dispute management and collections management.pdf

8/9/2019 Dispute Management and Collections Management.pdf

http://slidepdf.com/reader/full/dispute-management-and-collections-managementpdf 1/65

Karen HartnettSAP

Speed Invoice to Cash by

Integrating SAP Dispute

Management and

SAP Collections Management




Today’s business issues

SAP Dispute Management

Wrap-up






Wrap-up



!SAP AG 2005, 5

The Dispute Dilemma

* CRF 1998 Management Reports

** National Association of Purchasing Management

*** University of Tennessee

**** Credit Research Foundation survey

***** Grocery Manufacturers of America survey

! 20% of all sales transactions have one or more data issues thatcause reconciliation problems and delay payment *

! It costs between 14 to 162 USD to process a receivables

transaction **! Over 61% of accounts receivable are over 50 days outstanding ***

! 5-15% of a consumer product company’s sales revenue ends up as

payment deductions****! Payment deductions are on the rise! (growing at 20% per year)*****

“We b e l ie v e t h a t c o l le c t o r s s p e n d m o r e t h a n 5 0 o f t h e i r

t i m e o n d i sp u t e r e s o l u t i o n .”

(Meta Group , 2002)



!SAP AG 2005, 6

The Dispute Disease

Company A

Annual sales: $200M $10M annual deductions

Deduction rate: 5%

Typically, 85% allowed; $1.5M still in disputed receivables

Result:

o 5-10 days more in DSO

o 75% of credit and collection, A/R, and customer service resources spenton deduction resolution

o Strained customer relations

Source: BusinessFinanceMag.com



!SAP AG 2005, 7

Top Five Deductions Industry-Wide

0%

10%

20%

30%

40%

50%

60%

70%

Pricing Errors Advertising &

Promotional

Allowances

Returns &

Refused

Merchandise

Lost or

Damaged

Goods

Concealed

Shortages

Source: Credit Research Foundation

•Pricing errors•Advertising and promotional allowances•Returned and refused merchandise

•Lost or damaged goods•Concealed shortages

%

o f r e s p o n d e n t s



!SAP AG 2005, 8

Types of Deductions

Intentional:# Promotional or advertising related (for example, coupons, stocking

fees, quantity discounts, rebates)

# Anticipated, simply need better dispute management

Preventable:# Pricing discrepancies, processing errors, disputes over terms,

confusion over promotions

# Identify root causes and address

Unauthorized:

# Unearned discounts, duplicate claims, unsupported short payments(typically 10-20% of claims)

# Act quickly and aggressively with notification rejecting deduction;repeat offenders need to be addressed

Source: BusinessFinanceMag.com



!SAP AG 2005, 9

Can You Ever Eliminate Deductions?

! No, 80-90% of all deduction claims are legitimate

! For Consumer Packaged Goods (CPG) companies, and agrowing number of industries, deductions are preferred, oreven demanded, by customers

! More than 90% of invoices deducted in CPG, approximately22% for high tech

85

5

Legitimate

Deductions

Illegitimate

Deductions

Source: “Credit’s Worst Nightmare”, Rob Hand



!SAP AG 2005, 10

It’s Not Over Yet …

Post-audit claims: a vicious cycle

# Audit firms look for previously unnoticed billingdiscrepancies, discounts, or credits due to their clients

# Vendors need to review old documentation

# Audit firms work on a contingency basis and targetcompanies that cannot challenge post-audits due to poorsystems and recordkeeping

# Inability to defend company affects the bottom line!



!SAP AG 2005, 11

What to Do

Recognize theproblem anddetermine itsseverity, as

systemspermit

Getexecutivebuy-in toaddress the

disputemanagementarea

Reviewyourdisputeresolution

process

Determineyour goals

forimprovement

Identify asolution tomeet your

goals

(Hint: SAP)



!SAP AG 2005, 12

Collections Shows the Whole Picture

Collections management according to Meta Group is

Customer-centric receivables management

Collections management supports

! Evaluation, identification, stratification, and prioritization of accounts

$From a risk-management perspective

$From a customer-relationship perspective

! Proactive collection of receivables

$Payment reminders

$Promise-to-pay arrangements

$Follow-ups

$…

! Process optimization and automation for high volumes of open items!Workforce management






Wrap-up



!SAP AG 2005, 14

SAP Dispute Management Is ...

