SAP Credit and Collection Management. Vidar Greve Johannesson

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1 SAP Credit and Collection Management Vidar Greve Johannesson

4 Cash Flow Cycle Order placed Delivery + invoice Sale + Delivery + Invoice Actual payment date Days In Inventory Days Sales Outstanding time Days In Payables (average time to payment of supplier) Days In Receivables (average customer payment time) Cash payment for inventory Expected payment date Cash Flow Cycle 2011 SAP AG. All rights reserved. 4

5 Free Up Cash with SAP FSCM Companies have big potential to free up working capital by applying best practices Painpoints in Order to Cash Cycle 321 bn $ 91 bn $ Cash application 18 % 71 bn $ Accessing information 18 % 49 bn $ 110 bn $ Payment reconciliation Managing customer behavior 26 % 28 % Invoice presentment 29 % Current Working Capital Payables Receivables Inventory Best Practice Working Cash NPV released from best practice: 211 bn USD Capital Source: McKinsey (sample of 24 corporate clients) Discrepancy resolution 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 47 % Source: Paystream Advisors, 2007 (percentage of highest pain scores) 2011 SAP AG. All rights reserved. 5

6 Typical Barriers of the Order-to-Cash Cycle Independent functions No coordination in collections/ dispute resolution Inconsistent credit policies across divisions Poor insight into customer Credit risk No insight into process bottle necks Lack control over processes, workflow or prioritization High Cost of Finance Operations High Bad Debt Risk High DSOs Fragmented and inefficient Paper-based and laborintensive Lack of standardization Fragmented stand-alone systems No workflow or data management No integration with GL or AR systems 2011 SAP AG. All rights reserved. 6

7 Optimizing the Order-to-Cash Cycle Overcome Your Barriers by Optimizing the Order-to-Cash Cycle with SAP Barriers Finance Strategies SAP Solutions Insight & Control Monitor performance of financial processes Implement financial controls and fraud detection mechanism Control global credit risk SAP CPM SAP GRC SAP Credit Management Organization Processes IT Systems Establish greater cross-functional coordination Define global customer credit policies Establish clear lines of ownership and escalation policies Organize unstructured data and collaborate via workflows Streamline labor-intensive processes via standardization and automation Straight-through payment processing Utilize open standards to connect financial systems with customers, suppliers and banks Integrate collections / dispute systems with accounting and AR systems SAP ERP Financials SAP Credit Management SAP Dispute Management SAP Collections & Dispute Mgmt SAP Biller Direct SAP Accounts Receivable Enterprise Service Bundles SAP Biller Direct SAP ERP Financials SAP NetWeaver/SWIFT integration 2011 SAP AG. All rights reserved. 7

10 Financial Supply Chain Management with SAP SAP Credit Management SAP Biller Direct (Electronic Bill Presentment and Payment) SAP Dispute Management SAP Collections Management Check Credit Worthiness Issue Invoice Forecast Cash Finance Working Capital Resolve Disputes Collect Cash Settle & Pay Reconcile Order-to-Cash 2011 SAP AG. All rights reserved. 11

11 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 2011 SAP AG. All rights reserved. * Source: Creditreform 12

12 SAP Credit Management Focus System to implement a company wide credit policy Central credit management in a distributed system landscape Monitor a customer s 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 2011 SAP AG. All rights reserved. 13

13 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 2011 SAP AG. All rights reserved. 14

14 Default Probability Sets Risk Hedging Default Probability 30 % 20 % Cash on delivery Letter of credit Advance Payment Check by ext. Credit Agency Risk Class III 10 % Risk Class II Invoice Risk Class I = Customer Very Good Very Bad Score 2011 SAP AG. All rights reserved. 15

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 Possible Actions: Reduce business with this customer Change dunning procedure Permanent credit risk monitoring Customer B Low Sales High Risk Best Case Client: Customer C Intensify Customer Relationship Possible Actions: Increase sales prices Increase use of hedging instruments Customer D Low Risk Risk of default 2011 SAP AG. All rights reserved. 16

16 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 2011 SAP AG. All rights reserved. 17

17 Credit Limit Management Functions Manages the credit profile of a customer Alert Alert Monitor credit exposure / limit in a central system Credit Limit Web-Based access to customer s credit profile Rules Engine for implementing own scoring and limit rules January March February April Credit Exposure Scalable platform to use in B2B and B2C Scenarios Score customers and vendors Business Benefit Imlement company wide credit policy Early identification of default risk Reduce processing costs by automating credit decisions 2011 SAP AG. All rights reserved. 18

18 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 2011 SAP AG. All rights reserved. 19

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) 2011 SAP AG. All rights reserved. 20

21 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) 2011 SAP AG. All rights reserved. 23

22 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-do s 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 2011 SAP AG. All rights reserved. 24

