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SAP Financial Supply chain Management (FSCM) Solutions

Copyright © 2011, HighRadius Corporation. All rights reserved.

Presented by

Vikram Gollakota

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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

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Partial List of Customers

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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

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FSCM Modules At-A-Glance

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Receivables

Management

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SAP Credit Management

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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.

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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

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SAP Credit Management

Business Partner Overview

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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

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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

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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

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Info Categories are

available to store

additional information

like Credit Insurance,

Negative Events etc

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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

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Double click to get

to the transaction

details

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Double click to get

to the transaction

details

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Additional

Information which will

effect the credit

decision an be added

here. For example

Security, Seasonal

increase in limit etc

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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)

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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

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SAP Credit Management

Credit Checking

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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”

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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

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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

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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

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SAP Credit Management

Credit Scoring

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Scoring Rule

computes Credit

Score / Credit

Limit

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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

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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

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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

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Score Formula: Define Steps , each

step has a condition and Limit

subsequently credit limit can be

calculated and assigned.

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SAP Credit Management

Credit Workflow

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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

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Credit Case and

Credit case

attributes.

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Approval Steps for

the Credit Case

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SAP FSCM Collections Management

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SAP Collections ManagementRoles & 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

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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 ManagementCollection Manager

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SAP Collections ManagementCollection Strategy

Collection

Strategy

Collection Rule 220 Points

Collection Rule 130 Points

Collection Rule 410 Points

Collection Rule 520 Points

Collection Rule 315 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

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SAP Collections ManagementDemonstration: Collection Manager Role

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Text

Collection Rules

within the

Collection

Strategy

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Text

Conditions within

a Collection Rule

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TextAutomatic

Prioritization of

Customer Work

Items

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Text

Priority is determined

by the valuation of each

collection rule

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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 ManagementCollection Specialist

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SAP Collections ManagementDemonstration: Collection Specialist Role

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Text

Double-Click to

open customer

work item

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Text

Review open items

to be collected

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Text

Review payment

history

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Text

Review open and

closed dispute

cases

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Text

Record promise for

payment or customer

contact at the invoice

level

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Text

Promise for payment

has been recorded

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Text

Record customer

contact resulting in

completion of the

work item

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Text

Work item completed until worklist

is regenerated

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SAP FSCM Dispute Management

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Dispute

Case Object

Notes

Action LogSAP

Documents

Status

Reason

PriorityAmounts

Customer

Contact

Customer

Attachments

SAP Dispute ManagementCentralize Information

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Dispute Case

CreationResearch 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 ManagementDispute Case Processing

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SAP Dispute ManagementDemonstration: Processing of a Dispute Case

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Text

Creation of

Dispute Case

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Text

Input selection

criteria and hit

search

Double-Click to

open dispute

case

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Text

Click on reduce

attributes

button to input

notes

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Text

Select note

type

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Text

Input notes

and click on

copy

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Text

Click on increase

attributes button to

change dispute

case attributes

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Text

Update attributes

and send to Andy

in the Logistics

Department

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Text

Double-click to

open dispute

case

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Text

Click on the

notes button

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Text

Review

notes

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Text

Attach POD to

dispute case

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Text

Input internal

notes and

return to

analyst in the

deductions

department

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Text

Double-Click

to open

dispute case

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Text

Review

notes

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Text

Review

attachments

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Text

Update Concluding

Remark notes for

correspondence

Update status and

root cause code

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Text

Generate Claim

Denial

Correspondence

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Text

Display

Correspondence

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Text

Claim denial

correspondence

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Text

Amount re-paid by

the customer

Status

automatically

updated to closed

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SAP Biller Direct

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Dispute Invoices Online

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Enter Dispute Details

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Customer Master Administration - Contact Info

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Customer Master Administration - Bank & Credit Card

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Questions?