%A tool to track and process reduced payments while streamlining thedispute resolution process

%A component in SAP’s new financial solution suite, Financial SupplyChain Management (FSCM); available in FSCM 3.0 as of July 2004



!SAP AG 2005, 15

DisputeManagement

2. Invoice

3. Reduced payment (without reason)

1. Purchase is made and order is fulfilled and shipped

4. Automatic

creationof a disputecase

7. Posting

Customer Biller’s ERP

5. Email, letter

6a. Payment information(telephone call, fax)

FSCM Biller Direct(Web Portal)

6b. Access toDispute Management(payment information)(integrat ion w ith Bi l ler Direct

availab le in FSCM 3.0 )

R e al t i m

e

Dispute Management – an Example



!SAP AG 2005, 16

YES

EndEnd

Open and assign a

dispute case

NO “Assign, import” the relevant data

such as invoice, billing document,

master data, etc.

NODetermined by disputeaccounting clerk

YESWorkflow message to

person responsibleDispute case clarified and status set to clarified.

Info on the steps taken is stored in the Notes History

Dispute accounting clerk

subsequently checks this

Dispute accounting clerk

changes status to closedDispute case then

updated and closed

Dispute case then

updated and closed

Reasoncode

known

Directclearingpossible

Postprocessing

bank statement

SAP Dispute Management – An Example



!SAP AG 2005, 17



CRM SCM MM SD FI-Accounts Receivable Business Analytics ....Or FI-Contracts Accounting

CustomerCustomer AR-ClerkAR-Clerk Sales Manager Sales Manager

Input Input Input

Integration

O r

d e r

S h i p m e n t

B i l l i n g

C a m p a i g n

R e c e i v a b l e s

P r o d

u c t i o

n

C a s h

P

a y

A

n a l

y z e

Quality Mgt.Quality Mgt. ......

Input Input

Business process is managed within:

Integration Integration Integration



!SAP AG 2005, 18

How Does SAP Dispute Management Help?

SAP Dispute Management controls and streamlines the disputecase process

As central component for handling dispute cases, SAP Dispute

Management enables cross-department dispute resolution

SAP Dispute Management is integrated in financial but also inlogistical processes

SAP Dispute Management organizes and stores all informationand documents related to a dispute case

SAP Dispute Management includes sophisticated reporting$Detect quality issues

$Control workload$ Track dispute process



!SAP AG 2005, 19

Dispute Management Screens

Case organizer #Creating and

processing cases

#Search cases

#My cases

#List of all cases where

the user is the processor

#Favorites

#Resubmission

#History

#List of objects that were

most recently processed



!SAP AG 2005, 20

Basics of Dispute Management

Components of a case...

#Case attributes#Title, processor, status,

reason, amount,…

#Case record/linkedobjects#Customer, residual item,

word document,

transactions…

#Case notes#for the documentation

of the processing of the case

#Case log#History of actions performed

on the case



!SAP AG 2005, 21

Attributes of a Dispute Case

The case attributescontain...

# Header, case ID

# Processor, coordinator,

responsible person

# Reason, status, priority,

escalation reason

# Planned close date

# Amount fields

# Created/changed/

closed by/at



!SAP AG 2005, 22

Amount Fields of Dispute Case

Original disputedamount

Amountfields

Disputed amount

Paid

Credited

Cleared manually

Automatically writtenoff



!SAP AG 2005, 23

Case Notes

In the case notes, the user documents the processing of thedispute case

#Different types ofCase Notes(description, internal

memo, answer ...)#Customizable



!SAP AG 2005, 24

Case Record

The case record contains links to objects that are related tothe case

The case record cancontain links to...

