Management - Best Practices Copyright 2011, HighRadius Corporation. All rights reserved.
Presented By: Sashi Narahari August 15, 2011 CRF SAP User Group 2 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 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
Double-Click to open customer work item Collections Management: Collectors Worklist 9 Text
Review open items to be collected Collections Management: Invoice Summary Default Customer Contact readily available 10 Text
Review payment history Collections Management: Payment History 11 Text
Review open and closed dispute cases Collections Management: Dispute Cases 12 Text
Record promise for payment or customer contact at the invoice level Collections Management: Promise-to-Pay 13 Text
Promise for payment has been recorded Collections Management: Promise-to-Pay 14 Text
Record customer contact resulting in completion of the work item Collections Management: Customer Contact 15 Text
Work item completed Collections Management: Completed Item 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 Email contact notes and log directly from SAP to customer Collections Management: Correspondence Select a set of invoices Collections Management: Correspondence Select the specific type of correspondence or letter to send 23 Collections Management: Collection Manager 24 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 Basic Rules Collection Rules Collection Strategy 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 Resubmission Due for the Customer Collections Strategy Definition 26 Text
Collection Rules within the Collection Strategy Collections Management: Collection Strategy 27 Text
Conditions within a Collection Rule Collections Management: Collection Strategy 28 Text
Automatic Prioritization of Customer Work Items Collections Management: Collection Strategy 29 Text
Priority is determined by the valuation of each collection rule Collections Management: Collection Strategy 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 High, Medium, Low
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 2 nd
and/or 3 rd 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 PODs 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 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 To Be Collected Amount Calculation Clean Receivables 45 Use Collectable Amount in Strategies http://www.highradius.com