SAP-Credit-and-Collection-management.pdf

SAP Credit and CollectionManagement Vidar Greve Johannesson [email protected] Agenda 1.SAP Financial Supply Management – Business Issues and value proposition 2.SAP Credit Management 3.SAP Collection Management 4.Summary © 2011 SAP AG. All rights reserved. www.scensum.com. 2 Does this Sound Familiar? Copyright 2002 by Randy Glasbergen www.glasbergen.com © 2011 SAP AG. All rights reserved. www.scensum.com. 3 All rights reserved.com. www.scensum. 4 .Cash Flow Cycle Order placed Sale + Delivery + Invoice Delivery + invoice Actual payment date Days In Inventory Days Sales Outstanding Days In Payables Days In Receivables time (average time to payment of supplier) Cash payment for inventory (average customer payment time) Expected payment date Cash Flow Cycle © 2011 SAP AG. All rights reserved.Free Up Cash with SAP FSCM Companies have big potential to free up working capital by applying best practices 321 bn $ 91 bn $ Painpoints in Order to Cash Cycle Cash application 18 % Accessing information 18 % 71 bn $ Payment reconciliation 26 % 49 bn $ 110 bn $ Managing customer behavior 28 % Invoice presentment 29 % Current Working Capital Payables Receivables Inventory Best Practice Working Cash NPV released from best practice: 211 bn USD Capital Discrepancy resolution 47 % Source: McKinsey (sample of 24 corporate clients) Source: Paystream Advisors. www. 2007 (percentage of highest pain scores) With SAP Financial Supply Chain Management customers were able to • Reduce the number of bad debt using SAP Credit Management • Reduce efforts and costs for invoicing using SAP Biller Direct • Reduce DSO through improved discrepancy resolution with SAP Dispute Management and SAP Collections Management © 2011 SAP AG. 5 .com.scensum. workflow or prioritization  No integration with GL or AR systems © 2011 SAP AG.Typical Barriers of the Order-to-Cash Cycle  Independent functions  Fragmented and inefficient  No coordination in collections/ dispute resolution  Paper-based and laborintensive  Inconsistent credit policies across divisions  Lack of standardization  Poor insight into customer Credit risk High Cost of Finance Operations High Bad Debt Risk High DSOs  Fragmented stand-alone systems  No insight into process bottle necks  No workflow or data management  Lack control over processes. 6 . All rights reserved.com. www.scensum. 7 .Overcome Your Barriers by Optimizing the Order-to-Cash Cycle with SAP Optimizing the Order-to-Cash Cycle Barriers Insight & Control Organization Processes Finance Strategies SAP Solutions  Monitor performance of financial processes  Implement financial controls and fraud detection mechanism  Control global credit risk  SAP CPM  Establish greater cross-functional coordination  Define global customer credit policies  SAP ERP Financials  Establish clear lines of ownership and escalation policies  SAP Dispute Management  Organize unstructured data and collaborate via workflows  Streamline labor-intensive processes via standardization and automation  SAP GRC  SAP Credit Management  SAP Credit Management  SAP Collections & Dispute Mgmt  SAP Biller Direct  SAP Accounts Receivable  Straight-through payment processing IT Systems © 2011 SAP AG. suppliers and banks  Integrate collections / dispute systems with accounting and AR systems  Enterprise Service Bundles  SAP Biller Direct  SAP ERP Financials  SAP NetWeaver/SWIFT integration www.scensum.  Utilize open standards to connect financial systems with customers. All rights reserved.com. Agenda 1.SAP Financial Supply Management - Introduction 2.SAP Credit Management 3.SAP Collection Management 4.Summary © 2011 SAP AG. All rights reserved. www.scensum.com. 9 Agenda 1.SAP Credit Management – Introduction 2.User Interface of the Credit Manager 3.Master Data 4.Credit Rules Engine 5.Reporting & Mass Change © 2011 SAP AG. All rights reserved. www.scensum.com. 10 Financial Supply Chain Management with SAP SAP Credit Management Check Credit Worthiness Issue Invoice SAP Biller Direct (Electronic Bill Presentment and Payment) Forecast Cash Finance Working Capital SAP Dispute Management Resolve Disputes Collect Cash SAP Collections Management Settle & Pay Reconcile Order-to-Cash © 2011 SAP AG. All rights reserved. www.scensum.com. 11 credit.Credit Management – Business Facts Year 2007: approximately 129.com. All rights reserved. * Source: Creditreform www. 12 .scensum. and finance departments is very time-consuming A customer is treated differently in different business units within the same company © 2011 SAP AG.822 corporate bankruptcies in Western Europe* Average delay in payments for Western Europe between 8 days and 21 days* Ineffective credit management in distributed sales systems Information needed for credit decisions is spread out all over the company No credit history available when doing business with new customers Communication between sales. 13 . All rights reserved.scensum.SAP Credit Management – Focus © 2011 SAP AG.com.  