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Using SAP Collection Strategies & Correspondence Automation to Increase Collections Performance and Reduce DSO
Sashi Narahari CEO, HighRadius
SAP Receivables Management Seminar
Feb 6, 2013 Dallas, Texas
Agenda
• SAP Collection Strategies – How to effectively segment customers?
• Sap Collections integration with A/R – Is it real-time?
• Correspondence Automation – How to make the computer do a lot of ‘standard repetitive
work’ and refocus the analysts time on high value targets?
2
SAP Collections Management Users
Define collection strategies / rules
Define work item assignment to users / groups
Monitor and reallocation of workload
Incoming / Outbound collection calls
Process daily worklist based on prioritization
Record customer contact and follow up
Collections Manager Collections Specialist
Data available for Collection Strategies
• Credit Limit
• % Utilization
• Credit Exposure
• Risk Category
• Master Data or Operational Data which can be added to collections management
• Aging
• Amount
• Dunning Level
• Amount Dunned
• Disputed Amount
• Dispute Case Status
• Payment Data
• Broken Promise to Pay
• Number of Promise to Pays
• Promise to Pay Amount
• Customer Contacts
• Resubmissions Collections
Data
Open AR & Dispute
Mgmt Data
Credit Data Other Data
Collection Rules
Collection Strategy
Collection Strategy for High Risk Customers
Maximum Valuation = 100
High to Medium Risk and greater than 80% Credit
Limit Utilization
Valuation: 35 points
Past Due Invoices Over 15 days Past Due & Dunned
One or More Times
Valuation: 50 points
Resubmission Due for the Customer
Valuation: 15 points
Collections Strategy Definition
Collection Strategy Valuation
Valuation of customer is les than 20% of Maximum Valuation – Low Priority
Valuation of customer is less than 40% of Maximum Valuation – Medium Priority
Valuation of customer is less than 60% of Maximum Valuation – High Priority
Valuation of customer is less than or greater than equal to 100% of Maximum Valuation – Very High Priority
Solution Architecture
Set of Customers
[C1, C2, ………Cn]
Set of Customers
[C1, C2, C3……………Cn]
Subset of Customers [C1, C2, ………Cn]
Strategy
Rules
Auto Correspon-
dence
Call
Fax
Customer Segmentation • Small & Medium Business – Slow Pay
– Automated Proactive Reminder 7 days before
– Past Due Notice 1 after 7 Days
– Past Due Notice 2 after 21 Days
– Demand Notice after 45 days
– Call Customer after 60 days
• Small & Medium Business - Fast Pay – Past Due Notice 1 after 14 Days
– Past Due Notice 2 after 28 Days
– Call Customer after 50 days
• Major Accounts (Large Customers) – Proactive Reminder 14 days before
– Past Due Notice 1 after 14 Days
– Call Customer after 30 days
Collections Management: Collection Strategy
Strategy for Slow Pay
Customers
• Pro-active (0-20 points) • 1st Past Due (21-40 points) • 2nd Past Due (41-60 points) • Demand Notice (61-80 points) • Call (81-100 points)
Collections Management: Collection Strategy
Strategy for Fast Pay Customers
•1st Past Due (21-40 points) • 2nd Past Due (41-60 points) •Call (81-100 points)
Collections Management: Collection Strategy
Strategy for Major
Customers
• Pro-active (0-20 points) • 1st Past Due (21-40 points) • 2nd Past Due (41-60 points) •Call (81-100 points)
List of Customers Prioritized
Collections Management: Collector’s Worklist
• Pro-active (0-20 points) • 1st Past Due (21-40 points) • 2nd Past Due (41-60 points) • Demand Notice (61-80 points) • Call (81-100 points)
Is SAP Collections real-time?
17
• Worklist generation is batch • Say once a day
• Short Answer: YES!
• Open Items is real-time • Data is being read directly
from A/R
Ability to send correspondence
from Worklist
Correspondence: From Worklist
Select Pro-active to mass process
Select Package and which transactions to
include in correspondence
Select Contact and Correspondence
Mode
Correspondence: Proactive Reminder
Correspondence: Package Definition
Select from a list of Smart Forms, Documents such
as Invoice Copy, POD copy etc to define a ‘collated’ package
‘Call’ customers with high past due
balances or no outcome after
correspondence
Collector’s Worklist: Call Customers
Review open items to be
collected
Collections Management: Invoice Summary
Default Customer Contact readily available
Customer Contact Outcome
Customer Contact
Promise to Pay
Dispute Case
Request Follow up
Request additional
data
Not Available
Call Customer Outcome: Promise-to-Pay
Record promise for payment or
customer contact at the invoice level
Call Customer Outcome: Negotiate Installments
Ability to setup Installment plans
on high risk customer
Call Customer Outcome: Invoice Disputed
Ability to identify details of the dispute
and route it to the appropriate analyst