# Business objects

# Office documents

# ArchiveLink

documents

# Transactions



!SAP AG 2005, 25

Folder Structure of Linked Objects

Business partner

Disputed objects

Resolved objects

Items assigned during clearing

Other objects

Miscellaneous



!SAP AG 2005, 26

Case Action Log

MILLERBROWNPROCESSORBROWNAttributeChange

09:10:2018.04.2003

BROWNAccess CaseNotes

09:12:4518.04.2003

MILLERDisplay Case11:45:1221.04.2003

Value newValue oldAttributeUser ActivityTimeDate



!SAP AG 2005, 27

Dispute Case Locator

With the dispute case locator, the user can search for cases



!SAP AG 2005, 28

My Cases

My Cases provides the user a list of all cases for which he is theprocessor



!SAP AG 2005, 29

Creating a Dispute Case

Can take place from different screens

& From display and change FI document (FB02, FB03)

& From line item display (FBL5N)

& From clearing with residual item creation (FB05)

& From post-processing of bank account statement (FEBAN)

&New: from lockbox processing and Biller Direct



!SAP AG 2005, 30

Create Dispute Cases from FBL5N

From the open item list, all marked items will be taken into thedispute caseItems from different customers or companies and with differentcurrencies can be selected



!SAP AG 2005, 31

Create Case from Financial Transaction

Process integration

! Update amount field Original Disputed Amount

! Link FI document to folder Disputed Objects! Automatic derivation of field content

User action! Enter data for a few fields

! Write a note

Financialtransaction

Create disputecase



!SAP AG 2005, 32

Create Dispute Case in Case Organizer


Record and Case Record Models

Cases

Dispute Case

Dispute Case - Search

My Dispute Cases

Documents

Find

Create

Information



!SAP AG 2005, 33

Display Dispute Cases from FBL5N

Attributes of the dispute case can be added to the line item displayDispute data can be accessed from the list



!SAP AG 2005, 34

Update Case by Financial Transactions

Amount fields

! Original disputed amount

! Disputed amount! Credited amount

! Paid amount

! Amount manually cleared

Folders

! Resolved objects

! Items assigned during clearing

Financialtransaction

Update DisputeCase

Eff t f Cl i Di t d It



!SAP AG 2005, 35

Effect of Clearing a Disputed Item

A partial paymentis receivedfor a disputed item...

... before clearing

Eff t f Cl i Di t d It ( t )



!SAP AG 2005, 36

Effect of Clearing a Disputed Item (cont.)

A partial paymentis receivedfor a disputed item...

... after clearing

S litti Di t C b FB05



!SAP AG 2005, 37

Splitting Dispute Cases by FB05

The user can split the amount of a residual item from the disputecase and create a new case for this item:

Result

Original amountof old dispute case

will be reduced and

the two dispute cases

are linked together

Correspondence



!SAP AG 2005, 38

Correspondence

Correspondence can be created! Automatically by events like

$Create dispute cases

$Close dispute cases

$Events that can be defined on project level

!Manually by the user when processing the dispute case

SAP delivers standard customer correspondence for ! Fax, email, 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

$ Use smart forms$Data available for correspondence

& All attributes

& External notes

& Object keys of objects stored in the dispute case folders (case record)

& …

Example of Manual Correspondence



!SAP AG 2005, 39

Example of Manual Correspondence

Customer contact person

Select communication type

Selectcorrespondence

Selectexternal notes



Example: Time Grid for Disputes



!SAP AG 2005, 41

Example: Time Grid for Disputes

Implementation



!SAP AG 2005, 42

Implementation

R/3 release required! 4.6c or higher release of FI-AR. FI-CA is possible backend for FSCM 3.0.

Resources required

! Dispute Management/Accounts Receivable consultant

! ABAP consultant

! Basis consultant

Estimated time frame

! Depends upon amount of customization: approximately three months

! Possibilities exist to extend functionality via BAdIs (i.e., setting defaults)

Key actions to take before implementation

! Map out processes desired! Obtain statistics on current processes and determine goals for

improvement

Customer Enhancements for Default Values



!SAP AG 2005, 43

Customer Enhancements for Default Values

Case Type

Category

Reason

Priority

External Reference

Processor

Coordinator

Person responsible

Title

Case notes

CreateDispute Case

Find default

value for

Accounts receivable

Customer Enhancements



!SAP AG 2005, 44

Customer Enhancements

BAdI: Change cases during initialization

BAdI: Change cases before validation

BAdI: Customer-specific validation of cases

BAdI: Change cases before saving

BAdI: Customer-specific validation before saving

BAdI: Save customer-specific data when saving cases

BAdI: Mass activities on dispute cases

Deployment for mySAP ERP 2004 (1 System)



