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Want to put a fuel efficient engine with enhanced performance in your sports car?

So imagine someone offers you a new engine for your car would you be interested? I mean you have had your car for a while now and it is just how you want it, but it costs a bit too much to maintain. The performance has dropped a bit and there are new versions that have been released. You would be tempted to enquire how someone could make your car go faster as well as not eat as much fuel.


So what am I getting at? Well if you were an Accounts Receivable manager Collections Management part of SAP Financial Supply Chain Management should be your new engine.


Your current engine


Let’s start by looking at what you currently have under the bonnet that is delivered as standard in SAP Accounts Receivable.  The main tool for the Accounts Receivable team is the SAP Aged Debt report. This can be run by “Accounting Clerks” which normally mirror the Accounts Receivable processors.  They have the ability to run the report either by Value of outstanding debt, or against the customer account (number of name). Normally the Accounts Receivable processor will print off the Aged Debt report and work through the customers calling them up in an ad-hoc fashion.  Notes may be scrawled on the print out of the Aged Debt report, but the Accounts Receivable manager has no visibility if a customer has been contacted. Prints outs are out of date as soon as they are printed off.


Some customers may choose to enter some manual text to individual line items or use the credit master text to record some notes of the conversation. This means the Accounts Receivable processor needs to have the Aged Debt report open to write notes, and the Credit Master transaction to record notes in SAP. There is the possibility of double entry here, or none at all.


Lastly some customers choose to enter further text at an invoice level. This is done in a different transaction, and sometimes the same text would be copied and pasted for a large volume of invoices to indicate a customer dispute or a promise of payment.


Overall this can be very cumbersome and complicated. Further to this there is no structure to the process, if a processor was on holiday or off sick there would be no easy way to see which customers had been contacted, and reasons why contact was delayed.


The new engine


Collections Management is the heart beat of the SAP FSCM module. The key benefit to Collections Management is the ability to provide the Accounts Receivable processors a single prioritised worklist for them to work through. Complimentary to this is a single source of data that clearly provides all of the information the processor is used to from the historic Aged Debt report at customer level. Further to this is the ability to write notes of the contact made, positive or negative. Lastly there is the ability to record potential outcomes, i.e. new customer disputes or promises to pay.


So in summary the new engine performs all of the current business processes in a single easy to use transaction that is available to monitor progress in a uniform manner. The concept of the worklist with associated notes is not the main benefit; the real benefit is the integration to SAP FSCM Dispute Management and standard AR processes. Moreover the ability to provide a prioritised worklist provides the Accounts Receivable Manager the ability to have a single way or working as the customers that require immediate attention are at the top of the list. This provides the Manager the confidence that he can monitor the progress of the processors and compare performance of the whole team. On top of that, where processors are struggling customers can be added to different worklists to ensure the correct level of customers are contacted within an agreed KPI to reduce the risk of bad debt.


Tale of the tape


So what are the tangible benefits? How much quicker will your car go from 0 to 60mph? What are the combined miles per gallon? Hopefully the answers should be easy to see.


Improving speed  – By having a single transaction to record customer contact the Accounts Receivable processor will be able to contact more customers as they wont be wasting time to write on the print out of the aged debt report, or enter notes in more than one SAP transaction. Being able to record new customer disputes or progress of disputes as well as a “Promise to Pay” provides the full Accounts Receivable process in a single transaction.

Improving efficiency  – In turn this provides the Accounts Receivable Manager the ability to report on performance of the team re-allocating customers to processors who have some spare capacity.  This will in turn increase the performance of your team potentially leading to a reduction in head count. Further to this as more customers are contacted in a more efficient manner a client should see a reduction in bad debt and a reduction in its DSO.  This will enable the Accounts Receivable Manager to hit the targets set for their team performance, potentially exceeding expectations.

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