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

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

3. FSCM Modules At-A-Glance

4. Receivables Management

5. SAP FSCM Collections Management
Overview

6. 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

7. Collections Management: Collection Specialist

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

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

10. Collections Management: Payment History Review payment history
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Review payment history

11. Collections Management: Dispute Cases
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Review open and closed dispute cases

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

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

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

15. Collections Management: Completed Item
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Work item completed

16. Collections Management: Resubmission
Create a Follow-up reminder on specific invoices

17. Collections Management: Resubmission Summary of all Follow-Ups

18. Collections Management: Notes
Select invoice and enter invoice specific notes

19. Collections Management: Notes
Summary of all Notes

20. Collections Management: Correspondence
Several Correspondence Options available

21. Collections Management: Correspondence
contact notes and log directly from SAP to customer

22. Collections Management: Correspondence
Select the specific type of correspondence or letter to send
Select a set of invoices

23. Collections Management: Collection Manager

24. 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

25. 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

26. Collections Management: Collection Strategy
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Collection Rules within the Collection Strategy

27. Collections Management: Collection Strategy
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Conditions within a Collection Rule

28. Collections Management: Collection Strategy
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Automatic Prioritization of Customer Work Items

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

30. Collections Best Practices

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

32. 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

33. 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)

34. Slow or Med Pay SMB Collection Strategy

35. Advanced Correspondence

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

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

38. Advanced Correspondence Automation
Cover Letter

39. Advanced Correspondence Automation
Invoice Attachments

40. Advanced Correspondence Automation
POD Attachment #1

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

42. 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’

43. Create Disputes for Invoices

44. 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

45. Use ‘Collectable Amount’ in Strategies