Advanced SAP Collections
Management - Best Practices
CRF SAP User Group
Presented By:
Sashi Narahari
August 15, 2011
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Copyright © 2011, HighRadius Corporation. All rights reserved.
Agenda
• FSCM Overview
• Collection Management Overview
• Collections Best Practices
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FSCM Modules At-A-Glance
3
Receivables
Management
4
SAP FSCM Collections Management
Overview
5
SAP Collections Management
Overview
Collection Supervisor
 Define collection strategies /
rules
 Define work item assignment
to users / groups
 Monitor and reallocation of
workload
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Collection Specialist
 Incoming / Outbound collection
calls
 Process daily worklist based on
prioritization
 Record customer contact and
follow up
Collections Management: Collection
Specialist
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Collections Management: Collector’s Worklist
Text
Double-Click to open
customer work item
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Collections Management: Invoice Summary
Text
Default Customer
Contact readily
available
Review open items to
be collected
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Collections Management: Payment History
Review payment
history
10
Text
Collections Management: Dispute Cases
Review open and
closed dispute cases
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Text
Collections Management: Promise-to-Pay
Text
Record promise for
payment or customer
contact at the invoice
level
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Collections Management: Promise-to-Pay
Promise for payment has
been recorded
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Text
Collections Management: Customer Contact
Text
Record customer contact
resulting in completion
of the work item
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Collections Management: Completed Item
Work item
completed
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Text
Collections Management: Resubmission
Create a Follow-up
reminder on
specific invoices
Collections Management: Resubmission
Summary of all
Follow-Ups
Collections Management: Notes
Select invoice and
enter invoice
specific notes
Collections Management: Notes
Summary of all
Notes
Collections Management: Correspondence
Several
Correspondence
Options available
Collections Management: Correspondence
Email contact
notes and log
directly from SAP
to customer
Collections Management: Correspondence
Select the specific
type of
correspondence or
letter to send
Select a set of
invoices
Collections Management: Collection
Manager
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Data available for Collection Strategies
• Broken Promise to
Pay
• Number of Promise
to Pays
• Promise to Pay
Amount
• Customer Contacts
• Resubmissions
• Master Data or
Operational Data
which can be added
to collections
management
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Collections
Data
Open AR &
Dispute
Mgmt Data
Other Data
Credit Data
•
•
•
•
•
•
•
Aging
Amount
Dunning Level
Amount Dunned
Disputed Amount
Dispute Case Status
Payment Data
•
•
•
•
Credit Limit
% Utilization
Credit Exposure
Risk Category
Collections Strategy Definition
Collection
Strategy
Collection
Rules
Basic
Rules
High to Medium Risk and
greater than 80% Credit
Limit Utilization
Risk Category
Valuation: 15 points
Credit Limit Utilization
Dunning Level
Collection Strategy for
Higher Risk Customers
Past Due Invoices Over 15
days Past Due & Dunned
One or More Times
Documents by posting key
and document type
Valuation: 20 points
Individual Items Overdue
Since N Days
Resubmission Due for the
Customer
Valuation: 5 points
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Resubmission Due for the
Customer
Collections Management: Collection Strategy
Text
Collection Rules
within the Collection
Strategy
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Collections Management: Collection Strategy
Text
Conditions within a
Collection Rule
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Collections Management: Collection Strategy
Text
Automatic
Prioritization of
Customer Work Items
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Collections Management: Collection Strategy
Text
Priority is determined by
the valuation of each
collection rule
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Collections Best Practices
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Collections Best Practices
Customer Segmentation
Automated Correspondence
‘Invoice-Level’ Collections
Collect on ‘Clean Receivables’
Blocked Order Based Collections
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Customer Segmentation
• By Size
– Large Accounts
– Small & Medium Businesses (SMB)
• By Payment Behavior (Days Beyond Terms)
– Fast Pay, Medium Pay, Slow Pay
• By Risk Category
– High, Medium, Low
• Sales Volume
– High, Medium, Low
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Automated Correspondence
for SMB
• Gentle Reminders, Past-Due Notices, Demand
Letters (Standard SAP A/R Dunning)
– For most SMB Customers
– Except for ‘Fast Pay’ or ‘High Sales Volume’
• Include Invoice Copies, POD Copies for 2nd
and/or 3rd level Dunning (Requires
Enhancements to FSCM)
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Slow or Med Pay SMB
Collection Strategy
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Advanced Correspondence
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Advanced Correspondence Automation
Selection criteria: type of
letter, attachments and
method of communication
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Advanced Correspondence Automation
Highlight AR line
items to be included
in correspondence
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Advanced Correspondence Automation
Cover Letter
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Advanced Correspondence Automation
Invoice Attachments
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Advanced Correspondence Automation
POD Attachment #1
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Advanced Correspondence Automation
POD’s attached to the
Invoice AR line item
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Invoice-Level Collections
• Dunning might not work for Large Customers
• Most large business have automated AP
systems and are not paying because there is a
‘issue’ with the invoice
• Invoice-Level Collections similar to Disputes
• First perform root cause analysis based on
history what the reasons for ‘issues’ are
– EDI Transmissions, Disputes (Pricing Errors,
Shortages etc)
• Create ‘Dispute Case’ for ‘problem invoices’
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Create Disputes for Invoices
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‘Clean’ Receivables
To Be Collected Amount Calculation
Total
Amount
Past Due






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Items with
Open
Promise to
Pay
Dispute
Cases not in
a ‘To Be
Collected’
Status
Items with
a Current
Dunning
Notice
Items
Arranged
for Payment
Amount ‘To
Be
Collected’
Total Amount Past Due – Total of all overdue items in FI-Accounts Receivable
Items with Open Promise to Pay – If there items with an open promise to pay, or items with
a future payment promised on date, these items will be excluded from the ‘To Be Collected’
amount
Dispute Cases not in a ‘To Be Collected’ Status – All open dispute cases, which have not
been updated with a status that is mapped to the ‘To Be Collected’ in collections
management, will be excluded from the ‘To Be Collected’ amount
Items with a Current Dunning Notice – If a line item in FI-Accounts Receivable has recently
been dunned, this amount will be excluded from the ‘To Be Collected’ amount.
Items Arranged for Payment – All amounts that are (a) collected with a debit memo
procedure or (b) where the account statement balance contains a payment notification from
the bank will be excluded from the ‘To Be Collected’ amount
BAdI: Amount To Be Collected: Can be used to enhance the to be collected amount
calculation
Use ‘Collectable Amount’ in
Strategies
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