Financial Supply chain Management.
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Financial Supply chain Management.
- 1. 1 SAP Financial Supply chain Management (FSCM) Solutions Copyright © 2011, HighRadius Corporation. All rights reserved. Presented by Vikram Gollakota
- 2. 2 About HighRadius • Founded by a team with an extensive background in SAP and financials process automation • Specialize in Cash Application, Collections, Deductions and Credit Management • Provide Accelerators to SAP FSCM modules (to fill SAP gaps) • Provide Hosted Software-as-a-Service (SaaS) Solutions • Ranked among fastest growing technology companies in Houston in 2008, 2009 & 2010
- 3. 3 Partial List of Customers
- 4. 4 HighRadius Product Lines Dispute Resolution Accelerator Credit Memo Approval Credit Decision Accelerator for SAP POD & Claims Automation Document Management Cash Application Automation Deductions Management Credit Data Aggregation ReceivablesRadius SaaS Products SAP FSCM Accelerators Credit Debit Matching Engine FSCM Correspondence Automation Trade Promotions Settlement Cash Collections Forecasting
- 8. 8 FSCM Credit Management – Overview • New Module from SAP as a part of FSCM Suite. • Latest version is FSCM Credit Management 6.0 Enhancement package 4. • This is independent module and not an upgrade for SD Credit Management (FD32). • According to SAP this will eventually replace SD Credit Management.
- 9. 9 Description SAP FSCM Credit Management FI-AR Credit Management Credit Checking. Integrate SAP and Non SAP Systems for a centralized Credit Management. Integrate external credit rating agency information. Credit Sore and Limit Calculations. Workflow. Decoupled Risk Assessment to Credit Checking. Standard BI content and Portal Access for reporting and analysis FSCM Credit Management vs. FI-AR Credit Management
- 10. 10 SAP Credit Management Business Partner Overview
- 11. 11 A Business Partner can have many roles For example (Credit Mgmt, Collections Mgmt etc) Business Partner Master Data (UKM_BP) similar to Customer Master Data (FD01). If Customer Master exists in FD01, Auto synchronization process available for BP to be created / updated upon Customer creation / change
- 12. 12 Various Identification Numbers of the customer like DUNS number, Legacy Customer Number, Ticker Symbol etc can be configured and stored here. Tax Number and other legal identifications of the customer can be stored here. VAT Number, US Tax Identification Number etc
- 13. 13 Scoring Rule computes Credit Score / Credit Limit Risk Class is derived from the credit Score above Check Rule defines Credit Checking Rules. For example Dynamic Credit Check, Oldest open item etc Integrate External Agency Rating information. For example D&B Cap, D&B Financial Strength, Moody’s etc
- 14. 14 Info Categories are available to store additional information like Credit Insurance, Negative Events etc
- 15. 15 Credit Segment = Credit Control Area Credit segments are required for calculating the credit limit and enable you to carry out detailed checks at business partner level. Credit Limit / Exposure and Utilization %. Can take you to a detailed view
- 16. 16 Double click to get to the transaction details
- 17. 17 Double click to get to the transaction details
- 18. 18 Additional Information which will effect the credit decision an be added here. For example Security, Seasonal increase in limit etc
- 19. 19 Payment Behavior key figures are fields that summarize the customers payment history Information Available on this Screen: 1. Dunning Data 2. Oldest Open Item Data 3. Last Payment Data 4. Key Figures (DSO, Sales of the last 12 months, Highest Sales in last 12 months etc)
- 20. 20 A business partner relationship represents the business connection between two business partners and is characterized by the business partner relationship category. Some of the Relationship Categories that are important for Credit Management are 1. Higher-level Credit Management Account of 2. Lower-level Credit Management Account of 3. In Credit Management is managed by 4. Has Contact Person
- 21. 21 SAP Credit Management Credit Checking
- 22. 22 Credit Checking Credit Check Rule is a set of conditions that are checked during “Order to Cash” process to determine if the process can continue without a block Credit Check Rules can be assigned to the BP irrespective of the Risk class. For example a High Risk Customer having a “Cash in Advance” Payment Terms can have “Limited Credit Check”
- 23. 23 Credit Checking – Definition A Credit Check Rule consists of Check Steps each step consists of parameters that must be fulfilled for order processing to complete
- 24. 24 Credit Checking – Standard Checks Standard Check Explanation Statistical Check of Credit Exposure Static check includes total exposure of all Open Orders, Delivery, Billing and Open AR. It can also considers “Collaterals” and “Credit Insurance”. Dynamic Limit Check with Credit Horizon Dynamic check includes total exposure of all Open Orders (with in a Horizon period of days), Delivery, Billing and Open AR. It can also considers “Collaterals” and “Credit Insurance”. Check for Maximum Document Value Maximum Document Value, can be defined for each Segment. Check for Maximum Dunning Level Maximum Dunning Level Check for Age of Oldest Open Item Age of the Oldest Open Item Check of Payment Behavior Index DSO
- 25. 25 Check Checking – Rules Summary • SAP FSCM Credit Checking can be enabled to integrate with both SAP and non-SAP instances • New Credit Check steps can be customized by adding custom rules and also make them configurable • This will switch off SD credit check
- 26. 26 SAP Credit Management Credit Scoring
- 27. 27 Scoring Rule computes Credit Score / Credit Limit
- 28. 28
- 29. 29 Credit Score – Scoring Formula Example 1. If Customer is in Negative List Set Score = 0 and exit 2. If Customer is in Positive List set Score = 100 and exit 3. If Customer has a Foreclosure, Bankruptcy or any other negative characteristics Set Score = 0 and exit 4. Normalize external rating and add it to final score 5. Normalize Legal form and add it to final score 6. Normalize Industry and add it to final score 7. Normalize country and add it to final score 8. Normalize age of country add it to final score 9. Normalize Net Profit Margin and add it to final score 10.Normalize Equity Capital add it to final score
- 30. 30 Score Formula: Define Steps , each step has a condition and points that can be assigned. All these points can add up to a credit score
- 31. 31 Credit Score – Limit Formula Example 1. If Credit Score = 0 Set the Credit limit = 0 2. If Credit Score > 0 and <= 40 set the credit limit = (MAX_SALES in last 12 months)*0.5 3. If Credit Score >= 40 and <= 60 set the credit limit = (MAX_SALES in last 12 months)*1.0 4. If Credit Score >= 60 and <= 90 set the credit limit = (MAX_SALES in last 12 months)*1.5 5. If Credit Score > 90 set the credit limit = (MAX_SALES in last 12 months)*2.0
- 32. 32 Score Formula: Define Steps , each step has a condition and Limit subsequently credit limit can be calculated and assigned.