System to implement a company wide credit policy  Central credit management in a distributed system landscape  Monitor a customer‟s credit exposure in one central system  Customer scoring using own scoring rules creating new reports and queries  Automatically calculate and assign a customer-specific credit limit  Interface to external credit agencies  Web-based access to credit information for sales people  Distribute customer master data via Master Data Management (MDM)  Strategic credit analysis with predefined reports  Credit Manager Portal to speed up credit decisions  Improves productivity by automating credit decision process and focusing on the processing of exceptions www. 14 . www.How to Manage the Credit Risk ? Collect internal and external information about the customer Evaluate and classify the customer according to this information Assign a credit limit according to the risk assessment of the customer Collect information about the credit exposure of business transactions with this customer Ongoing monitoring of the credit limit usage Hedge business transactions for high risk customers Monitor early warning signs Plan sales and marketing activities for low risk customers Compare credit portfolio with companies‟ strategic goals Share credit information with sales © 2011 SAP AG.com.scensum. All rights reserved. 15 .Default Probability Sets Risk Hedging Default Probability 30 % Cash on delivery Letter of credit 20 % Advance Payment Risk Class III Check by ext.scensum.com. Risk Class I = Customer Very Bad Score www. All rights reserved. Credit Agency 10 % Risk Class II Invoice Very Good © 2011 SAP AG. com.Treatment of Clients Depending on Sales and Default Risk Sales with client High Sales Possible Actions:  Lower sales prices  Reduce use of hedging instruments … Customer A Best Case Client: Customer C  Intensify Customer Relationship Low Sales Possible Actions:  Reduce business with this customer  Change dunning procedure  Permanent credit risk monitoring Customer B Possible Actions:  Increase sales prices  Increase use of hedging instruments … Customer D High Risk © 2011 SAP AG.scensum. All rights reserved. 16 . Low Risk Risk of default www. Functional Overview Credit Limit Management  Implement a company wide credit policy  Manage a customer credit profile  Central credit management in a distributed system landscape Credit Case  Credit case for structured processing of credit limit applications  Track status and result of credit limit applications Credit Rules Engine  Categorize customers by scoring rules  Automatically calculate and assign a customer-specific credit limit  Credit check rules  Model and implement own customer credit score cards Credit Information  Interface to external credit agencies  Input parameters for scoring rules  BW Content Credit Manager Portal  © 2011 SAP AG.scensum. Role-based access to credit management information and analysis www.com. All rights reserved. 17 . www.scensum.com. 18 . All rights reserved.Credit Limit Management Functions  Manages the credit profile of a customer  Monitor credit exposure / limit in a central system  Web-Based access to customer„s credit profile  Rules Engine for implementing own scoring and limit rules  Scalable platform to use in B2B and B2C Scenarios  Score customers and vendors Alert Alert Credit Limit January March February Credit Exposure April Business Benefit  Imlement company wide credit policy  Early identification of default risk  Reduce processing costs by automating credit decisions © 2011 SAP AG. Credit Case Functions Virtual Folder to track credit applications A credit case contains        Major customer master data & credit profile Status Organizational data Documents Orders Notes Inbox A credit case can be sent from user to user It is linked to the customer credit data SAP Workflow Integration © 2011 SAP AG. All rights reserved. Business Benefit Sales people can enter an application for credit limit change Track status of the application Inform sales when decision is made www.scensum. 19 .com. Close credit limit application Send notification to sales assistant (workflow) www.Create Limit Application (Example) Customer exceeds credit limit frequently Sales assistant enters credit limit application (credit case) Send credit case to financial analyst Assign credit manager manually / automatically Send workflow item to financial analyst Send workflow item to credit manager Send back credit case with financial data Need more information? yes no Approve / reject credit limit application Change limit in master data (manually) © 2011 SAP AG. All rights reserved.com. 20 .scensum. com. All rights reserved.scensum. 22 .Creating Credit Limit Request Select Business Partner Define details Add note Add Attachments Review and save Confirmation © 2011 SAP AG. www. www.scensum.com. 23 .g. CRM) © 2011 SAP AG.Integration Functions Central credit management in a heterogeneous system landscape Import exposure information from various systems Perform credit limit check in real-time Integrate services from external credit agencies into the credit decision process Distribution of customer master data by MDM Business Benefits Minimal effort for connecting SAP and non-SAP Systems and low TCO due to XI Seamless integration of external services increases user productivity Real-time credit limit check guarantees consistent credit decisions Provide customer credit profile to other applications (e. All rights reserved. www. credit and accounting department  Sales people can access credit information from customer site © 2011 SAP AG.scensum. 