23 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 2011 SAP AG. All rights reserved. 25

24 Integration with External Credit Agencies Real Time SAP Enterprise Portal Credit Manager Portal 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 2011 SAP AG. All rights reserved. 26

25 Comparison R/3 Credit Management with SAP 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) Rule based definition of credit limits Only through partner products Not available any XML based credit information service 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 R/3 Credit Management SAP Credit Management Not available PI Server

27 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 SAP AG. All rights reserved. 30

28 Worklist Detailed Navigation = View Switch User receives notifications on credit events (e.g. changes in risk class, score etc.) Links launch applications in Activity Window (user can also start applications related to master data and mass data processing here) User can view details and access directly the dialogue processing of business partner maintenance 2011 SAP AG. All rights reserved. 31

29 Credit Limit Requests Overview Detailed Navigation = View Switch Pre-delivered default queries with customized values Links launch applications in Activity Window User can access directly the dialogue processing of the respective request SAP AG. All rights reserved. 32

30 Blocked Customers Detailed Navigation = View Switch Pre-delivered default queries with customized values Links launch applications in Activity Window Action button leads the user directly to the exact location of the block information in the business partner master data 2011 SAP AG. All rights reserved. 33

31 Agenda 1.SAP Credit Management Introduction 2.User Interface of the Credit Manager 3.Master Data 4.Credit Rules Engine 5.Integration with External Information Providers 6.Reporting & Mass Change 2011 SAP AG. All rights reserved. 35

32 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 SAP AG. All rights reserved. 36

33 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 2011 SAP AG. All rights reserved. 37

34 Relationship Higher-level credit management account of Business Partner 4711 Segment 0000 Credit Exp.: Total Credit Exposure: Is the higher level credit management account of Business Partner 4712 Segment 0000 Credit Exp.: Total Credit Exposure: Is the higher level credit management account of Business Partner 4713 Segment 0000 Credit Exp.: Total Credit Exposure: SAP AG. All rights reserved. 39

36 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 2011 SAP AG. All rights reserved. 41

37 Calculate Internal Credit Scoring (Existing Customer) Customer Address Birth Date Profession Sales Volume Dunning Payments Region Age GroupProfession Score... ATL <20 Student 17 NYC Student Credit Agency I AAA Credit Agency II B+ Mapped Score A: AAA = 50 Mapped Score B: B+ = 30 Credit Information Score C: 17 Score D: 3 Credit Rules Engine IF (Black List Entry exists): S = 0 ELSE S = (2*A + 3*B + 5*C) + / 5*D) 10 / 15 Sales Volume Score SV Dunning Score DU Paym. (days after Due) Score PY 0 0 <5 4 <10 8 < Score D = SV DU PY = 3 Black List Int. Scoring S = SAP AG. All rights reserved. 43

39 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 2011 SAP AG. All rights reserved. 48

40 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 2011 SAP AG. All rights reserved. 50

41 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 2011 SAP AG. All rights reserved. 51

42 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 2011 SAP AG. All rights reserved. 52

43 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 2011 SAP AG. All rights reserved. 53

45 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 2011 SAP AG. All rights reserved. 57

46 Financial Supply Chain Management with SAP SAP Credit Management SAP Biller Direct (Electronic Bill Presentment and Payment) SAP Dispute Management SAP Collections Management Check Credit Worthiness Issue Invoice Forecast Cash Finance Working Capital Resolve Disputes Collect Cash Settle & Pay Reconcile Order-to-Cash

47 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 2011 SAP AG. All rights reserved. 60

48 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 2011 SAP AG. All rights reserved. 61

49 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 2011 SAP AG. All rights reserved. 62

50 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 2011 SAP AG. All rights reserved. 63

51 Two Roles: Collection Manager and Collection Specialist Collection Group Collection Manager Collection Specialist Main Tasks: Define or adapt collection strategies Keep collection groups up-to-date Adjust business partners Supervise collection process Collection Specialist Collection Specialist Main Tasks (are all about processing the daily worklist): Prepare customer contact Contact customer Document customer contact 2011 SAP AG. All rights reserved. 64

52 Data Synchronization and Creation of Worklist Process Replicate Customer Master Data Transfer Data from Accounts Receivable Create Worklists Monitoring Master data synchronization Contact persons Collections Management specific data Initial transfer Periodic transfer Selected transfer Create worklist items Distribute unassigned items Monitor master data synchronization Monitor parallel runs 2011 SAP AG. All rights reserved. 65

53 Functionality Supporting the Collection of Receivables Process Collection Specialist Access Worklist Prepare Customer Contact Contact Customer Automatically created Personalization Search function Statistics 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 Promises to pay Dispute cases Resubmissions Customer contact 2011 SAP AG. All rights reserved. 66