- 33. 33 SAP Credit Management Credit Workflow
- 34. 34 These events can trigger workflow’s, calculate the credit score / credit limit etc. For example External agency has downgraded the Customer and the information has updated in the BP. In this event we can configure the system recalculate Credit Score and start a workflow to have the Credit Analyst review the customer’s account
- 35. 35 Credit Case and Credit case attributes.
- 36. 36 Approval Steps for the Credit Case
- 37. 37 SAP FSCM Collections Management
- 38. 38 SAP Collections Management Roles & Responsibilities 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 Collection Manager Collection Specialist
- 39. 39 Work Item Prioritization Work Item Assignment Monitor & Reallocation of Workload How do you categorize your customers for collection activities? How do you assign and distribute work items to collectors? Monitor collector performance Reallocation of workload through reassignment or temporary reassignment of work items When should a customer be contacted for payment? How do you prioritize customers that should be contacted for payment? SAP Collections Management Collection Manager
- 40. 40 SAP Collections Management Collection Strategy Collection Strategy Collection Rule 2 20 Points Collection Rule 1 30 Points Collection Rule 4 10 Points Collection Rule 5 20 Points Collection Rule 3 15 Points High Risk Class Item greater than 30 days past due Amount to be collected greater than $0.01 No successful contact within 5 days Credit limit utilization is greater than 95% Dunning level is greater than 2 Amount to be collected greater than $0.01 There is a resubmission due There are broken promises to pay
- 41. 41 SAP Collections Management Demonstration: Collection Manager Role
- 45. 45 Text Priority is determined by the valuation of each collection rule
- 46. 46 Access Worklist Contact Customer Record Customer Contact Review customer work item Receivables, payment history, dispute cases, promise to pay, notes and contact person Create promise to pay to record invoice-level customer contact Create dispute case for disputed items Create resubmission for customer follow up Review prioritization of customer work items Check degree of worklist processing Review customer-level information SAP Collections Management Collection Specialist
- 47. 47 SAP Collections Management Demonstration: Collection Specialist Role
- 49. 49 Text Review open items to be collected
- 51. 51 Text Review open and closed dispute cases
- 52. 52 Text Record promise for payment or customer contact at the invoice level
- 53. 53 Text Promise for payment has been recorded
- 54. 54 Text Record customer contact resulting in completion of the work item
- 55. 55 Text Work item completed until worklist is regenerated
- 56. 56 SAP FSCM Dispute Management
- 57. 57 Dispute Case Object Notes Action LogSAP Documents Status Reason Priority Amounts Customer Contact Customer Attachments SAP Dispute Management Centralize Information
- 58. 58 Dispute Case Creation Research Resolution Dispute Case Closure Identify reason code Update attributes, notes and attachments Cross- Departmental collaboration Credit Issuance for valid claim Generate Correspondence for collection of invalid claim Write-off of uncollectable claims Automatic closure based on clearing activity in accounts receivable Automatic creation from incoming deductions Manual creation from open AR line item Manual creation for pre- deducted claim notifications (Customer- Disputed Objects) SAP Dispute Management Dispute Case Processing
- 59. 59 SAP Dispute Management Demonstration: Processing of a Dispute Case
- 61. 61 Text Input selection criteria and hit search Double-Click to open dispute case
- 62. 62 Text Click on reduce attributes button to input notes
- 64. 64 Text Input notes and click on copy
- 65. 65 Text Click on increase attributes button to change dispute case attributes
- 66. 66 Text Update attributes and send to Andy in the Logistics Department
- 68. 68 Text Click on the notes button
- 70. 70 Text Attach POD to dispute case
- 71. 71 Text Input internal notes and return to analyst in the deductions department
- 75. 75 Text Update Concluding Remark notes for correspondence Update status and root cause code
- 79. 79 Text Amount re-paid by the customer Status automatically updated to closed
- 83. 96 Customer Master Administration - Contact Info
- 84. 97 Customer Master Administration - Bank & Credit Card