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SAP Receivables Management Dispute & Collection Module Implementation August 13, 2012Judy Wagner, Director Corporate CreditRoche Diagnostics Corporation
ERP Version & Receivables Management Modules
• SAP ERP Version – 6.0
• Receivables Management version – Enhancement Pack 4
• Modules used – Collection Management and Dispute Management
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Number of customers and their characteristics
• 17,000 overall payers
• Approximately 6,000 active payers
– Size varies across all segments, small to large
– Both public and private customer
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AR Size
• AR Balance
– Between $250 - 300 M
– Average 89% current
– Average auto cash hit rate 81%
• Annual Sales
– $2+ B
– 688K+ invoices generated in 2011
– DSO averages ~45 days
• Staff
– Supervisors – 3
– Collectors – 16
– Credit Analysts – 4
– AR (Cash App) - 44
Main sources of overdue payments
• Disputes
– Pricing
– Tax certificates
• Customer cash flow issues
– Related to government reimbursement
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SAP Receivables Management
• Best in class/fit with SAP
• Provided a solution that did not have bolt on solutions that would have to be maintained and upgraded in future
• Partnered with SAP out of Germany to create a global template and to assist with the implementations on first 4 affiliates
– Listened and understood our global approach
– Brought solution through process discussions and gap analysis
– Great partners with exceptional knowledge on Receivables Management
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Global instance vs. Regional instance – why?
• Align processes across the global utilizing the same tools
• Easier support model if we all use essentially the same global template
• Establish best practices
• Saved costs in long run as we did not have to do full requirement gathering for each country
• Consistent reporting and shared knowledge going forward
– Training manuals
– Resources
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Organizational Environment
• RDC first site to go live August 2011. Spain live in 2012 and working now with Tucson who is expected to go live beginning of 2013.
• Future state – 6-8 organizations on 1 instance of SAP and 3 affiliates on another instance of SAP, all organizations are separated by different company codes
• Users:
– 16 Collection
– 50 Contracting (Pricing)
– 4 Cash application
– 4 Customer Service
– 1 Tax
• No shared service at this time, however, tool could be leverage to do this
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Gaps identified in the modules
• No bolt on software, however, we did custom program some items into Receivables Management
• Gaps identified dispute management:
– Enhanced correspondence with ability to utilize various templates and attaching supporting files
– Correspondence is able to be configured in multiple languages
– System able to assign process deadlines automatically
– Program that identifies overdue cases
– Workflow functionality based on reason code and potential next steps
– Ability to automatically begin the creation of debit and credit from Receivables Management
– Automatic creation of disputes needed to be program, functionality exists
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Gaps identified in the modules
• Gaps identified collection management:
– Added key fields from F.35 into Receivables Management, i.e. text
– Added fields from credit management (i.e. DSO, credit risk)
– Integrated Collection Module with the dunning process
– Able to upload mass creation of promises to pay
– Added field for rolling 12 month sales
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Reporting
• Using BW, 7 reports
– Collection Management• Worklist summary• Customer contact results• Promise to pay
– Dispute Management• Flexible dispute management report• Dispute Aging• Turn Around Time• Management Overview
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Roles & Processes in Collections Management
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Collection of Receivables Process Overview
•Three basic processes Collection Specialist performs:
Automatically created Key figures per worklist item Promise to pay
Personalized Validation detail Dispute cases
Search functions Due date grid Resubmissions
Statistics Invoice overview Customer contact
Overview of past payments,
contacts, and resubmissions
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Collection Manager process for “Control of Collections”
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Collection Rules
Collection Strategy
Collection group
Business partner
Collection profile
Allocate worklist items
Control statistics
Collection Rule
Collection rules reflect the reason why a customer is to be contacted. A collection rule formulates the prerequisites that a customer in a collection segment must fulfill in order to receive valuation points. SAP delivers various collection rules in the standard. Collection rules are listed for each collection strategy.
Example of a rule:
Prerequisite + Condition = Collection Rule
Risk Class Total Open Items
Since N Days
Broken Promise to Pay
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Data Sources for Collection Rules
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Collection Strategies
Collection Strategies comprise company-specific rules for collecting receivables.
Collection strategies have the following purpose
•Determine which customers are to be contacted in collection management (basis for automatic worklist creation
•Prioritize customers on the collection worklist
•Define the currency in which the amounts are to be displayed on the worklist
•Determine the time intervals of the aging of receivables per customer in a segment (due date grid)
•Define the type of integration with dunning in Accounts Receivable Accounting
•Determine the influence of the terms of payment on Collections Management (consideration of cash discounts)
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Sample Collection Strategies
Industry Z: Prv: CD LVC
Weighted Value Strategy Description Prerequisites and Conditions (Values) Exit Rule (X)10 Total of All Items Overdue Since n Days Item Total: From 0.00 to 0.00
Days Overdue: 60
20 Broken Promise to Pay Total Promised: From 0.00 to 0.00Level of Promise to Pay: 0 to 0
5 Total of Amounts from Dispute Cases to Be Collected Total Amounts: From 0.00 to 0.00
10 Total of All Items Overdue Since n Days Item Total: From 25,000 to 50,000Days Overdue: 91
20 Total of All Items Overdue Since n Days Item Total: From 25,0001 to 100,000Days Overdue: 91
40 Total of All Items Overdue Since n Days Item Total: From 100,001 to 999,999,999Days Overdue: 91
40 Dunned Amount Still To Be Collected n Days after dunning Dunning Level: 4 to 4Days Since Last Dunning: 30
Successful Customer Contact in Last n Days Days Since Last Contact: 7 X
20 There is a resubmission due for the customer Contact Person was AbsentContact Person Requests to be Called Later
185 Total Valuation
This strategy can probably be simplied since we would only Dun these customers and that for the most part would be the onlycontact made on these accounts.
