quote can only be requested if the cart total meets a minimum threshold value, which includes any applied promotions. This threshold ensures that quote requests are only triggered for substantial orders, streamlining the process. It also facilitates strategic pricing negotiations and helps maintain order efficiency and cost control.

• Seller Approval Threshold: Vendor quotes that exceed the seller approval threshold require authorization from the seller approver before they can be presented to the buyer. This ensures that larger or higher-value transactions are properly evaluated before proceeding.