Oracle® Applications Release12

Advanced Collections Setup

White Paper
<Sanjukta Choudhuri>
Oracle E Business Suite
 Advance Collections Setup – Oracle Applications

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 Advance Collections Setup – Oracle Applications

Abstract

This document provides an overview of Advanced Collections setup in Oracle Applications

R12. This whitepaper discusses all sections of functional design document and lists the
corresponding sections required to configure to use the Collector’s work queue.

In today’s business environment, cash flow is most critical to a business’s success. In order to
collect cash faster and more efficiently using streamlined processes offer a real competitive
advantage. The implementation of Oracle Advanced Collections allows organizations to
proactively manage their overdue management efficiency, whilst retaining its ongoing
customer relationships.

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About the Author

Sanjukta Choudhuri is a Techno-Functional consultant in TCS. She is an IT Analyst, worked in
two different ERP solutions over last 6 yrs. She has been involved in Implementation,
Maintenance, Support projects during her tenure and has work experience in ERP Supply chain
management and Finance modules.

About the Domain

The paper is aimed to talk about the Advanced Collections Setup, to develop a basic
understanding of how the main objective of debt collection has been achieved by setting up an
effective debt management tool to meet the requirement of the customers. Nowadays, many
companies are becoming bankrupt because of bad debt. In this situation collecting premium
from its customers on time has become a challenge. The collection process should be robust
enough to match with the current market situation.

Oracle Advanced Collections allows us to bridge the gap between back-office transactional
data and front-office customer management processes, while improving agent productivity and
collection results. Streamlined processes apply the right collections strategy to the right
customer to help the company collect more money faster and with less effort.

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CONTENTS

1. INTRODUCTION.........................................................................................................................................6
2. OVERVIEW ..................................................................................................................................................8
3. NECESSARY SETUPS ................................................................................................................................9
4. CONCLUSION ...........................................................................................................................................25
5. ACKNOWLEDGEMENTS .......................................................................................................................25
6. REFERENCES............................................................................................................................................26

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1. Introduction
Other than normal regular collection method for every business there should be one effective
debt collection process in place so that money that customers has not paid on time can be
collected from them. Advanced Collection is a module in oracle e-business suite which
provides an effective debt collection process for the money which is not collected on time. It is
very flexible. It can be designed differently for different industry, different territory and
different types of customers.

What is Advanced Collections?

Advanced Collections module of Oracle Applications provides advanced features of debt
management. This module deals specifically with customers who have not paid on time (These
customer are called as Delinquent Customers) and tries to collect overdue amount.

Why Advanced Collection needed?

In today’s world collection process has become very complex. Below mentioned are the points
which are key concern areas for which it is needed to opt for Advanced collection.

 There is one Collection feature present in Receivables but that is not flexible enough.
There we can only send letters (Dunning Letters) to defaulters depending upon how many
days they are late for doing the payments (Aging Buckets). In Advanced Collection
different collection strategy can be implemented for different customers depending upon
customer’s debt history or debt amount. This feature is not present in Collections in
Receivables module.
 Collectors are too busy to contact customers with overdue invoices with small amount.
Some customers pay these invoices but consequently, they end up writing off many of
these small balances. Many small amounts when added up do not remain small at all. How
can we stop this?
 Business values their customers who have been with them for many years and would like
to develop a more gentle collections strategy to recover bad debt. But customers who have
been with them for less time should have a more aggressive collections strategy for them
so that business can control their bad debt, get financial relationship off to a better start and
ultimately retain and weed newer customers out based on their value. How to execute dual
strategies without confusing the collectors?
 It has often seen that customers who pay on a quarterly or semi-annual basis are often days
or weeks late. Since these payments are less frequent, the amounts are often larger and
greatly impact cash flow. But, these customers are not necessarily bad customers but are
habitually late. How can we get these pre-delinquent customers to pay on time (or even
early!) without offending them by a collections call?

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 There are unique collections requirements for each country that determine how and when
to contact delinquent customers. Company spends lot of money in training keep collectors
clear on these country-specific rules and regulations. It has also seen that customers in each
country often respond differently to the dunning and calling process. How to easily create
country-specific collections best practices strategies?
 Collectors struggle with customers who continue to refuse to pay. They waste extra calls to
these delinquent customers when they should really refer these customers to managers or
collections specialists who can take more drastic collections measures to litigate repossess
and/or write off these debts. Also, customers sometimes claim bankruptcy which, whether
this is true or not, needs to be addressed quickly to reduce additional bad debt exposure as
well as adhere to strict bankruptcy laws. How to address these later stage delinquencies
activities without bogging down the collections process?

 When there are many defaulters, collectors are confused as to who to call first and when to
stop calling. Automation to ease their burden. How to prioritize their work so that recovery
rate improves?

