SAP Technical Brief SAP Collections Management

RECEIVABLES MANAGEMENT WITH SAP COLLECTIONS MANAGEMENT

Increase Value and Profits with Proactive Collections

Efficient receivables management can be difficult to achieve. But without the proactive management of past-due accounts, profits can remain elusive and account receivables employees are pressured to process more and more individual receivables as quickly as they can. The results: unnecessary errors, receivables losses, and the soaring costs of inefficiency all of which you can easily avoid. The SAP Collections Management application brings efficient, proactive receivables management within reach.

Efficient receivables management has always been at the top of the wish list for many companies. That may be even more true today as traditional past-due or dunning notices seem to have less impact upon a customers willingness to settle outstanding invoices. Many companies are instead choosing individual management of accounts in important customer segments. The brunt of this decision usually falls upon receivables management employees, who have the unenviable often impossible task of processing an ever-increasing receivables balance as fast as possible. For some companies, proactive management of overdue or outstanding invoices is simply not feasible. The results for the creditor are fatal: reduced working capital, a deteriorating cash flow, an escalating risk of losses, and outsized costs and effort for receivables management. The SAP Collections Management application can paint an entirely different picture. SAP Collections Management can make your receivables management effort truly efficient, improving the overall value of your company. Key benefits include: Proactive collection of outstanding receivables Faster processing through the automatic identification and prioritization of customer accounts Improved customer relationships through customer-specific receivables management Reduced days sales outstanding (DSO) Improved cash flow Increased efficiency due to automated work lists Mitigation of credit risk and potential losses through tight integration with the SAP Credit Management application Follow-up of invalid disputes through integration with the SAP Dispute Management application

Proactive Receivables Management for a Healthier Bottom Line

The robust functionality of SAP Collections Management makes your receivables management more proactive, relieving employees of unproductive routine activities and empowering them to take care of the really critical customer relationships personally. A proactive approach has a positive impact on cash flow and accounts in arrears, of course, but it also improves customer relationship management because you can react quickly to invoicing discrepancies. Cash flow and DSO have an immediate effect on shareholder value, as well as strategic direction (depending on your customer and market segments). By improving the effectiveness of your accounts receivable department with SAP Collections Management, you can target chronically delinquent accounts, offer discounts more intelligently, and retain your best-paying customers. SAP Collections Management can prevent poor cash flow and DSO from ever becoming a problem.
Support for All Phases of Collections

Figure 1: Collection Work List, Including Due Date Grid for Selected Customer
Preparing Customer Contacts

SAP Collections Management supports collection specialists through all steps of collections management: Creating a collection work list Preparing customer contacts Documenting customer contacts
Creating a Collection Work List

SAP Collection Management automatically creates a daily work list for each collection specialist. The work list contains all customers that the collection specialist should contact in order of priority (see Figure 1). The prioritization of the customers in the work list is determined by the collection strategy assigned to the customer. Once a customer has been successfully contacted, the corresponding item is removed from the work list.

To prepare customer contacts, collection specialists need information about why the contact is necessary. They also need to consider the customers account and previous contacts with the customer. The work list shows the required information as key figures, the due date and the value of the customer according to the assigned collection strategy, and one navigation level below on the customer account level. Here the open invoices of the customer are listed with their respective status. Collection specialists can also view an overview of previous customer contacts with the results of previous contacts (see Figure 2). They can also see promises to pay, dispute cases, and resubmissions that arose from customer contacts.

If collection specialists cant reach a customer or the customer requests a return call, they can create a resubmission. On the date specified, the customer appears on the work list again. After the customer has been contacted, the collection specialist summarizes and documents the contact. SAP Collections Management creates a standard note and adds all promises to pay, dispute cases, and resubmissions created to the customer contact. Collection specialists then enter a contact result and return to the work list. There they prepare the next customer contact.

Figure 2: Overview of Past Customer Contacts

Documenting Customer Contacts

To make the contact, collection specialists use the contact data of the contact person at the customer. The collection specialist enters the results of the customer contact into SAP Collections Management. If a customer promises to pay open invoices, the collection specialist creates a promise to pay notification for the invoices specified (see Figure 3). SAP Collections Management automatically monitors whether the customer keeps this promise to pay. If the collection strategy is configured accordingly, when promises to pay are broken the customer appears on the work list again. If a customer objects to an invoice, collection specialists can create a dispute case for the invoice. The department responsible can process the dispute case immediately. If the customers objections are found to be unjustified, the customer automatically appears on the work list again.

Figure 3: Creating a Promise to Pay for Selected Invoices Controlling and Supervising Collections

The collection manager is responsible for ensuring that receivables are collected according to your companys financial targets. SAP Collections Management helps collection managers control and supervise the collection of outstanding receivables.

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Defining Collection Strategies

Monitoring the Collection of Receivables

Collection managers define the criteria (the collection rules) that are used to analyze customers and prioritize them for collections. To do this, you define collection strategies and enter them into the software (see Figure 4). You can create different strategies depending on the customer group, region, or company situation. All customers are analyzed and valuated according to the strategy assigned to them and, depending upon the valuation, included in the work list. Collection strategies are therefore the basis for the automatic creation of work lists. The collection manager also determines the collection strategy that a group uses to collect receivables.

To monitor the process, you can display the work list items for all collection groups. You can display statistics that help you evaluate how many work list items have been completed, how many are still open, and how many successful or unsuccessful customer contacts have already been carried out. You can also redistribute work list items among collection specialists for a more even distribution of the workload and to ensure that high-priority items are processed quickly.
Manage Your Complete Financial Supply Chain

SAP Collections Management is one of eight applications in the SAP Financial Supply Chain Management (SAP FSCM) set of applications, a complete set of financial supply chain management applications in the mySAP ERP application. SAP FSCM optimizes the financial and information flows within a company and between business partners. SAP FSCM handles the following areas: Receivables management (with SAP Collections Management) Electronic billing and payment (with the SAP Biller Direct application) Efficient resolution of payment deductions and other receivables-related disputes (with SAP Dispute Management) Automated credit decisions (with SAP Credit Management) Management of liquidity positions (with the SAP Cash and Liquidity Management application) Payment factories (with the SAP In-House Cash application) Management of financial positions and market risks (with the SAP Treasury and Risk Management application)
Learn More

Figure 4: Collection Strategy, Including Various Collection Rules

For more information about SAP Collections Management, SAP FSCM, and mySAP ERP, please visit the SAP Web site at www.sap.com/solutions.

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