54 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. Aging of receivables per selected customer Detail valuation of customer per collection rule 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 2011 SAP AG. All rights reserved. 67

55 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 customer s 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 2011 SAP AG. All rights reserved. 68

56 Worklist as Starting Point for Customer Contact 1 Select worklist item and view data Maximum amount to be collected 2 View valuation of customer according to collection strategy 3 View aging of customer s receivables 2011 SAP AG. All rights reserved. 69

57 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 2011 SAP AG. All rights reserved. 70

58 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 2011 SAP AG. All rights reserved. 71

60 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 2011 SAP AG. All rights reserved. 73

61 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 2011 SAP AG. All rights reserved. 74

62 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 2011 SAP AG. All rights reserved. 75

63 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 2011 SAP AG. All rights reserved. 77

64 Promise to Pay Process Collection Specialist Tom McFee 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. 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 2011 SAP AG. All rights reserved. 78

65 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 2011 SAP AG. All rights reserved. 79

66 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 SAP AG. All rights reserved. 80

67 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 SAP AG. All rights reserved. 82

68 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 Suppress customer from worklist until resubmission date First line of note 2011 SAP AG. All rights reserved. 83

69 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 2011 SAP AG. All rights reserved. 84

70 Agenda 1.SAP Collections Management Introduction 2.Roles and Processes 3.Process Collection of Receivables 4.Process Control Collections of Receivables 5.Process Data Synchronization and Creation of Worklist 6.Analytics 2011 SAP AG. All rights reserved. 85

71 Functionality Supporting the Control Collection of Receivables Process Collection Manager Define Collection Strategies Maintain Collection Groups Adjust Business Partner Master Data Supervise Collection Process Collection rules Collection strategy Collection group Business partner Collection profile Allocate worklist items Control statistics 2011 SAP AG. All rights reserved. 86

72 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) 2011 SAP AG. All rights reserved. 88

73 Data Sources for Collection Rules SAP Accounts Receivable Open Item Data Dunning Data Payment Data Customer Data SAP Dispute Management Dispute Case Data SAP Collections Management SAP Credit Management Promise To PayData Contact Data Resubmission Data Risk Class Credit Limit Utilization 2011 SAP AG. All rights reserved. 89

74 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 2011 SAP AG. All rights reserved. 90

75 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 2011 SAP AG. All rights reserved. 96

76 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 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 2011 SAP AG. All rights reserved SAP AG All rights reserved. / Page

77 Agenda 1.SAP Collections Management Introduction 2.Roles and Processes 3.Process Collection of Receivables 4.Process Control Collections of Receivables 5.Process Data Synchronization and Creation of Worklist 6.Analytics 2011 SAP AG. All rights reserved. 98

78 Functionality Supporting the Data Synchronization and Creation of Worklist Process Replicate Customer Master Data Transfer Data from Accounts Receivable Create Worklists Monitoring Customer /Vendor Integration Create Collections Management role Change collection segment data Initial transfer Periodic transfer Selected transfer Create worklist items Distribute worklist items Monitor master data synchronization Monitor parallel runs 2011 SAP AG. All rights reserved. 99

79 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 2011 SAP AG. All rights reserved

80 Agenda 1.SAP Collections Management Introduction 2.Roles and Processes 3.Process Collection of Receivables 4.Process Control Collections of Receivables 5.Process Data Synchronization and Creation of Worklist 6.Analytics 2011 SAP AG. All rights reserved

81 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 2011 SAP AG. All rights reserved

82 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 2011 SAP AG. All rights reserved

85 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 Main characteristics: Contact date Contact result Contact type Collection group Collection specialist Collection segment Collection strategy Business partner 2011 SAP AG. All rights reserved

86 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 Main characteristics: Promise to pay level / Promise to pay state Invoice number Document date Payment date (of invoice) Customer 2011 SAP AG. All rights reserved

87 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 Overdue from 31 to 60 days Overdue from 1 to 30 days Due within 30 days Due within 30 to 61 days Due within 61 to 90 days Due within more than 90 days Main characteristics: Collection segment Collection group Collection specialist Business partner 2011 SAP AG. All rights reserved

90 SAP Credit Management Summary Customer Challenges Takes too long to evaluate credit Inconsistent methods and policies No global view of exposure Evaluations hold up sales orders SAP Functionality Analyze risk and set policy quickly Consistent evaluation and policy Global 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 2011 SAP AG. All rights reserved

91 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 Rules-based collections strategies Prioritization via worklists All relevant information at a glance Proactive targeting of late pays Benefits Improved collections rates Reduced bad debt expense Streamline collections and reduce operating costs Reduce DSOs 2011 SAP AG. All rights reserved

92 Thank you For more information feel free to contact: Vidar Greve Johannesson