SAP Education presents: “How much do you know about SAP Financial Supply Chain Management?”

[Former Member]

So what exactly is SAP ERP Financial Supply Chain Management?  The SAP Financial Supply Chain Management (SAP FSCM) set of applications provides a complete, integrated solution for managing electronic customer billing disputes, receivables, collections, and customer credit risk. SAP FSCM helps you more effectively control your company's accounts receivable processes and ensure cash flows through online billing, more streamlined handling of billing disputes, and collections.

Complete integration with core SAP ERP applications ensures that your receivables and collections professionals have the most up-to-date data. So they can resolve issues quickly - resulting in accelerated cash flow and lower operating expenses.

SAP FSCM includes the following applications:

• Credit management - Employs sophisticated tools to analyze customer credit worthiness and establish policy and helps you avoid overdue accounts and bad debt losses by proactively managing customer credit risk exposure.


• Electronic invoicing and payments - Enables customer access to invoices, account status, and payment information over the Internet, and integrates seamlessly with your existing customer or supplier facing portals.


• Dispute management - Resolves invoice disputes faster and more systematically and reduces days sales outstanding (DSO) and improve cash flows.


• Collections management - Enables the more effective management of past due accounts and ensures faster collection of delinquent payments though prioritized collections efforts.

And here are a few of the business benefits of SAP FSCM:

• Improve cash flow and liquidity - SAP ERP Financials automates dispute, credit, and collections management - and offers electronic invoicing and payment capabilities that supplement traditional accounts receivable and accounts payable functions to accelerate and manage cash flow.


• Optimize global cash management - With SAP ERP Financials, you can report, analyze, and allocate cash in real time, and establish in-house banks or payment centers.


• Improve process integration between finance and treasury - With SAP ERP Financials, you can integrate risk and treasury transactions with core accounting and financial reporting processes.


• Reduce overall finance costs - SAP ERP Financials helps you innovate processes, collaborate with supply chain partners, and streamline operations to reduce costs and resource demands.

Are you OK so far?  Let's get more into the details of SAP Financial Supply Chain Management.  Here are a few questions to test your knowledge - the answers are at the end so don't peek...

Q1:  Does SAP Financial Supply Chain Management support aged debt reports that allow creation of action plans?

Q2:  Does SAP Financial Supply Chain Management provide sales order processing?

Q3:  Does SAP Financial Supply Chain Management support a central database for all account details (office accounts, general client accounts, designated deposits account, and joint accounts)?

Q4:  What credit control tools does the solution provide?

Q5:  Can SAP Financial Supply Chain Management establish user-defined tolerance levels for accepting small differences in bill values and receipts and automatically post those differences to the proper account?

Q6: Does SAP FSCM support automatic reconciliation of goods receipt/invoices receipt mismatches?

Q7:  Does SAP FSCM support leading move suppliers to electronic invoicing?

Q8: What automatic printing forms for all major payment types does SAP FSCM support?

Q9:  Can SAP FSCM send customers automated letters after specified non-payment time limits?

Q10:  Does SAP FSCM support management of invoice issues online with minimized manual intervention?

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Here are the answers:

Q1:  Does SAP Financial Supply Chain Management support aged debt reports that allow creation of action plans?

Answer:  The SAP FSCM Collections Management application provides the functionality to create action plans in the form of "promises to pay," which can be agreed with a customer. Furthermore, the SAP Dispute Management application lets users create dispute cases and follow up items where items have been disputed and need to be resolved quickly and effectively.

Q2:  Does SAP Financial Supply Chain Management provide sales order processing?

Answer:  The SAP ERP Financials solution provides sales order processing. SAP is a fully integrated, online, real-time system, enabling users to move seamlessly between applications once they have logged in, without the need to log in and log out of each functional area. This integration eliminates duplication of effort, leading to increased accuracy. Although the functions listed are - in SAP's terms - three different components, this is completely transparent to the user. The sales and distribution (SD) area provides facilities to enter orders and create invoices that are reflected in accounts receivable. You can set up periodic billing contracts for commercial rent agreement and have the system produce the invoices automatically. In SD you can also use the credit checking and monitoring facilities. Accounts receivable (AR) has facilities for all debt collection, account management, reminder letters, statements, and cash allocation. AR can also handle student billing, sponsor management & DD. Treasury (TR) provides you with the functionality to import electronic bank statements and reconcile those bank items seamlessly to debtors receipts in accounts receivable.