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Sample Collection Strategy Industry Y053 Prv: Applied Science
Weighted Value Strategy Description Prerequisites and Conditions (Values) Exit Rule (X)30 Total of All Items Overdue Since n Days Item Total: From 0.00 to 0.00
Days Overdue: 30Risk Category Low
40 Total of All Items Overdue Since n Days Item Total: From 0.00 to 0.00Days Overdue: 30Risk Category Med
50 Total of All Items Overdue Since n Days Item Total: From 0.00 to 0.00Days Overdue: 30Risk Category High
60 Total of All Items Overdue Since n Days Item Total: From 0.00 to 0.00Days Overdue: 30Risk Category Very High
10 Total of All Items Overdue Since n Days Item Total: From 25,000 to 50,000Days Overdue: 91
20 Total of All Items Overdue Since n Days Item Total: From 25,0001 to 100,000Days Overdue: 91
40 Total of All Items Overdue Since n Days Item Total: From 100,001 to 999,999,999Days Overdue: 91
20 Broken Promise to Pay Total Promised: From 0.00 to 0.00Level of Promise to Pay: 0 to 0
20 Broken Promise to Pay Total Promised: From 0.00 to 0.00Level of Promise to Pay: 0 to 0
5 Total of Amounts from Dispute Cases to Be Collected Total Amounts: From 0.00 to 0.00
10 Dunned Amount Still To Be Collected n Days after dunning Dunning Level: to Days Since Last Dunning: 30
Successful Customer Contact in Last n Days Days Since Last Contact: 7 X
20 There is a resubmission due for the customer Contact Person was Absent
Contact Person Requests to be Called Later
305 Total Valuation
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Sample Collection Strategy
Industry Z: Prv: Affiliates
Weighted Value Strategy Description Prerequisites and Conditions (Values) Exit Rule (X)
100 Amount of Individual Items Overdue Since n Days Item Total: From 0.00 to 999,999,999
Days Overdue: 60
100 Total Valuation
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How SAP Dispute Management helps collections• Controls and streamlines the dispute case process
• Central component for handling dispute cases enables cross-department dispute resolution
• Integrated in financial but also in logistical process
• Organizes and stores all information and documents related to a dispute case
• Includes sophisticated reporting
– Detect quality issues
– Control workload
– Track dispute process
– Deductions per customer
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What is a Dispute Case?
• A dispute case is a new business object that
– Has descriptive attributes
– Is like a folder that links all relevant documents and objects
– Can be processed across multiple departments
– Supports different communication channels
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Updating Dispute Management Information
Dispute Management is automatically informed of financial transactions such as:
•Incoming payment for disputed items
•Offset credit memos for disputed amount
•Manual clearing positing
The update is visible in the dispute case
•In corresponding amount fields
•As linked objects in specific folders
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CorrespondenceCan be created
•Automatically by events like
– Creating a dispute case
– Closing a dispute case
•Manually by the user when processing the dispute case
SAP delivers standard customer correspondence for
•FAX, e-Mail, and letter
– Notification that a dispute case has been created
– Notification that dispute case has been closed
– Query regarding dispute case
– Information about dispute case
•Customers can create their own correspondence
– Using Smart forms
– Data available for correspondence• All attributes• External Notes• Object keys of objects sorted in the dispute case folder (case record)
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ReportingReceivables Management Dashboard - January 2012
Collection Activity for the Month Goal of 25%Dashboard
Date 1/6/2012
Collection Specialis No of worklist items No of completed Worklist Items% of completed Worklist
Items2837 305 10.75%
CURRENTLY THE PTP DATA IS ONLY SHOWING OPEN PTP ITEMS AND DOES NOT REFLECT ITEMS PAID WITH A STATUS OF 'KEPT' - THIS IS BEING ADDRESSEDPromise To Pay Activity for the Month Activity is only for payments promised for Current Month Goal 85% Kept
245 $1,145,152.90 $15,000.00
Dispute Activity for the Month Goal TAT < 45 days Goal no deduction amounts beyond 61 Day aging bucket
CoordinatorNumber of Open Dispute Cases Average Resolution Time (Days) Current Disputed Amount 0 - 30 Days 31 - 60 Days 61 - 90 Days
91 - 120 Days
>= 121 Days
464 24.98 $1,657,151 $675,116 $643,305 $266,561 $69,263 $2,907 100.0% 40.7% 38.8% 16.1% 4.2% 0.2%
Receivables Management Dashboard - July 2012
Collection Activity for the Month Goal of 25%Dashboard
Date 7/31/2012
Collection Specialist No of worklist items No of completed Worklist Items% of completed Worklist
Items11567 3049 26%
Promise To Pay Activity for the Month Activity is only for payments promised for Current Month Goal 85% Kept
Collection SpecialisNumber of Promise to Pay Amount Promised
Amount Paid (Promise to Pay)
% Promised Kept
% Promised Broken
% Partially Kept
1342 $11,608,609.48 $9,942,803.95 86%
Dispute Activity for the Month Goal TAT < 45 days Goal no deduction amounts beyond 61 Day aging bucket
CoordinatorNumber of Open Dispute Cases Average Resolution Time (Days) Current Disputed Amount 0 - 30 Days 31 - 60 Days 61 - 90 Days
91 - 120 Days
>= 121 Days
153 23 $942,774 $423,465 $54,157 $450,032 $5,665 $9,455 100.0% 44.9% 5.7% 47.7% 0.6% 1.0%
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Key Challenges Faces
Lessons Learned
Technology Process
Finance 2011 AccomplishmentLaunch of Receivables Management
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