Important Terms
1
2 Delinquency: Delinquency means condition of a debt when overdue. The customers
who do not pay on time are called delinquent customer.
Strategy: Used for applying specific debt management business rules for collection.
3 Aging Bucket: Different Aging Bucket can be defined in Receivables depending upon
number of days. E.g. Seven days aging bucket. Then all the transaction for which payment is
late for 7 days will come to this bucket.
4 Dunning Letter: Dunning letters are notification or warning letters send to customers
if they do not pay on time. Each Aging Bucket will be having a set of Dunning Letters.
Depending upon the Aging Bucket the customer falls dunning letters are sent.
5 Scoring Engines: Scoring Engines determines customer’s delinquency status and
customer scoring.
6 Score: Every delinquent customer is assigned to a value called score. Score is
calculated depending upon many factors like debt amount, debt duration etc.
7 Competency: Competence is a standardized requirement for an individual to properly
perform a specific job. Job wise competency is defined in system and assign to particular
person who can do that job. E.g. Calling Customer a competency. Some people who are
enough skillful to call and convince customer is assigned to this competency.

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2. Overview
Advanced Collection is an extension of collection process in Receivables module therefore it is
obviously linked with Receivables in oracle applications. Customer information and the
transaction details for which customer has not paid on time, all this information will come to
Advanced Collection from Receivables module. Other than that it is linked with the following
modules-

 HR Management (Full implementation): Collectors are employee of the

organizations. So they should be set up as an employee in HRMS. This one is
mandatory.

 CRM Resource Management: Groups, Roles and Resources everything needs to be

managed by CRM Resource Management. This module implementation is also
mandatory.

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3. Necessary Setups
Setup is very important for Collections. Once the setup is done collection process will continue
executing using the collection strategies defined at the time of set up. It is also possible to
modify or create a new strategy.
Below mentioned are the detailed steps required for Advanced Collection setup

1 Step 1 – Create Responsibility

2 Step 2 – Assign Responsibility Profile options
3 Step 3 – Set up Employees
4 Step 4 – Assign Users to Responsibilities
5 Step 5 – Assign Resource Roles and Used In
6 Step 6 – Import Resources
7 Step 7 – Create Collectors
8 Step 8 – Set up Level for Dunning
9 Step 9 – Set-up Scoring Component
10 Step 10 –Setup Scoring Engine
Step 11 – Create Work Item Template
11 Step 12 – Create Collection Strategies
12 Step 13 – Concurrent Programs - Create delinquencies
13 Step 14 – Set up Profile Options Universal Work Queue
14 Step 15 – IEX: Enable the AR transactions summary tables

Collector Setup:
Step 1: Create Responsibility
First responsibilities for Advanced collection which will be used by collectors need to be
created. Ex – Collections Agent
Responsibility: System Administrator
Navigation: Security >> Responsibility >> Define

Step 2 – Assign Responsibility Profile options

Responsibility: System Administrator
Navigation: Profile >> System
Assign all the required profile options for Advanced Collections Setup

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Step 3 – Set up Employees
Collectors are first employees of the organization. So it is required to set them as Employee
first.
Responsibility: HRMS Manager
Navigation: People >> Enter and Maintain

Step 4 – Assign Users to Responsibilities

Responsibilities are created for Collectors, now these responsibilities should be assigned to
respective user.
Responsibility: System Administrator
Navigation: Security >> User >> Define

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Step 5 – Assign Resource Roles and Used In

Now each user will have their separate roles. So we need to create roles now.
Responsibility: CRM Resource Manager
Navigation: Resource Manager>>Setup>>Roles
E.g. Collections Manager, Collections Agent

5. 1Create Role

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Step 6– Import Resources

Resource as first defined in HRMS then the resource should be imported as Employee in the
system. Once the import is complete the resource is visible in the system and the resource
category is Employee. Later the resource should be tagged with Collection Agent or any other
relevant role. Then only the employee can able to work as Collector.

Responsibility: CRM Administrator

Navigation: Resource Manager>>Maintain Resources>>Import Resources

6.1 Import Resource

6.2 Assign Role to Resource

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Step 7 – Create Collectors
The collector has to be defined in the system so that he/she can perform the collection
activities.

Responsibility: Receivables Super User

Navigation: Set up >> Collections >> Collectors

7.1Collector Creation

7.2 Collector is assigned to the customer

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Step 8 – Set up for Dunning Plan

Dunning Plans are simple collections methods. They automatically send notices to delinquent
customers and, optionally, assign a follow up call to a collector.
Strategies support simple or complex collections activities. They automatically execute
predefined activities to manage delinquent or pre-delinquent customers. We can use
preconfigured strategies or create our own. Organizations use Dunning Plan or strategy as their
Collection method.

Responsibility: Collections Administrator

Navigation: Setup Checklist >>Collections Method Setup>> Create Dunning Plans

One must run the following concurrent programs in Oracle Advanced Collections to
execute dunning plans:

• IEX: Promise Reconciliation: This program updates the open promise information
in Advanced Collections with payments received in Oracle Receivables to
determine outstanding items.