24 . All rights reserved.Credit Manager Portal Functions  Role based application providing analytical tools needed for quick credit decisions  Single point of access for all relevant credit information  Work lists inform the user about to-do‟s  Platform to make credit information available for sales people Business Benefits  Improves user efficiency due to consolidation of various information sources  Improves communication between sales.com. All rights reserved.com. 25 .scensum. www.Credit Analysis Functions  Company-wide monitoring of credit risk  Analysis of customer payment and order behavior  Alert on high risk customers  Risk structure analysis of the customer base by country / business unit / customer group Business Benefits  Proactive credit management  Identification of risks before customer gets insolvent  Hedging of high risk customers reduces unexpected losses  Aim marketing and sales activities to lowrisk customers  Drive price policy by a customer risk category © 2011 SAP AG. All rights reserved.... Original XML Document is stored in the document management system that is used by the SAP Business Partner www..Integration with External Credit Agencies SAP Enterprise Portal Credit Manager Portal Real Time SAP Credit Management D&B Creditreform XML Real Time External Credit Information System SCHUFA D+B Creditreform © 2011 SAP AG.com...scensum. 26 . . 1xSD) Distributed system-landscape (multiple FI.Comparison R/3 Credit Management with SAP Credit Management R/3 Credit Management SAP Credit Management Master Data FI-AR Account SAP Business Partner FI Data SAP Business Partner FI-AR. BW Content) and OLTP reporting Connectivity for non SAP-systems Not available PI Server . FI-CA. others Monitor Credit Exposure Only for simple systemlandscape (1xFI.g. SD and CRM systems) Customer Scoring/Rating Not available Credit Rules Engine External Credit Information (e. D&B) Only through partner products any XML based credit information service Rule based definition of credit limits Not available Credit Rules Engine Workflow Only in SD Create Workflow for any Credit Event Analysis Customer fact sheet Credit Manager Portal (incl. User Interface of the Credit Manager 3.scensum. 28 . www.SAP Credit Management – Introduction 2.Agenda 1.Reporting & Mass Change © 2011 SAP AG.Credit Rules Engine 5.Master Data 4.com. All rights reserved. © 2011 SAP AG.Work Center for SAP Credit Management – Modeling the Role of the Credit Manager Each Work Center represents a certain area of activity:  Worklist  Processing of credit limit requests  Processing of blocked sales orders  Processing of blocked customers Each work center provides access to a range of work lists. pre-filled reports and services appropriate to the tasks performed by the user.scensum. 30 . www.com. All rights reserved. All rights reserved. score etc. changes in risk class.Worklist Detailed Navigation = View Switch Links launch applications in Activity Window (user can also start applications related to master data and mass data processing here) © 2011 SAP AG.scensum.com. 31 .g.) User can view details and access directly the dialogue processing of business partner maintenance www. User receives notifications on credit events (e. Credit Limit Requests Overview Detailed Navigation = View Switch Links launch applications in Activity Window © 2011 SAP AG. 32 . All rights reserved. www.com.scensum. Pre-delivered default queries with customized values User can access directly the dialogue processing of the respective request. All rights reserved. 33 .Blocked Customers Detailed Navigation = View Switch Links launch applications in Activity Window © 2011 SAP AG.scensum.com. Pre-delivered default queries with customized values Action button leads the user directly to the exact location of the block information in the business partner master data www. Credit Rules Engine 5.SAP Credit Management – Introduction 2.User Interface of the Credit Manager 3.Reporting & Mass Change © 2011 SAP AG.Master Data 4. 35 . All rights reserved. www.scensum.com.Agenda 1.Integration with External Information Providers 6. company codes). external rating. 36 .com. The credit profile is used for the central storage of customer data relevant for risk assessment (scoring. Credit segments can map various areas of a company (such as sales area. It consists of the credit profile data and credit segment data. countries.scensum.Master Data in SAP Credit Management Credit data is a component of SAP Credit Management and is stored in SAP Business Partner. They are used for area-specific administration of credit limits (and their utilization) and to store information on the payment behavior of the customer. © 2011 SAP AG. www. The corresponding credit segment data is used for credit checking when the order is created or on delivery within a company area. credit check rule). By using relationships you have the possibility of creating customer hierarchy. risk class. All rights reserved. g. industry.com. country) Credit Check Rule: Rules that define how a customer is credit checked (e.g.Business Partner in SAP Credit Management Scoring Rule: Rules that define how a customer is scored (e. 37 . External Rating from D&B www. All rights reserved. D&B. static / dynamic check. legal form. oldest open item …) © 2011 SAP AG.scensum. 