SAP Credit and Collection Management PDF

SAP Credit and Collection
Management
Vidar Greve Johannesson
vgj@scensum.com
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.
Does this Sound Familiar?
Copyright 2002 by Randy Glasbergen

www.glasbergen.com
www.scensum.com.
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

www.scensum.com.
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, 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
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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,

workflow or prioritization
No integration with GL or
AR systems
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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 Collections & Dispute Mgmt

SAP Biller Direct
SAP Accounts Receivable
Straight-through payment processing
IT Systems
Utilize open standards to connect financial

systems with customers, 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
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Agenda
1.SAP Financial Supply Management - Introduction

4.Summary
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Agenda
1.SAP Credit Management Introduction

2.User Interface of the Credit Manager
3.Master Data
4.Credit Rules Engine
5.Reporting & Mass Change
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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
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Credit Management Business Facts

Year 2007: approximately 129,822 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, credit, and finance
departments is very time-consuming
A customer is treated differently in different business units

within the same company
* Source: Creditreform
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12
SAP Credit Management Focus
System to implement a company wide credit policy
Central credit management in a distributed system landscape
Monitor a customers 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
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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
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Default Probability Sets Risk Hedging

Default Probability
30 %
Cash on delivery
Letter of credit
20 %
Advance Payment
Risk Class III
Check by ext.
Credit Agency
10 %
Risk Class II
Invoice
Very Good
Risk Class I
= Customer
Very Bad
Score
www.scensum.com. 15
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
Low Risk
Risk of
default
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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
Role-based access to credit management information and analysis

www.scensum.com. 17
Credit Limit Management

Functions
Manages the credit profile of a customer
Monitor credit exposure / limit in a
central system
Web-Based access to customers
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
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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
Business Benefit
Sales people can enter an application for credit limit
change
Track status of the application
Inform sales when decision is made
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19
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)
Close credit
limit application
Send notification to
sales assistant (workflow)
www.scensum.com. 20
Creating Credit Limit Request

Select Business Partner
Define details
Add note
Add Attachments
Review and save
Confirmation
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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.g. CRM)
www.scensum.com. 23
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-dos
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,
credit
and accounting department
Sales people can access credit information
from customer site
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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
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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
.......
Original XML Document is stored in the

document management system that is
used by the SAP Business Partner
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Comparison R/3 Credit Management

with SAP Credit Management
R/3 Credit Management
Master Data
FI-AR Account
SAP Business Partner
FI Data
SAP Business Partner
FI-AR, FI-CA, others
Monitor Credit Exposure
Only for simple systemlandscape (1xFI, 1xSD)
Distributed system-landscape
(multiple FI, SD and CRM
systems)
Customer Scoring/Rating
Not available
Credit Rules Engine
External Credit Information

(e.g. 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.

BW Content) and OLTP
reporting
Connectivity for non

SAP-systems
Not available
PI Server
Agenda

3.Master Data
www.scensum.com. 28
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.
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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)
User receives
notifications on
credit events
(e.g. changes in
risk class, score etc.)
User can view details

and access directly the
dialogue processing
of business partner
maintenance
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Credit Limit Requests Overview

View Switch
Links launch
applications in
Activity Window
Pre-delivered
default queries with
customized values
User can access

directly the dialogue
processing of the
respective request.
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Blocked Customers
View Switch
Links launch
applications in
Activity Window
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
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Agenda

3.Master Data
5.Integration with External Information Providers
www.scensum.com. 35
Master Data in SAP Credit Management

Credit data is a component of SAP Credit Management
and is stored in SAP Business Partner. It consists of the
credit profile data and credit segment data.
The credit profile is used for the central storage of
customer data relevant for risk assessment (scoring, risk
class, external rating, credit check rule).
Credit segments can map various areas of a company
(such as sales area, countries, company codes). They
are used for area-specific administration of credit limits
(and their utilization) and to store information on the
payment behavior of the customer. The corresponding
credit segment data is used for credit checking when the
order is created or on delivery within a company area.
By using relationships you have the possibility of
creating customer hierarchy.
www.scensum.com. 36
Business Partner in SAP Credit Management
Scoring Rule:
Rules that define how
a customer is scored
(e.g. industry, D&B,
legal form, country)
Credit Check Rule:

Rules that define how a
customer is credit checked
(e.g. static / dynamic check,
oldest open item )
External Rating from D&B
www.scensum.com. 37
Relationship
Higher-level credit management account of
Business Partner 4711
Segment 0000
Credit Exp.: 1.000.000
Is the higher
level credit
management
account of

Segment 0000
Credit Exp.: 1.500.000
Is the higher
level credit
management
account of
Total Credit Exposure:

3.100.000

2.100.000

Segment 0000
Credit Exp.: 700.000

700.000
www.scensum.com. 39
Agenda

3.Master Data
www.scensum.com. 40
Credit Rules Engine

Create scoring formula and credit limit formula by
using the formula editor. Parameters (for example
business partner data) and functions are used as input
parameter.
One scoring formula and several credit limit formulas (for
each credit segment) are assigned to the rule for scoring
and credit limit calculation, which is assigned to each
customer in the credit profile. The risk class is determined
directly from the score.
In customizing, specific score ranges which do not
overlap are assigned to each risk class. For the check
rule, the system determines the steps which are taken to
check the creditworthiness of a customer when a sales
order is created. This may include the static check of the
credit limit or the check of the highest dunning level.
Customer-specific process chains in SAP Credit
Management can be defined through events which
trigger follow-up actions
www.scensum.com. 41
Calculate Internal Credit Scoring

(Existing Customer)
Customer
Address
Birth Date
RegionAge GroupProfession Score

...
ATL <20
Student 17
NYC 20-30
Student 18
...
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
AAA = 50
Credit Agency II Mapped Score B:

B+
B+ = 30
Payments
...
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
...
Paym. (days after Due) Score PY
0
0
<5
4
<10
8
<20
15
...
Score D = SV DU PY = 3
Black List
27.5
Int. Scoring S = 19.3
www.scensum.com. 43
Agenda

3.Master Data
www.scensum.com. 47
Reporting
Ad hoc reporting in SAP Credit Management

Various reporting and analysis options are available in SAP Credit Management,
such as creating warning lists, analyzing liability data for one or more customers, or
logging the last order-related credit check for a customer
Various mass changes are available in SAP Credit Management, such as
calculating the creditworthiness, risk class, or credit limit for the first time for a
number of customers
www.scensum.com. 48
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.g. 80% for early warning list
www.scensum.com. 50
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
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
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
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Agenda

4.Summary
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Agenda
1.SAP Collections Management Introduction

2.Process Collection of Receivables
3.Process Control Collections of Receivables
4.Process Data Synchronization and Creation of Worklist
5.Analytics
www.scensum.com. 57
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
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, costly and
cumbersome process
Select and prioritize customers to be collected
Search for account information
High volumes
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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
www.scensum.com. 61
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.
Worklists ensure evaluation, identification, 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
www.scensum.com. 62
Agenda

5.Analytics
www.scensum.com. 63
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
Adjust business partners

Supervise collection process
Main Tasks (are all about

processing the daily worklist):
Prepare customer contact
Contact customer
Document customer contact
www.scensum.com. 64
Data Synchronization and Creation of Worklist Process
Replicate
Customer
Master
Data
Master data
synchronization
Contact persons
Collections
Management
specific data
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.scensum.com. 65
Functionality Supporting the

Collection of Receivables Process
Access
Worklist
Automatically created
Personalization
Search function
Statistics
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.com. 66
Collection Worklist
Each collection specialist gets a daily worklist containing all customers who should be contacted.
Customers are valuated and prioritized according to collection rules in a collection strategy.
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
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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 customers 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
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Worklist as Starting Point for Customer Contact

1
Select worklist item and view data

Maximum amount
to be collected
View valuation of customer according to collection strategy
View aging of customers receivables
www.scensum.com. 69
Process Receivables Function Main Area During

Contact
To contact the customer, the collection specialist navigates from the selected worklist item to the
Process Receivables function. This function offers detailed customer information and supports
various collection activities.
Navigation
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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. Per invoice the status is displayed including the amount
invoiced, open amount, disputed amount, amount promised to pay, 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
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Example Printing Invoice in Worklists
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Process Receivables Past Payments

The overview on past payments allows collection specialists to check past payments of the
customer he or she is contacting. The payment history lists all invoices that have been fully or
partially paid by the selected payment.
Payment History for selected payment
All documents related to the

payment are highlighted
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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. You can navigate to the details of a selected promise to pay,
change or withdraw a promise to pay.
View promise
to pay
Change
promise to pay
Withdraw
promise to pay
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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. You can navigate to a selected dispute case and if you have the
authorization process the dispute case. Furthermore, you can display which invoices are
assigned to the dispute case.
Navigate to selected
dispute case
View assigned
invoices
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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
www.scensum.com. 77
Promise to Pay Process

Hello Mrs. Brown, did you
recognize that invoice 4711 has
been overdue since 4 weeks?
Hello Mr. McFee, thank

you for reminding me.
We will pay the full
amount by Wednesday
next week.
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
www.scensum.com. 78
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
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Create Promise to Pay

The collection specialist can create a promise to pay in the system for the selected invoices.
The total of all open amounts is proposed by the system as promised amount. If the promised
amount is less than the proposed amount, the promised amount can be distributed to the invoices.
www.scensum.com. 80
Create Dispute Case

The collection specialist can create a dispute case for the selected invoices. The total of all open
amounts is proposed by the system as disputed amount. The collection specialist can enter all
necessary information such as dispute reason and a note.
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Resubmission
Collection specialists can set a resubmission for a customer. They can enter a note and a
resubmission reason. The customer will re-appear on the worklist at the resubmission date.
It is also possible to suppress a customer from the worklist until the resubmission date.
Create resubmission
Overview of existing resubmission
First line of note

Suppress customer from worklist
until resubmission date
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Create Customer Contact

