This article will illustrate how to design & use Collection Strategy (CS) in FSCD.

This is a sequel to my below docs / blogs

Dunning in FSCD simplified

Change of approach in Insurance Collections

I have highlighted the effective use of Dunning by Dunning Procedure (DP) and the transition of DP to CS by the Insurance companies in the above blogs / docs. Though CS is still not much popular as DP due to its complex nature but it provides a flexible collection process meaning more conditions can be added before assigning a dunning level (the dunning levels are referred as “collection step”) to an open item otherwise which would require lot of coding in user exits while using DP.

We have the option of using dunning by dunning procedure for insurance companies, or dunning by collection strategy, from SAP ECC 6.0, Industry Extension Insurance, EnhP 3 onwards, in Collections Disbursements under business function INS_FSCD_CI_1.

Dunning by CS works in similar principle as dunning by DP. Same transactions are used for creating dunning proposals and running dunning activities.

It is very important to make the collection grouping active for a company code so that dunning is by CS instead of by DP.  Hence we need to do adjustments in the value in MD grouping. This is where the system determines which one to follow.

CS active.jpg

 

Posting area V230 is available for insurance companies for initial default values for the collection group and the collection strategy.

Please be advised that what I have illustrated here has been done in sandbox just to test the water and has not been used in production. So this article can be referred to just for information purpose and is not a guide line to implement CS.

Here is how the actual set up begins.

Under collection strategy in Customizing as shown below in the snapshot.

Define CS.jpg

You define the collection strategy in Customizing and in the contract account (or in insurance object).

Thus we define the following;

1.       Name of Collection Strategy

2.       Application Class of the BRF

3.       Name of Event

We can define N number of CS depending upon the business process we want to follow. But for each N number of CS we need to define the event for the CS to proceed and as well as build the collection steps for each N of CS.

CS change.jpg

Assign the collection strategies to a BRF application class and an event of this application class.  You can create BRF application classes by copying the BRF application class COLLECTIONS_INS from client 000 and changing it according.

We make use of the tool Business Rule Framework (BRF) to build the collection strategy.

The collection strategy defines rules that define the sequence of the collection steps.

BRF in itself is a separate topic and is not elaborated out here. You can also visit the  BRF Home page SAP Business Rules Management | SCN in SCN for more details.

We can make use of BRF+ instead of BRF by implementing OSS Note: 1466868 Dunning by collection strategy with BRF+.

With this implementation we can use the BRF+ as a rules engine for the dunning runs. However in this discussion I am using BRF only.

For e.g I want to build a strategy where I want to proceed with reminder SMS, Letter and Calls for overdue receivables for particular customers having a certain pay as their premium paying method and for those who have an instalment plans in place ( which excludes single premium policyholders).

We have this BRF which does a check for these conditions and is defined in the event and assigned in the CS.

Dec Tree - Exp modified.jpg

Now with our CS in place we can proceed to define the collection steps since CS is nothing but defining the rules that decide on the sequence of the collection steps.

collection step.jpg

Collection steps can be assigned to collection levels that describe the regular sequence of the collection steps within a CS. The collection level just documents the number of collection steps within a dunning process.

CS.jpg

Interval to Next Dunning & Payment Deadline in Days are the two important parameter which decide the next collection step.

Where Interval to Next Dunning is the minimum time interval to the next dunning in days. Here I have defined it as 1 for collection step 1F01. The interval must be at least one day so that the last dunning can be determined uniquely.

Payment Deadline in Days is just the payment deadline for a dunning notice.

Here we see that collection steps 1F01 till 1F03 have been defined and each is assigned to CS. After step 10 has been defined we proceed for collection steps 20 and 30. Hence there is derivation of the collection step in the dunning run (event 0315 and event of Business Rules Framework (BRF)).

coll step.jpg

Last the Dunning Activities is determined when a specific collection step is reached.

In the Define Collection Steps Customizing activity, you assign the dunning activities to the collection steps.

When you execute the dunning activity run, the function modules defined for the activities for a dunning level are called up.

Here you can see that for the collection step 1F02 I have assigned 2 activities which shall be performed when the collection step 1F02 is reached.