000 € Is the higher level credit management account of … © 2011 SAP AG. All rights reserved.Relationship Higher-level credit management account of … Business Partner 4711 Segment 0000 Credit Exp.500.000 € Total Credit Exposure: 2.: 1.000 € Total Credit Exposure: 700.: 700.000 € Is the higher level credit management account of … Business Partner 4712 Segment 0000 Credit Exp. 39 .scensum.100.: 1.000 € Business Partner 4713 Segment 0000 Credit Exp.com.100. Total Credit Exposure: 3.000 € www.000. Master Data 4.Credit Rules Engine 5.scensum.com. 40 .Reporting & Mass Change © 2011 SAP AG.SAP Credit Management – Introduction 2.Agenda 1. www.User Interface of the Credit Manager 3. All rights reserved. www.Credit Rules Engine Create scoring formula and credit limit formula by using the formula editor. 41 . The risk class is determined directly from the score. specific score ranges which do not overlap are assigned to each risk class. Customer-specific process chains in SAP Credit Management can be defined through events which trigger follow-up actions © 2011 SAP AG. which is assigned to each customer in the credit profile. For the check rule. This may include the static check of the credit limit or the check of the highest dunning level. All rights reserved.scensum. the system determines the steps which are taken to check the creditworthiness of a customer when a sales order is created. One scoring formula and several credit limit formulas (for each credit segment) are assigned to the rule for scoring and credit limit calculation.com. In customizing. Parameters (for example business partner data) and functions are used as input parameter. 3 www.5 Int.... ATL <20 Student 17 NYC 20-30 Student 18 ... Scoring S = 19..Calculate Internal Credit Scoring (Existing Customer) Customer Address Birth Date RegionAge GroupProfession Score ..scensum. (days after Due) Score PY 0 0 <5 4 <10 8 <20 15 . All rights reserved. Credit Rules Engine Credit Agency I AAA Dunning IF (Black List Entry exists): S=0 ELSE S = (2*A + 3*B + 5*C 5*C)+/ 5*D) 10 / 15 Score DU 0 3 .com.. Paym..  Score D = SV – DU – PY = 3 Black List © 2011 SAP AG. 43 . 27.. Profession Sales Volume Credit Information Score C: 17 Score D: 3 Mapped Score A: Sales Volume Score SV 0 – 100 101 – 300 301 – 1000 0 5 10 Dunning 0 1 AAA = 50 Credit Agency II Mapped Score B: B+ B+ = 30 Payments . Agenda 1.Credit Rules Engine 5. www.Reporting & Mass Change © 2011 SAP AG. All rights reserved.com. 47 .Master Data 4.SAP Credit Management – Introduction 2.scensum.User Interface of the Credit Manager 3. risk class. All rights reserved. such as creating warning lists.Reporting Ad hoc reporting in SAP Credit Management Various reporting and analysis options are available in SAP Credit Management. www. or credit limit for the first time for a number of customers © 2011 SAP AG. such as calculating the creditworthiness.com.scensum. analyzing liability data for one or more customers. 48 . or logging the last order-related credit check for a customer Various mass changes are available in SAP Credit Management. 80% for early warning list © 2011 SAP AG.com. 50 .scensum.Report UKM_MASS_DSP2 UKM_MASS_DSP2 – Report for Credit Segment Data: Credit Limit (current /calculated) + validity date Blocked Customers in SAP Credit Management Customers to monitor Resubmission Date Assigned Credit Analyst Plus all UKM_MASS_DSP1 Fields e. www.g. All rights reserved. Report UKM_MALUS_DSP UKM_MALUS_DSP – Report for Credit Limit Utilization Credit Exposure (%) Credit Limit Still Available / Amount by which credit limit exceeded (absolute) Customer Credit Group Credit Analyst or Group Resubmission Date Blocked Customer in SAP Credit Management © 2011 SAP AG. All rights reserved. www.scensum.com. 51 Report UKM_VECTORS UKM_VECTORS – Payment Behavior KPIs Total Sales Volume in last 12 months Gross Total of Cleared Items with Cash Discount Not Taken Gross Total of Cleared Items without Cash Discount Loss Av. Arrears with cash discount payments Av. Arrears without cash discount payments © 2011 SAP AG. All rights reserved. www.scensum.com. 52 Report UKM_COMMITMENTS UKM_COMMITMENTS – Display / Correction of Commitment Data (Credit Exposure) Display of commitments, for example, by commitment type or credit horizon Detail view of commitment items (e.g. open items, open orders ) Due date of open items and open orders Navigation © 2011 SAP AG. All rights reserved. www.scensum.com. 53 56 . All rights reserved.SAP Collection Management 4.Agenda 1.Introduction 2.com.SAP Credit Management 3.SAP Financial Supply Management . www.Summary © 2011 SAP AG.scensum. Agenda 1.SAP Collections Management – Introduction 2. www.Process „Collection of Receivables‟ 3.Analytics © 2011 SAP AG.scensum. 