Receivables Management is part of the Financial Operations area – which are often structured / grouped in shared services or global business services.
SAP has a series of modules that can help companies manage receivables.
These add-ons can be deployed in a single system, but can pull data together from multiple systems – giving your team a unified view of their receivables, even in a distributed systems landscape.
Automated processes deliver high quality customers interactions – and if your shared services organization has to deliver services for additional units next year, the receivables processes will be ready to scale, with:
Credit checks for every business transaction
Updating of customer credit limits
Workflow for dispute resolution
Automated creation of credit memos / accounting postings
Collections prioritization
Synchronization between accounting / incoming payments and promised payments and open disputes
Reporting allows your teams to focus on key customer accounts to drive down bad debt write-offs by better managing credit relationships, and improve DSO and working capital with tools to collaborate with your customers on payments.
Receivables Management is a key part of an optimized order to cash process. Based on FI-AR (the accounts receivables backbone of SAP ERP Finance), SAP offers a suite of add-on applications that are fully, natively integrated with FI-AR and ERP processes like sales and distribution.
Companies can deploy these add-ons as needed – there is no "correct" order for an implementation – businesses start where their pain is greatest.
These receivables management engines include:
SAP Credit Management – to help companies implement a single company-wide credit policy and use credit analysis results to calculate credit limits – including embedding credit checks into key operational processes
SAP Biller Direct – an electronic bill presentment and payment solution that 1) lets customers download or pay invoices via bank transfer, card, etc., as well as start the dispute process, and 2) allows vendors to see the approval and payment status of their invoices, including inquiry functionality
SAP E-Invoicing for Compliance – an e-billing solution that sends customers validated, signed invoice PDFs via email or invoices via EDI – including the compliance checks required in 37 different countries
SAP Collections and Dispute Management – modules that provide workflow and process support for managing disputes as well as a module that generates prioritized collections worklists that help collections specialists proactively contact customers.
These add-ons can be deployed in a single system, but can pull data together from multiple systems – giving your team a unified view of their receivables, even in a distributed systems landscape.
For the accountant using the latest version of S/4HANA Finance, SAP makes analytical Fiori applications for reporting scenarios available, with apps tailored for accountants and managers.
Clicking on these coloring coded tiles will provide real-time analytics about total and future receivables, dunning levels, and much more. And you can always jump into the customer details.
In terms of transactions, user productivity has also been improved:
Layout variants allow users to save favorites from hundreds of data columns
Fuzzy search and type-ahead features
Worklists structure processes
Context-sensitive navigation points within processes
Improved productivity – fewer clicks and screen changes
Fiori apps have been delivered for the following sub-processes in FI-AR:
Customer balances
Customer line item browser
Clear/Post incoming payments
Correspondence
Dunning
Manage bank statements
SAP Credit Evaluation and Management
Credit Management lets companies have a cross-enterprise, scorecard-based approach to rating customers and managing automatically-assigned credit limits which will reduce write-offs while increasing automation rates. All exposures from all systems are considered, and workflow-based processes keep credit blocks from slowing sales.
Credit Limit Management
System to implement a company-wide credit policy (one central view of customer credit, even in a distributed system landscape)
Manage a customer credit profile - based on the SAP Business Partner master data structure
Credit Case
Credit case for structured, workflow-supported processing of credit limit applications
Track status and result of credit limit applications in worklist approach
Credit Rules Engine
Categorize customers by scoring rules
Automatically calculate and assign a customer-specific credit limit
Credit check rules
Configuration of follow up processes with event chains
Customer scoring using own scoring rules
SAP Dispute Management
Manual dispute handling is disjointed (lots of media breaks –phone, email), which drives up DSO, and puts customer relationships at risk
Most companies handle billing disputes and collections cases in the following way. (1) A customer calls, emails or faxes the seller to tell them there is a problem with the invoice or the AR department sends a report with past due accounts. (2)The dispute coordinator use receivables aging reports extracted from the company’s AR system—but they do not show the reasons behind past-due accounts. (3) The coordinator needs supporting data to verify the dispute so he calls or emails the people in sales or shipping—depending on what’s being disputed– and hopes they provide a timely and accurate response. (4) Tracking and follow up are strictly manual and there’s no way to tell whether or not progress is being made against the dispute. (5) And because the disputes are not tracked in the AR system, its likely that the customer will appear on an aging report and called by a collection agent.
37% - Lower overdue accounts receivable where disputes can be settled online and a dispute management system is integrated into the collections system
Invoice disputes
Have various root causes inside and outside Finance
Are hard to identify
Delay payments
Increase DSO (day sales outstanding)
SAP Receivables Management automatically
Identifies disputes based on rules
Drives resolution - increases quality and shortens resolution
Builds structured knowledge database – (over time, the number of disputes decreases as you identify and fix the root causes of disputes - Your Finance team is happy. Your customer is happy)
Reduces DSO
Process Description:
1. Continuous synchronization between A/R and dispute cases
Automatically create disputes for underpayments
Create and view dispute cases from financial transactions
Automatic update of dispute cases by financial transactions
Link to financial and billing documents (and sales documents)
2. Monitoring for progress and success of collections
Analyze and escalate dispute cases
Create notes, view an action log or link documents to the case
Perform dispute case analysis and monitor trends that influence dispute resolutions
3. Automated workflow and allocation of worklists
Correspond with customers
Assign workflow for sales teams or collections agent to work with customers
SAP Collections Management
SAP delivers an integrated, automated and collaborative environment for collecting all accounts receivable, complete with integration to all relevant order, invoice, bill and credit information in the collections management capability of SAP Collections and Dispute Management.
The integrated nature of the solution provides important advantages to customers. Disputes and any relevant customer credit information is combined with bills and collections data to give collections and customer service personnel a complete picture of the customer relationship. This improves customer satisfaction, as well as reduces the time and expense of collecting from customers. The integration of the Biller Direct portal also enables customers to manage their own payments, further saving time (improving DSO) and costs.
Business issues:
Inconsistent account prioritization; Labor intensive and long cycles; High costs of collection; Increased bad debt risk
Process Description:
1. Identify overdue accounts
Review dispute cases and overdue accounts
Receivables aging for customers
Collection specialist can create/renew promise to pay
2. Prioritize collections
Determine which customers are to be contacted
Determine the terms of payment, consider cash discounts
3. Generate worklists
Contacts valuated and prioritized according to collection rules in a collection strategy
360 degree review of customer data to prepare call
4. Leverage integrated system
Open and manage dispute cases
Process invoices individually or grouped
Analyze results to evaluate strategy effectiveness
SAP has 15+ years automating receivables processes – in simple environments but also in complex, multi-system landscapes. These receivables processes of credit, dispute and collections were designed to work across multiple ERP systems.
SAP Delivers
Standardized processes that scale as business expands and contracts - automation and integration makes processes less susceptible to changes in volume
High-quality support to make sure your customer interactions are consistent across the enterprise
Team management capabilities for prioritization, execution and reporting across systems
Several different connection scenarios supported (Central Finance, Shared Service Framework for Finance, ALE classic, etc) depending on your architectural setup.
Credit, Collections and Dispute could be deployed on your Central Finance instance with S/4HANA Finance
Or they can be deployed with SAP Shared Services Framework for Finance for an added level of service level management and communications integration
Finally, companies have been using ALE scenarios with these solutions across multiple back end ERP systems for nearly 15 years.
The SAP receivables management portfolio will help your finance operations team be ready for the digital business revolution – we enable you to scale standardized business processes and give each customer the impression that they are highly valued – by providing everyone with real-time access to account details.
