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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.
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?
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 reposes
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
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.
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.
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.
Collector Setup:
First responsibilities for Advanced collection which will be used by collectors need to be
created. Ex – Collections Agent
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
Create Role
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.
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.
• 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.
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.
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:
Navigation: Setup Checklist >>Collections Method Setup>> Create Work Item Template
Create Work Item Template
Step 12 – Create Collection Strategies:
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.