57 . All rights reserved.Process „Data Synchronization and Creation of Worklist‟ 5.Process „Control Collections of Receivables‟ 4.com. Financial Supply Chain Management with SAP SAP Credit Management Check Credit Worthiness Issue Invoice Order-to-Cash SAP Biller Direct (Electronic Bill Presentment and Payment) Forecast Cash Finance Working Capital SAP Dispute Management Resolve Disputes Collect Cash SAP Collections Management Settle & Pay Reconcile . costly and cumbersome process  Select and prioritize customers to be collected  Search for account information  High volumes © 2011 SAP AG. www. All rights reserved.Collections Management – Important Business Issue Increasingly bad payment behavior  Increasing Days Sales Outstanding (DSO)  No reaction on automatic correspondence like dunning  Financial situation influences customer relationship Collections Management today is mostly a time-consuming.com.scensum. 60 . All rights reserved. 61 .scensum.com. www.What Are the Business Objectives? Increase share of collected receivables  Reduce Days Sales Outstanding (DSO)  Avoid write-offs  Increase payments on time Decrease cost of cash collection Improve Customer Relationship Management  Retain valuable customers and convert difficult customers by providing the right interaction in delicate scenarios  Provide complete picture of customer history  Increase customer satisfaction © 2011 SAP AG. scensum. stratification and prioritization of customers according to collection strategy  Daily worklists improve user productivity and efficiency SAP Collections Management offers special collection procedures to document and react on customer contacts  Promise to pay agreements  Dispute cases (via integration with SAP Dispute Management)  Resubmissions  Customer contacts Collection managers will find a variety of options to control the collection of receivables  Define and adapt strategies  Maintain collection groups  Workforce management by reassigning worklist items and monitoring degree of worklist processing © 2011 SAP AG.  Worklists ensure evaluation. 62 .com. www. identification.How Does SAP Collections Management Help? SAP Collections Management provides collection strategies that allow to select and prioritize customers for the collection of receivables  Collection strategies are the basis for the automatic creation of daily worklists for collection specialists. All rights reserved. SAP Collections Management – Introduction 2.Agenda 1.Process „Data Synchronization and Creation of Worklist‟ 5.Process „Control Collections of Receivables‟ 4. www. All rights reserved. 63 .scensum.com.Process ‘Collection of Receivables’ 3.Analytics © 2011 SAP AG. Two Roles: Collection Manager and Collection Specialist Collection Group Collection Specialist Collection Manager Main Tasks: Define or adapt collection strategies Keep collection groups up-to-date Collection Specialist Adjust business partners Supervise collection process Collection Specialist Main Tasks (are all about processing the daily worklist):  Prepare customer contact  Contact customer  Document customer contact © 2011 SAP AG. www. All rights reserved.com.scensum. 64 . com. 65 .scensum.‘Data Synchronization and Creation of Worklist’ Process Replicate Customer Master Data  Master data synchronization  Contact persons  Collections Management specific data © 2011 SAP AG. Transfer Data from Accounts Receivable  Initial transfer  Periodic transfer  Selected transfer Create Worklists  Create worklist items  Distribute unassigned items Monitoring  Monitor master data synchronization  Monitor parallel runs www. All rights reserved. Prepare Customer Contact  Key figures per worklist item  Valuation detail  Due date grid  Invoice overview  Overview of customer account  Overview of past payments  Overview of past contacts  Check resubmissions Contact Customer  Promises to pay  Dispute cases  Resubmissions  Customer contact www.scensum.Functionality Supporting the ‘Collection of Receivables’ Process Collection Specialist Access Worklist  Automatically created  Personalization  Search function  Statistics © 2011 SAP AG. 66 .com. All rights reserved. www. Customers are valuated and prioritized according to collection rules in a collection strategy.Collection Worklist Each collection specialist gets a daily worklist containing all customers who should be contacted. All rights reserved.scensum. Detail valuation of customer per collection rule Aging of receivables per selected customer Link to business partner Assign items Refresh worklist Display completed items Search for other business partner Summarizes information concerning  Customer account in Accounts Receivable  Past collection activities  Credit Management © 2011 SAP AG. 67 .com. www. 68 .com. All rights reserved.Main Features of the Collection Worklist Automatic creation of worklists based on collection strategies Summarized information per customer regarding Customer account in Accounts Receivable Past collection activities Credit Management data Detailed information per customer about  Valuation according to collection strategy  Aging of the customer‟s receivables (due date grid) Personalize worklist by setting as default Search function (view other customer account or other worklist) Navigation to business partner master from the worklist Statistics about degree of worklist processing © 2011 SAP AG.scensum. 