Q3:  Does SAP Financial Supply Chain Management support a central database for all account details (office accounts, general client accounts, designated deposits account, and joint accounts)?

Answer:  Central databases for all account details can managed in the bank accounting area or in the in-house cash areas of the SAP Financial Supply Chain Management (SAP FSCM) set of applications. If the standard bank accounting area is used, some of the items, like date account was opened, and so on, can be stored in additional fields (workaround). Or, depending on the details, some additional fields can be added with some code modifications. The in-house cash area has additional views and screens to cater for these types of detail on accounts (as the solution is derived from a bank current account solution and is used by banks, for example, by UBS for their current accounting processes).

Q4:  What credit control tools does the solution provide?

Answer:  Credit management is offered as standard functionality within the system SAP ERP Financials solution.  There are two aspects to credit management:

• Master Data Settings - Customer master data in SAP software can be managed in various ways.  Examples of master data settings include: credit control area, risk category, credit representative group, credit representative clerk, and credit control group.  The master data settings above let you manage, control, and report on customers in numerous ways.


• Processing Settings - Once the relevant master data settings have been made, the credit limits have to be assigned to the customers. You then need to address the decision on how to manage the processes relevant to customer needs.  Examples of these processes are "sales orders," "goods issues," "billing," and the question of when "credit blocks" need to take place. Sales orders can be blocked as a matter or process and then released once approved. SAP software is flexible enough to support multiple approaches to credit management, depending on the type or class of customer and the level of credit management that needs to be applied.

Q5:  Can SAP Financial Supply Chain Management establish user-defined tolerance levels for accepting small differences in bill values and receipts and automatically post those differences to the proper account?

Answer:  Tolerances can be established, and differences between tolerances can automatically be posted to difference accounts.

Q6: Does SAP FSCM support automatic reconciliation of goods receipt/invoices receipt mismatches?

Answer:  The goods received and not invoiced accrual accounts are automatically reconciled as receipt and invoice matches.

Q7:  Does SAP FSCM support leading move suppliers to electronic invoicing?

Answer:  The biller direct functionality of the SAP Financial Supply Chain Management set of applications fully supports electronic invoicing. Suppliers can either send invoices via XML or electronic data interchange (EDI), can be self-billed, or can post their invoices using a supplier portal.

Q8: What automatic printing forms for all major payment types does SAP FSCM support?

Answer: The SAP Financial Supply Chain Management set of applications can provide electronic and printed forms for payment services; for example, generating electronic files for Bankers Automated Clearing Services (BACS) processing.

Q9:  Can SAP FSCM send customers automated letters after specified non-payment time limits?

Answer:  Using the dunning functionality of SAP software, the SAP Financial Supply Chain Management set of applications provides standard functionality to send automatic letters to customers. With dunning, you can send customers a payment reminder or a dunning notice to remind them of their outstanding debts.  SAP software lets you dun business partners automatically. The software duns the open items from business partner accounts where the overdue items create a debit balance. The dunning solution selects the overdue open items, determines the dunning level of the account in question, and creates a dunning notice. It then saves the dunning data determined for the items and accounts affected.

Q10:  Does SAP FSCM support management of invoice issues online with minimized manual intervention?

Answer:  The SAP Dispute Management application lets you manage invoice issues automatically.  You can create a dispute case, which can then be routed through to the relevant party for resolution.

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To learn more about SAP Financial Supply Chain Management, especially in the areas of Biller Direct, Credit Management, and Dispute/Collections Management, I recommend you try the FSC020 and FSC200 training courses provided within SAP Education's Financial Supply Chain Management Learning Map.