Collections Management in SAP S/4 HANA – Receivables Management
1. Receivables Management
Receivables Management in line with its title is self explanatory. In SAP S/4 HANA enterprise management it enhances management of Accounts Receivables. Incoming cash flow from sales is the heartbeat of every organization. Managing this sales cash flow is effort an intensive process and often complex.
Receivables Management (RM) has excellent system functions to evaluate a Business Partner’s credit situation before a sale is initiated. It also allows proactively managing delayed payments. It streamlines management of disputes in the Business Partner’s sales invoices. It ultimately reduces Days sales outstanding (DSO), improves the working capital. Assists in lowering operating costs and minimize bad debt and write-offs. In the earlier SAP ECC 6.0, RM was referred to as Financial Supply Chain Management (FSCM).
1.1 Scope of the Blog
This blog attempts to explain the Collection management related business functions that are available in SAP S/4 HANA Enterprise management.
2. Collection Management Processes
Collection Management is an integral part of Receivables Management in the SAP S/4 HANA Enterprise management.
- It facilitates effective management of collections and better service to Business partners (BP)
- It allows the collection team agent to proactively evaluate, identify, and prioritize the BP accounts that have Sales Invoices past their due dates but haven’t been paid.\
- It allows prioritization of collections calls, document BP contact, set call-back reminders and record invoice disputes.
- It facilitates electronically sending copies of Invoices and statements during BP contact.
For collections Managers there are reports to analyze agent performance to better distribute workload.
- In aging reports the Collection data can be combined with receivables information.
- This helps to reduce DSO, improve collections rates, and enhance sales related Business Partner relationships.
2.1 Keys items in Collections Management
Collections Management has the following 2 key items
2.1.1 Collection Strategies
- Strategy is a set of rules which form a basis for the automatic creation of daily worklists.
- Each rule within the strategy contains the criterion and the score. These details are used to prioritize Business Partners for the collection of receivables
2.1.2 Collection Worklist
- Worklist is a prioritized list of sales related Business Partners that have to be worked on.
- Worklist creation performs the evaluation, identification, stratification and prioritization of Business Partners according to collection strategy
- Daily worklists improve user productivity and efficiency
2.2 Collection Management Roles
Collection management in SAP revolves around the active involvement of the below 3 roles
- Collection Specialist
- Collection Manager
- System (i.e. Automated steps)
2.2.1 Collection Specialist
A collection specialist is a team member who contacts the Business Partners (BP) from the Sales business.
The Collection specialist accesses the worklist, prepares for contacting the BP, contacts the BP and documents the details involved in this contact.
126.96.36.199 Access Worklist
The Collection Specialist accesses the worklist and
- Gets an overview of all worklist BP related entries
- Checks degree of worklist processing i.e. the scoring pattern
In SAP S/4 HANA the collection specialist logs into the FIORI UX portal by entering the username and password
Once the collection specialist has logged in the S/4 HANA systems, all the APPS what are applicable to the user are displayed.
The APP for accessing the collection worklist has been shown above in a red box. The APP displays on the tile the number of worklist items that are assigned to the specialist. These Items denote number of Business partners.
Once the worklist APP is accessed the list of Business partners appears in the order of priority i.e. the scoring pattern. Here the user can check the different amounts like outstanding, Disputed etc. Missed payments and call back reminders.
188.8.131.52 Prepare for Contact
The Collection Specialist accesses the worklist and
- Checks valuation of Business Partners (BP) according to collection strategy
- Gets overview of BP accounts
- Views past contacts
- Views past payments
- Checks resubmissions
- Selects contact person to reach
Inside the worklist APP, if the user clicks on the priority column it takes the user through the strategy rules applied on the Business Partner (BP) and details how the total score was arrived. The worklist also provides an overview of the different BP accounts. If credit management is applicable the credit limit and usage can also be seen. Incase Dunning is applicable the level can be seen.