69 . All rights reserved.Worklist as Starting Point for Customer Contact 1 Select worklist item and view data Maximum amount to be collected 2 View valuation of customer according to collection strategy 3 © 2011 SAP AG.com. View aging of customer’s receivables www.scensum. ‘Process Receivables’ Function – Main Area During Contact To contact the customer. 70 . All rights reserved. Navigation © 2011 SAP AG. the collection specialist navigates from the selected worklist item to the „Process Receivables‟ function.com.scensum. This function offers detailed customer information and supports various collection activities. www. open amount.Process Receivables – Invoices (Open) On the „Invoices‟ tab page the collection specialist gets an overview of all open invoices of a customer in a collection segment. disputed amount. amount promised to pay. 71 . www.scensum.com. All rights reserved. state of promise etc. Customer Data View invoice history of selected invoice View promises to pay per selected invoice View dispute case(s) per selected invoice Customer Contact Person Display or print billing document in PDF format © 2011 SAP AG. Per invoice the status is displayed including the amount invoiced. All rights reserved. www.Example – Printing Invoice in Worklists © 2011 SAP AG.com.scensum. 72 . 73 . The payment history lists all invoices that have been fully or partially paid by the selected payment.scensum. Payment History for selected payment All documents related to the payment are highlighted © 2011 SAP AG. www.com.Process Receivables – Past Payments The overview on past payments allows collection specialists to check past payments of the customer he or she is contacting. All rights reserved. com.scensum. 74 . Change promise to pay Withdraw promise to pay www. You can navigate to the details of a selected promise to pay. change or withdraw a promise to pay.Process Receivables – Promise to Pay The overview on promise to pay shows all promises to pay that were given for the open invoices displayed on the „invoices‟ tab. All rights reserved. View promise to pay © 2011 SAP AG. You can navigate to a selected dispute case and – if you have the authorization – process the dispute case. you can display which invoices are assigned to the dispute case. 75 .com.Process Receivables – Dispute Case The overview on dispute case shows all dispute cases that are related to the open invoices listed on the „invoices‟ tab. Furthermore. All rights reserved. View assigned invoices www.scensum. Navigate to selected dispute case © 2011 SAP AG. scensum.com.Collection Activities – Documenting Customer Contact The collection specialist has the following possibilities to document his or her collection activities Create promises to pay Create dispute cases Create resubmissions Document the customer contact itself © 2011 SAP AG. www. All rights reserved. 77 . Promise to Pay Process Hello Mrs. McFee. www. Collection Specialist Tom McFee Accounts Payable Manager Sue Brown Promise to Pay Promised amount Promised to date Promised by Note Invoice reference … Tom McFee enters promise to pay in the system © 2011 SAP AG. thank you for reminding me. We will pay the full amount by Wednesday next week. Brown.scensum. 78 . did you recognize that invoice 4711 has been overdue since 4 weeks? Hello Mr.com. All rights reserved. scensum.Promise to Pay in SAP Collections Management Customer promises to pay one or several invoices Collection specialist creates promise to pay  Creation possible for one or several invoices  Promise is traced on single invoice level Collection specialist renews promise to pay  Existing promises can be renewed  Renewed promises get higher promise level Promises to pay are updated by incoming payments State „kept‟ if incoming payment equals promised amount State „partially broken‟ if payment amount is smaller than promised amount Promises that are not kept get state ‘broken’ Customers with broken promises will automatically appear on the worklist if defined so in the collection strategy © 2011 SAP AG. 79 . All rights reserved.com. www. © 2011 SAP AG. If the promised amount is less than the proposed amount.com. www. the promised amount can be distributed to the invoices. All rights reserved. 80 .scensum. The total of all open amounts is proposed by the system as promised amount.Create Promise to Pay The collection specialist can create a promise to pay in the system for the selected invoices. The collection specialist can enter all necessary information such as dispute reason and a note. 82 .Create Dispute Case The collection specialist can create a dispute case for the selected invoices. © 2011 SAP AG. www. The total of all open amounts is proposed by the system as disputed amount.scensum. All rights reserved.com. scensum. 