The collection specialist can document the outcome of the whole customer contact. Dispute
cases, promises to pay and resubmissions created during the contact will be automatically
assigned. A default note is set by the system and can be enhanced by the specialist.
Controls if worklist item remains on
worklist or will be removed
Default note automatically

created by the system
www.scensum.com. 84
Agenda

2.Roles and Processes
6.Analytics
www.scensum.com. 85
Functionality Supporting the

Control Collection of Receivables Process
Collection Manager
Define
Collection
Strategies
Collection rules
Collection strategy
Maintain
Collection
Groups
Collection group
Adjust
Business
Partner
Master Data
Business partner
Collection profile
Supervise
Collection
Process
Allocate worklist
items
Control statistics
www.scensum.com. 86
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)
www.scensum.com. 88
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
www.scensum.com. 89
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. Per rule the collection manager
enters the relevant parameters and the valuation points a customer receives when he fulfills the
rule.
Determines structure of
Due Date Grid
Enter parameters
of collection rule
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Allocation of Worklist Items to Collection Specialists

The collection manager can view all worklist items assigned to his or her collection groups. The worklist items
are allocated automatically to the collection specialists. The collection manager can re-allocate worklist items
among specialist of one group. (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
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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, the number of open worklist items, the number of
completed worklist items where the contact person was reached and the number of completed worklist items
with an unsuccessful contact.
Number of open
worklist items

SAP AG 2009. All rights reserved. / Page
No. of completed
worklist items
where the customer
was reached
No. of completed
worklist items
where the customer
was not reached
Total number of
worklist items
www.scensum.com. 97
Agenda

6.Analytics
www.scensum.com. 98
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
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.scensum.com. 99
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
www.scensum.com. 100
Agenda

6.Analytics
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
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
Analysis of Worklists Daily Collection
Analysis of Worklists Daily Collection
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
Contact date
Contact result
Contact type
Collection group
Collection segment
Collection strategy
Business partner
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
Promise to pay level / Promise to pay state
Invoice number
Document date
Payment date (of invoice)
Customer
Analysis of Open Items Linked with Organizational Units of

Collections Management
Business value: Due date analysis for organizational units
of SAP Collections Management, ability to plan ahead
Main key figures:
Overdue for more than 90 days
Overdue from 61 to 90 days
Due within 30 days
Due within 30 to 61 days
Due within 61 to 90 days
Due within more than 90 days
Collection segment
Collection group
Business partner
Due Date Analysis
Agenda

4.Summary
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
Benefits
Faster
credit decisions
Lower
costs and resource

demands
Reduce
bad debt write-offs
Reduce
sales order delays
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
Thank you
For more information feel free to contact:
Vidar Greve Johannesson

vgj@scensum.com
www.scensum.com

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SAP Credit and Collection

1.SAP Financial Supply Management Business Issues and value

2011 SAP AG. All rights reserved.

Does this Sound Familiar?

Copyright 2002 by Randy Glasbergen

2011 SAP AG. All rights reserved.

Cash Flow Cycle

Days Sales Outstanding

(average customer payment time)

Cash Flow Cycle

Free Up Cash with SAP FSCM

Painpoints in Order to Cash Cycle

Managing customer behavior 28 %

Source: McKinsey (sample of 24 corporate clients)

Source: Paystream Advisors, 2007

With SAP Financial Supply Chain Management customers were able to

Reduce the number of bad debt using SAP Credit Management

2011 SAP AG. All rights reserved.

Typical Barriers of the Order-to-Cash Cycle

Fragmented and inefficient

Paper-based and laborintensive

Poor insight into

No insight into process

Lack control over processes,

2011 SAP AG. All rights reserved.

Overcome Your Barriers by Optimizing the

Optimizing the Order-to-Cash Cycle

Monitor performance of financial processes

Establish greater cross-functional coordination

SAP ERP Financials

Establish clear lines of ownership and

SAP Dispute Management

Organize unstructured data and collaborate

SAP Credit Management

SAP Collections & Dispute Mgmt

Straight-through payment processing

2011 SAP AG. All rights reserved.

Utilize open standards to connect financial

Enterprise Service Bundles

1.SAP Financial Supply Management - Introduction

2011 SAP AG. All rights reserved.

1.SAP Credit Management Introduction

2011 SAP AG. All rights reserved.

Financial Supply Chain Management with SAP

SAP Biller Direct

2011 SAP AG. All rights reserved.

Credit Management Business Facts

No credit history available when doing business with

A customer is treated differently in different business units

SAP Credit Management Focus

2011 SAP AG. All rights reserved.

System to implement a company wide credit policy

Central credit management in a distributed system landscape

Monitor a customers credit exposure in one central system

Customer scoring using own scoring rules creating new

Automatically calculate and assign a customer-specific

Interface to external credit agencies

Web-based access to credit information for sales people

Distribute customer master data via Master Data Management

Strategic credit analysis with predefined reports

Credit Manager Portal to speed up credit decisions

Improves productivity by automating credit decision process