!SAP AG 2005, 45

Deployment for mySAP ERP 2004 (1 System)

SAP ECC 5.0(FI-AR)

SAP DisputeManagement3.0

SAP Web Application Server (Web AS)6.40

Deployment for SAP R/3 Enterprise 4.7*



!SAP AG 2005, 46

p y p

SAP R/3 Enterprise4.7

SAP DisputeManagement

3.0

SAP Web AS 6.20 SAP Web AS 6.40

ALE

*Deployment for 4.6c would look similar

SAP Dispute Management Demo



!SAP AG 2005, 47

p g






Wrap-up




!SAP AG 2005, 49

%Solution to optimize collections by providing collectors with work lists,collections information, and related functionality

%High customer interest in this area

%First release was in FSCM 3.0 July 2004

The Functionality



!SAP AG 2005, 50

SAP Collections Management comprises a new possibility toprocess and view open items per customer account forcash collection! All open invoices and their statuses at a glance

! Invoice history

! Actions for one or several invoices can be directly taken

! Tight integration with SAP Accounts Receivable

SAP Collections Management offers work lists that can be created

manually! Search criteria to select customer accounts

! Criteria to prioritize customer accounts

! Direct access to customer account from worklist

SAP Collections Management offers new collection procedure! Promise-to-pay agreements

! Automatic integration with payments and clearing postings




!SAP AG 2005, 51

Selectcustomeraccounts

Prioritizecustomeraccounts

Preparereceivablesfor collection

Process

receivablesper customeraccount

Selection by•Company code•Account no.•Clerk•Sales area•Total open amount

• ...

Prioritize by•Total open amount•Due today•Amount promised•Amount broken pr.•Amount dunned

• …

Prepare by•Sorting•Filtering•Viewing history•Assigning contact• …

Process account by•Creating promises to pay•Renewing promises•Creating dispute cases• …

Co l l e c t i o n s p r o c e s s

Prepare Customer Contact



!SAP AG 2005, 52

Collection agent gets the following information on customeraccount level! All open invoices of customer account (invoice view)

! Open promises to pay – navigation to detail view possible (promise-to-pay view)

! Open dispute cases – navigation to detail view possible (dispute case view)

Collection agent gets the following information on invoice level! Invoice history

! Promises-to-pay list per invoice – navigation to detail view possible

! Dispute case list per invoice – navigation to detail view possible

Collector can define layouts that allow him to view status of invoice at aglance like! Invoiced amount

! Open amount

! Paid

! Credited

! Promised

Prepare Customer Contact: Invoice View



!SAP AG 2005, 53

Create Dispute Case: Example



!SAP AG 2005, 54

Promise to Pay



!SAP AG 2005, 55

Customer promises to pay one or several invoices! Collection agent creates promise to pay

$Creation possible for one or several invoices

$ Promise is traced on single invoice level

! Collection agent renews promise to pay$ Existing promises can be renewed

$Renewed promises get higher promise level

Promises to pay are updated by incoming payments! State “kept” if incoming payment equals promised amount

! State “partially broken” if payment amount is smaller than promised amount

! Promises that are not kept are labeled “broken”

! Partially broken and broken promises can be followed up

For invoices that have been fully cleared, promises to pay can beclosed automatically

Collection agent can create, change, renew, withdraw or void promisesto pay

Create Promise to Pay: Example



!SAP AG 2005, 56

Selected invoices

Sum is taken over as default value for promised amount

If promised amount is smaller than total open amount distribution

Deployment for mySAP ERP 2004



!SAP AG 2005, 57

SAP EnterpriseCore Component

(ECC) 5.0(FI-AR)

SAP Dispute and

CollectionsManagement

3.0

SAP Web AS 6.40

Deployment for SAP R/3 Enterprise 4.7



!SAP AG 2005, 58

SAP R/3 Enterprise4.7

SAP Dispute andCollectionsManagement

3.0

SAP Web AS 6.20 SAP Web AS 6.40

ALE

SAP Dispute Management Demo



!SAP AG 2005, 59






Wrap-up

FSCM Roadmap



!SAP AG 2005, 61

Focus:

• Biller Direct

• Dispute Management

• Credit Management*Credit manager portal, credit rating,

credit rules engine

• Treasury and Risk ManagementParallel valuation area, position monitor,

new instruments

SAP

FSCM 2.0

Focus:

• Biller DirectDispute Management integration, collection authorization

• Dispute ManagementAutomation and prioritization, workflow integration, correspondence

• Collections ManagementManual worklists, promises to pay, integration with Dispute Management

• Credit ManagementCredit Limit Check, Credit Analysis, Credit Eventing, Workflow

• In-House CashPrima Nota, Integration with Cash and Treasury and Risk Management

• Treasury and Risk ManagementNew instruments for foreign exchange and derivatives, Hedge Accounting,

enhancements in Market and Credit Risk Analyzer

mySAP ERP 2004

(incl. SAP FSCM 3.0)

Ramp-Up

Q2/2004

Release to Customer

Q3/2003

* Pilot customers only

mySAP ERP 2005(incl. SAP FSCM 6.0)

Planned

Q3/2005

Resources



!SAP AG 2005, 62

Direct contact:

Contact your SAP Account Executive or …

Karen Hartnett, FSCM Product Manager

(Biller Direct, Dispute Management, CreditManagement, Collection Management)

[email protected]

Web site:

www.sap.com/fscm

•Brochures

•White papers

•News and events

•Customer success stories

7 Key Points to Take Home



!SAP AG 2005, 63

( Dispute and Collections Management is an important focus area for

most companies today

( Poor dispute resolution diverts company focus, worsens customerrelations, and negatively affects profitability

(Most companies are still using a manual, paper-based process withno standardization to address disputes

( Deductions are not avoidable, but the associated pain is

( SAP Collections Management lets you manage collections at the

customer level, while Dispute Management is at the individualdispute or line-item level. The two solutions together provide acomprehensive solution to improve collections and customersatisfaction.

( Implementations of Dispute and Collections Management arerelatively fast

( Integration within FSCM and with other SAP solutions is key

Your Turn!



!SAP AG 2005, 65

! No part of this publication may be reproduced or transmitted in any form or for any purpose without the express

permission of SAP AG. The information contained herein may be changed without prior notice.

! Some software products marketed by SAP AG and its distributors contain proprietary software components of other

software vendors.

! Microsoft®, WINDOWS®, NT®, EXCEL®, Word®, PowerPoint® and SQL Server® are registered trademarks of

Microsoft Corporation.

! IBM®, DB2®, DB2 Universal Database, OS/2®, Parallel Sysplex®, MVS/ESA, AIX®, S/390®, AS/400®, OS/390®,

OS/400®, iSeries, pSeries, xSeries, zSeries, z/OS, AFP, Intelligent Miner, WebSphere®, Netfinity®, Tivoli®, Informixand Informix® Dynamic ServerTM are trademarks of IBM Corporation in USA and/or other countries.

! ORACLE® is a registered trademark of ORACLE Corporation.

! UNIX®, X/Open®, OSF/1®, and Motif® are registered trademarks of the Open Group.

! Citrix®, the Citrix logo, ICA®, Program Neighborhood®, MetaFrame®, WinFrame®, VideoFrame®, MultiWin® and

other Citrix product names referenced herein are trademarks of Citrix Systems, Inc.

! HTML, DHTML, XML, XHTML are trademarks or registered trademarks of W3C®, World Wide Web Consortium,

Massachusetts Institute of Technology.

! JAVA® is a registered trademark of Sun Microsystems, Inc.

! JAVASCRIPT® is a registered trademark of Sun Microsystems, Inc., used under license for technology invented and

implemented by Netscape.

! MarketSet and Enterprise Buyer are jointly owned trademarks of SAP Markets and Commerce One.! SAP, SAP Logo, R/2, R/3, mySAP, mySAP.com and other SAP products and services mentioned herein as well as

their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries

all over the world. All other product and service names mentioned are trademarks of their respective companies.