83 . The customer will re-appear on the worklist at the resubmission date. All rights reserved.com. Create resubmission Overview of existing resubmission First line of note Suppress customer from worklist until resubmission date © 2011 SAP AG. It is also possible to suppress a customer from the worklist until the resubmission date. They can enter a note and a resubmission reason. www.Resubmission Collection specialists can set a resubmission for a customer. scensum.Create Customer Contact The collection specialist can document the outcome of the whole customer contact. www. A default note is set by the system and can be enhanced by the specialist. promises to pay and resubmissions created during the contact will be automatically assigned. Controls if worklist item remains on worklist or will be removed Default note automatically created by the system © 2011 SAP AG. All rights reserved.com. Dispute cases. 84 . All rights reserved.Roles and Processes 3.com.Analytics © 2011 SAP AG.Process „Collection of Receivables‟ 4.Agenda 1.Process „Data Synchronization and Creation of Worklist‟ 6.SAP Collections Management – Introduction 2. 85 .scensum.Process ‘Control Collections of Receivables’ 5. www. 86 .scensum. Maintain Collection Groups  Collection group Adjust Business Partner Master Data  Business partner  Collection profile Supervise Collection Process  Allocate worklist items  Control statistics www.Functionality Supporting the ‘Control Collection of Receivables’ Process Collection Manager Define Collection Strategies  Collection rules  Collection strategy © 2011 SAP AG. All rights reserved.com. scensum. www. 88 . All rights reserved.Collection Strategies Collection strategies comprise company-specific rules for collecting receivables Collection strategies have the following purpose  Determine which customers are to be contacted in Collections Management (basis for automatic worklist creation)  Prioritize customers on the collection worklist  Define the currency in which the amounts are to be displayed on the worklist  Determine the time intervals of the aging of receivables per customer in a segment (due date grid)  Define the type of integration with dunning in Accounts Receivable Accounting  Determine the influence of the terms of payment on Collections Management (consideration of cash discounts) © 2011 SAP AG.com. scensum.Data Sources for Collection Rules SAP Accounts Receivable SAP Dispute Management SAP Collections Management  Open Item Data  Dunning Data  Payment Data  Customer Data  Dispute Case Data  Promise To PayData  Contact Data  Resubmission Data  Risk Class  Credit Limit Utilization SAP Credit Management © 2011 SAP AG. 89 .com. www. All rights reserved. Per rule the collection manager enters the relevant parameters and the valuation points a customer receives when he fulfills the rule.com. www.Maintain Collection Strategy The collection manager decides on the kinds of collection rules customers are to be contacted. The corresponding collection rules are assigned to the strategy. Determines structure of Due Date Grid Enter parameters of collection rule © 2011 SAP AG. 90 .scensum. All rights reserved. The worklist items are allocated automatically to the collection specialists. All rights reserved. 96 .Allocation of Worklist Items to Collection Specialists The collection manager can view all worklist items assigned to his or her collection groups.scensum. The collection manager can re-allocate worklist items among specialist of one group.com. (Example: A collection specialist will not be able to finish his or her worklist during the day.) Worklist items of all collection groups Reallocation only possible to other specialists of the same collection group © 2011 SAP AG. www. Number of open worklist items © 2011 SAP AG. All rights reserved. / Page No. All rights reserved.Supervise Progress of Worklists Processing The collection manager can view the worklist statistics of all collection groups he or she is responsible for. The statistics show the total number of worklist items.scensum. of completed worklist items where the customer was reached No. the number of open worklist items.com. of completed worklist items where the customer was not reached Total number of worklist items www. 97 . © SAP AG 2009. the number of completed worklist items where the contact person was reached and the number of completed worklist items with an unsuccessful contact. www. 98 . All rights reserved.Analytics © 2011 SAP AG.scensum.Process „Control Collections of Receivables‟ 5.SAP Collections Management – Introduction 2.Roles and Processes 3.Process „Collection of Receivables‟ 4.Agenda 1.Process ‘Data Synchronization and Creation of Worklist’ 6.com. Functionality Supporting the ‘Data Synchronization and Creation of Worklist’ Process Replicate Customer Master Data  Customer /Vendor Integration  Create „Collections Management‟ role  Change collection segment data © 2011 SAP AG.com. Transfer Data from Accounts Receivable  Initial transfer  Periodic transfer  Selected transfer Create Worklists  Create worklist items  Distribute worklist items Monitoring  Monitor master data synchronization  Monitor parallel runs www. 99 .scensum. All rights reserved. com. All rights reserved.scensum.Complete Business Partner Master Data Report: Assign/Change Business Partner Collection Profile Create ‘Collections Mgmt’ business partner role Assign collection profile Assign collection group different to default group (optional) Assign collection specialist (optional) Report: Change Business Partner Segment Data © 2011 SAP AG. 100 . www. scensum.Roles and Processes 3.SAP Collections Management – Introduction 2.Process „Collection of Receivables‟ 4.Agenda 1.Process „Control Collections of Receivables‟ 5.com.Process „Data Synchronization and Creation of Worklist‟ 6.Analytics © 2011 SAP AG. www. All rights reserved. 