Advanced SAP Collections Management - Best Practices CRF SAP User Group Presented By: Sashi Narahari August 15, 2011 Copyright © 2011, HighRadius Corporation. All rights reserved.

Collection Management Overview Collections Best Practices Agenda FSCM Overview Collection Management Overview Collections Best Practices

FSCM Modules At-A-Glance

Receivables Management

SAP FSCM Collections Management Overview

SAP Collections Management Overview Collection Supervisor Collection Specialist Define collection strategies / rules Define work item assignment to users / groups Monitor and reallocation of workload Incoming / Outbound collection calls Process daily worklist based on prioritization Record customer contact and follow up

Collections Management: Collection Specialist

Collections Management: Collector’s Worklist Text Double-Click to open customer work item

Collections Management: Invoice Summary Text Default Customer Contact readily available Review open items to be collected

Collections Management: Payment History Review payment history Text Review payment history

Collections Management: Dispute Cases Text Review open and closed dispute cases

Collections Management: Promise-to-Pay Text Record promise for payment or customer contact at the invoice level

Collections Management: Promise-to-Pay Text Promise for payment has been recorded

Collections Management: Customer Contact Text Record customer contact resulting in completion of the work item

Collections Management: Completed Item Text Work item completed

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

Open AR & Dispute Mgmt Data Data available for Collection Strategies Credit Limit % Utilization Credit Exposure Risk Category Master Data or Operational Data which can be added to collections management Aging Amount Dunning Level Amount Dunned Disputed Amount Dispute Case Status Payment Data Broken Promise to Pay Number of Promise to Pays Promise to Pay Amount Customer Contacts Resubmissions Collections Data Open AR & Dispute Mgmt Data Credit Data Other Data

Collections Strategy Definition Collection Strategy for Higher Risk Customers High to Medium Risk and greater than 80% Credit Limit Utilization Valuation: 15 points Risk Category Credit Limit Utilization Past Due Invoices Over 15 days Past Due & Dunned One or More Times Valuation: 20 points Dunning Level Documents by posting key and document type Individual Items Overdue Since N Days Resubmission Due for the Customer Valuation: 5 points Collection Strategy Collection Rules Basic Rules

Collections Management: Collection Strategy Text Collection Rules within the Collection Strategy

Collections Management: Collection Strategy Text Conditions within a Collection Rule

Collections Management: Collection Strategy Text Automatic Prioritization of Customer Work Items

Collections Management: Collection Strategy Text Priority is determined by the valuation of each collection rule

Collections Best Practices

Collections Best Practices Customer Segmentation Automated Correspondence ‘Invoice-Level’ Collections Collect on ‘Clean Receivables’ Blocked Order Based Collections

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

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)

Slow or Med Pay SMB Collection Strategy

Advanced Correspondence

Advanced Correspondence Automation Selection criteria: type of letter, attachments and method of communication

Advanced Correspondence Automation Highlight AR line items to be included in correspondence

Advanced Correspondence Automation Cover Letter

Advanced Correspondence Automation Invoice Attachments

Advanced Correspondence Automation POD Attachment #1

Advanced Correspondence Automation POD’s attached to the Invoice AR line item

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’

Create Disputes for Invoices

Amount ‘To Be Collected’ ‘Clean’ Receivables To Be Collected Amount Calculation Total Amount Past Due 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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