Within each Business partner item the specialist can drill one level below. This lists the details of the BP i.e. Invoices and Payments, Disputes, missed payments and callback reminders.
An overview of the details allows the specialist to prepare for contacting the BP. The list of notes shown on the right hand side bottom is a massive improvement over the earlier ECC 6.0 based Collections Management.
The notes are now shown at a BP level. In S/4 HANA every action performed on the worklist is logged within the respective BP as notes. The due date based graph for BP receivables in respective buckets is another new addition in S/4 HANA that pictorially helps the specialist during the BP contact
184.108.40.206 Contact Business Partner
The Collection Specialist attempts to contacts the Business Partner and document the details by one of the below items
- Create promises to pay / Renew promises to pay
- Withdraw promise to pay
- Create dispute cases
- Create resubmissions
- Complete resubmission
- Create correspondence
- Mark the result of the customer contact
Each of the above items have been marked in the worklist in the below screen-prints. When the respective buttons on the worklist are accessed and it brings up the relevant screen for documenting the BP contact.
1. Create promises to pay / renew promises to pay
When the BP agrees to pay at on a particular date the same is noted. The date can be renewed. If payments are not received on the set date, the system marks it as broken promise to pay.
When a promise to pay is recorded, the system doesn’t consider the respective item in the worklist until the promise to pay is broken
2. Withdraw promises to pay
BP can changes their mind based on the confirmation and the broken promise to pay it can be withdrawn
3. Create Disputes
When the BP disputes an Invoice, the same can be recorded from the worklist in S/4 HANA Dispute Management.
4. Create Resubmission
The BP cannot be reached sometimes or is reached but requests to call at a different time. In such scenarios an resubmission record is submitted
5. Complete Resubmission
When BP is contacted on the date of Re-submission, the same is set as complete.
6. Create Correspondence
When BP is contacted and request Invoice copies or periodic account statements, the same can be immediately sent across via the BP correspondence.
7. Mark Customer Contact Result
When BP is contacted the result is set to remove that item from the worklist and move to the subsequent item.
2.2.2 Collection Manager
A collection manager is a lead who manages the collections team and verifies the efficiency. They perform the following tasks
220.127.116.11 Defines and Adopt Strategies
This step involves setting up the values for the rule and scores within a strategy. i.e. in line with business expectations. This step isn’t any different in s/4 HANA when compared to ECC 6.
18.104.22.168 Create / update groups
These groups are created and maintained in line with business operation hierarchy. This step isn’t any different in s/4 HANA when compared to ECC 6. Team members and substitutes are included as well
22.214.171.124 Adjust BP Master
Receivables Management in S/4 HANA has BP masters same as in FSCM in ECC 6. The BP masters are kept in synchronization. The collection profile tab is specific to collections management
126.96.36.199 Supervise / Monitor Collections
In S/4 HANA Receivables Management, the collections manager is able to access the unassigned worklists item from the worklist app
The same with checking equal distribution of worklist items. This can be done from the worklist by navigating to different specialist in the list.
The key advantage of S/4 HANA is the analytical apps are also within one FIORI UX portal unlike ECC 6 where the manager had to access the BI portal. The APPS are configured to highlight key indicators on top.
2.2.3 System (automated steps)
In S/4 HANA the system performs few automated steps which form a key step
- When Business partners are created in accounts receivable, the same is replicated in Collection Management by an automated steps
- In S/4 HANA the process receivables section of the worklist is real-time with accounts receivables.
However the worklist overview is system step that the system performs periodically
This periodic step includes daily creation of worklist with the updated accounts receivable data.
Collections Management in S/4 HANA is definitely a very intuitive solution. The user experience with the UX FIORI apps are impeccable, same is the experience with real-time time analytics in the same system.
The Collections manager related apps are not in place yet. Hence there is a dependency on personas and backend ECC screens, leaves a lot more to be desired. This is definitely an area of improvement.
The information is very useful. Where can I find Receivables Management functionalities related to self service online customer registration web portal and mobile app?