105 . com.scensum.Analytics in SAP Collections Management (as of SAP Enhancement Package 1) Analytics for SAP Collections Management enable you to control and optimize your collection activities Analytics for SAP Collections Management comprises the following analysis scenarios:  Analysis of worklists  Analysis of customer contacts  Analysis of invoices and promises to pay  Analysis of open items linked with organizational units of Collections Management © 2011 SAP AG. All rights reserved. 106 . www. 107 .scensum. All rights reserved. www.com.Analysis of Worklists Business value:  Measure performance and productivity of collection groups/collections specialists  Measure effectiveness of collection strategies Main key figures:  Number of worklist items  Number of completed worklist items  % Completed worklist items  Amount to be collected  Amount processed (including amount promised to pay and amount disputed) Main characteristics:  Collection specialist  Collection group  Collection segment  Collection strategy © 2011 SAP AG. All rights reserved. www.Analysis of Worklists – Daily Collection © 2011 SAP AG.com.scensum. 108 . All rights reserved.scensum. www.Analysis of Worklists – Daily Collection © 2011 SAP AG. 109 .com.  Contact date  Contact result  Contact type  Collection group  Collection specialist  Collection segment  Collection strategy  Business partner www. All rights reserved. 110 .com.scensum.Analysis of Customer Contacts Business value: Measure performance and productivity of the collection specialists Main key figures:  Number of customer contacts  Amount promised during the customer contact  Original disputed amount of dispute cases created during contact  Number of promises to pay created during contact  Number of dispute cases created during contact  Number of resubmissions Main characteristics: © 2011 SAP AG. scensum.Analysis of Invoices and Promises to Pay Business value: Measure effectiveness of collection activities and volume of invoices managed in SAP Collections Management Main key figures:  Amount promised  Amount paid (referring to promise to pay)  Amount invoiced  Amount paid (of invoice)  Number of invoices  Number of promises to pay  % Kept / % Broken  True DSO  Days in arrears Main characteristics: © 2011 SAP AG. All rights reserved. 111 .  Promise to pay level / Promise to pay state  Invoice number  Document date  Payment date (of invoice) Customer www.com. scensum.  Collection segment  Collection group  Collection specialist  Business partner www.Analysis of Open Items Linked with Organizational Units of Collections Management Business value: Due date analysis for organizational units of SAP Collections Management.com. ability to plan ahead Main key figures:  Overdue for more than 90 days  Overdue from 61 to 90 days  Overdue from 31 to 60 days  Overdue from 1 to 30 days  Due within 30 days  Due within 30 to 61 days  Due within 61 to 90 days  Due within more than 90 days Main characteristics: © 2011 SAP AG. All rights reserved. 112 . 113 .com. www. All rights reserved.scensum.Due Date Analysis © 2011 SAP AG. All rights reserved. www.Introduction 2.SAP Financial Supply Management .com.Agenda 1.scensum.SAP Credit Management 3. 114 .SAP Collection Management 4.Summary © 2011 SAP AG. 116 .com.scensum. All rights reserved.SAP Credit Management – Summary Customer Challenges  Takes too long to evaluate credit  Inconsistent  No methods and policies global view of exposure  Evaluations hold up sales orders SAP Functionality  Analyze risk and set policy quickly  Consistent  Global evaluation and policy view of credit exposure  Automatically update exposure throughout customer lifecycle © 2011 SAP AG. Benefits  Faster credit decisions  Lower costs and resource demands  Reduce bad debt write-offs  Reduce sales order delays www. SAP Collections Management – Summary Challenges Inconsistent account prioritization Labor intensive and long cycle times Inconsistent collection strategies High costs of collections Increase bad debt risk Functionality Benefits Rules-based collections strategies Improved collections rates Prioritization via worklists Reduced bad debt expense All relevant information at a glance Streamline collections and reduce operating costs Proactive targeting of “late pays” Reduce DSOs © 2011 SAP AG. 118 . www.com. All rights reserved.scensum. scensum.com www.Thank you For more information feel free to contact: Vidar Greve Johannesson [email protected] . All rights reserved.com.scensum. www. 120 .© 2011 SAP AG.