• IEX: Scoring Engine Harness: We can select up to five scoring engines to run at the
same time. The scoring harness assigns a value to an object such as a customer,
account, or bill to location. Another score determines whether transactions are
delinquent, pre-delinquent, or current.
At a minimum, we must run a scoring engine that scores transactions to create
delinquencies; and then run a scoring engine to score the level of our dunning
plan (customer, account, or bill to location).

• IEX: Send Dunnings for delinquent customers: This program sends the results of
the scoring engine harness to Oracle One-to-One Fulfillment to send out dunning
Correspondence.

• IEX: Create Dunning and Broken Promise Call Backs: If we have dunning
callbacks as part of our dunning plan, need to run this program to create callback work
items to a collector's task list in the Collector's Work Queue.

Step 9 – Setup for Collection Strategies:

Use collections strategies as an alternative to dunning plans, to automate the collections

management process and support complex collections activities. Strategies can be used to
recover delinquent transactions such as invoices from Oracle Receivables, cases as
identified by Oracle Lease Management, or loan transactions from Oracle Loans.
A strategy is a series of manual or automated tasks, known as work items, linked
together in the order in which they will be executed. Each work item is a collection
activity to recover a delinquency, such as making a phone call or sending a letter, and
can be reused and included in many strategies. A strategy is associated with a
collections object, such as customers or accounts. The collections object is the data level
we do business at.

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Overview of Scoring:
Scoring forms the foundation of collections activities. Oracle Advanced Collections
uses scoring in two ways:

• To determine transaction status: current, delinquent, and pre-delinquent.

When scoring transactions, Advanced Collections looks at transactions from Oracle
Receivables, including invoices, debit memos, and chargebacks; lease invoices
originating in Oracle Lease Management; or loans invoices originating in Oracle
Loans. In general, if a customer has delinquent transactions, the customer is
considered to be delinquent.

• To determine the value of each customer.

When scoring to assign customer value, we can use any data point about the
Customer. Typically we run customer value scoring at an operational data level
(Customer, account, bill to, or delinquency).
Set up Scoring Components:

Responsibility: Collections Administrator

Navigation: Setup Checklist >>Collections Method Setup>> Create Scoring Components

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9 Create Scoring Components

Step 10 – Set up Scoring Engine:

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What is Scoring Engine?

For each scenario we will be having a score Engine. Each engine is consists of many score
components.
Score Components: Many queries together find out the final score. Each score component
will be attached to one query. Many such components together are responsible to find out total
score for a particular scenario. Each component will be assigned to certain weight. Different
high and low value range will be defined for each component and each range will have certain
value. The final score that we will get is product of value that we will get from query and
weight.

Responsibility: Collections Administrator

Navigation: Setup Checklist >>Collections Method Setup>> Create Scoring Engine

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Scoring
Engine
Details

10 Create Scoring Engine

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Step 11 – Setup of Work Item:

Each strategy is made up of one or more work items. A work item is a task to be
Executed manually or automatically and is driven by a workflow. The workflow notifies
the collector to perform a task or initiates the automatic process. Every work item has
an associated workflow.
Work items are grouped by work type:
• Manual: a task to be completed by a collector or specialist. It is displayed as an
entry on the Strategy Work Item node in Collector's Work Queue. It can be sorted
by priority and other methods. When completed, the work item is removed from
the queue. Manual work items include a personal visit, phone call, and review
tasks.
• Automatic: a task completed by an automated process. This group includes tasks
such as sending e-mails, faxes, or sending documents to be printed.
• Workflow: a custom workflow that initiates an automated task not performed by a
preconfigured workflow.

Create Work Item Template:

Responsibility: Collections Administrator

Navigation: Setup Checklist >>Collections Method Setup>> Create Work Item Template

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11. Create Work Item Template

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Step 12 – Create Collection Strategies:

Responsibility: Collections Administrator

Navigation: Setup Checklist >>Collections Method Setup>> Create Collection Strategies

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12. Create Collection Strategies

Step 13 – Concurrent Programs - Create delinquencies

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Request Set ‘IEX: Oracle Collections Concurrent Request Set’ needs to be run frequently for
following purposes.
• Data flow in Advanced Collections from Receivables
• Delinquency Status Determination
• Customer Scoring
• Strategy Assignment
• Work Distribution
1.
‘IEX: Oracle Collections Concurrent Request Set’ consists of Concurrent Programs:
• IEX: Promise Reconciliation
• IEX: Scoring Engine Harness
• IEX: Strategy Management
• IEX: Purge Score History Table

Step 14 – Set up Profile Options Universal Work Queue

Universal Work Queue (UWQ) is the screen used for getting consolidated view of the work a
collector needs to do. Based on the business needs various profile options need to be set up the
UWQ.

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14. Universal Work Queue

4. Conclusion
It can be concluded that by using the Oracle Application Advanced Collections module debt
collection process of any company can be managed easily and effectively. Depending upon the
different need of different organizations the different strategy can be defined and different
work item can be set.

5. Acknowledgements
• Sudesh Upadhyay: Provided some valuable inputs.
1

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6. References
1. Oracle Advanced Collection Implementation & User Guide
2. https://metalink.oracle.com

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