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Dunning activities are realized industry-specific. However, you can also define installation-specific activities. In addition to the features of the standard delivery, you can realize industry-specific dunning activities.

Possible dunning activities are:

  1. Creation of work items
  2. Creation of a dunning letter
  3. Creation of a note by a clerk
  4. Submission of items to a collection agency
  5. Termination of a contract
  6. Setting a lock
  7. Creation of a collection work item

Here are some of the Function Module which can be used for Activity.

The function module defined for the dunning activity executes the dunning activity. All function modules that you enter here must have the same interface as function module FKK_SAMPLE_0350_CCC.

The function modules delivered by SAP that you can use as dunning activity have the character string ‘_0350’ and begin with ‘FKK_’ or the industry-specific ID. Some of the function modules are listed below.

1.     FKK_COLL_AGENCY_RELEASE_0350

The function module releases dunned receivables for submission to a collection agency. Only use this activity if you want to submit items to a collection agency.

2.     FKK_0350_WLI_CREATE_AND_CLOSE 

The function module creates a work item.

3.     FKK_SAMPLE_0350_GET_DRS

The function module initiates the query of debt recovery scores for business partners.

4.     FKK_CREDIT_RATING_FREEZE_0350

The function module updates the current creditworthiness of a business partner.

Events associated with CS

  1. In event 1040, the system determines all contracts of a business partner that participate in Collections Management. For each contract, the system determines the collection unit, collection strategy, and the contact person.
  2. In Event 1041, you can define, for Collections Management, which contract is responsible for an open item if the item was posted with no contract reference (on account). The contract determined then determines the collection unit, collection strategy, and the contact person.
  3. In event 1042, the system saves the data of the contracts of a business partner that were determined in event 1040.
  4. In event 1043 you can define how the contract account name is to be displayed in the transactions FPCG and FPCGA. (See SAP menu Master Data -> Business Partners -> Data for Collections Management -> Maintain/Display Master Data Groups).
  5. In event 1044 you can define the initial values of the collection unit and the collection strategy for Collections Management. In the standard, the new posting area 0400 and, if necessary, an industry-specific posting area are processed here.
  6. In event 1045 you can define the initial values of the contact person for Collections Management.
  7. In event 1046 the system determines all contracts of a business partner that were summarized to a specific master data group for Collections Management.
  8. In event 1047 the system checks whether the master data group is permitted for a contract.
  9. Event 2844 to search for workitems using customer-specific fields. The event can be used for the workitem search from the Interaction Center WebClient.
  10. Event 2845 determines the last collection contact of the master data group.
  11. Event 2846 enables you to fill customer-specific fields of a work item when you create it in the dunning activity FKK_0350_WLI_CREATE_AND_DELETE.
  12. Event 2847 enables customer-specific checks when a workitem is changed in the Interaction Center WebClient.
  13. Event 2848 enables you to fill customer-specific fields of a workitem when a subsequent workitem is created from the Interaction Center WebClient.
  14. Event 2849 prepares the data for displaying the progress of a worklist in the Interaction Center WebClient.

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Very important disclaimer mentioned by SAP 

If you are already using dunning by dunning procedure for insurance companies and now would like to use dunning by collection strategy, note that running dunning procedures remain open and are not processed further. Continue to schedule the dunning end run for your dunning procedures until no more of the documents are in dunning, which had already been dunned with dunning by dunning procedure for insurance companies. Analyze which dunning end activities are not to run during the dunning end run. Remove these dunning end activities from Customizing for your dunning procedure. You can find the corresponding IMG activity in Customizing for Collections/Disbursements, under Business Transactions -> Dunning -> Dunning by Dunning Procedure -> Configure Dunning Procedure.

Dunning by collection strategy does not completely support dunning according to German, Austrian and Swiss insurance law, such as special handling of single premiums, initial premiums and follow-up premiums. Dunning by collection strategy does not support dunning using brokers, the dunning end run, or the connection to the information container. Mapping of benefit-free periods is not taken into account by dunning by collection strategy.

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As you can see that there are quite a few drawbacks related to using CS so the future in this space can be more of a hybrid based collections on the lines of traditional DP and CS.

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