Advanced SAP Collections

Management - Best Practices

CRF SAP User Group

Presented By:
Sashi Narahari
August 15, 2011

Copyright 2011, HighRadius Corporation. All rights reserved.

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

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

Collections Management: Collectors 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

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

12

Collections Management: Promise-to-Pay

Promise for payment has

been recorded

13

Text

Collections Management: Customer Contact

Text

Record customer contact

resulting in completion
of the work item

14

Collections Management: Completed Item

Work item
completed

15

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

26

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

28

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

31

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

PODs 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

43

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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