How To Upgrade Receivables Management in SAP S/4HANA
Dealing with payments, invoices, and collections all come back to the accounts receivable department. SAP S/4HANA upgrades receivables in a viable way, offering valuable tools for use with each of the different areas of the accounts receivables process. At its heart, SAP’s system is about automation and speeding up internal processes. With these upgrades to the accounts receivables processes, businesses can further integrate automation into collections agencies and automated invoice collection and processing. Here, we’ll look at some critical feature upgrades in each section.
In most businesses, the accounts receivable ledger is a book that records the customer transactions, including who’s paid and what is still outstanding. Today, businesses have moved their accounts receivables ledger online. With integration through SAP S/4 HANA, a company can create seamless integration with other partners and stakeholders such as dispute management, collections, and credit departments. When you post customer invoices to SAP S/4HANA, you create open items within the customer’s account. There is a deadline payment date for the customer to deliver payment for the invoice, which is a combination of the baseline data and the terms of payment. Once the customer fails to make payment up to thirty days past the baseline date, the invoice automatically becomes overdue.
If payment is received, we see another facet of accounts receivables – clearing. When the business collects payment for the invoice, it “clears” both the customer account and the invoice on the accounts receivable system. SAP accomplishes this through specialized clearing transactions, which affect the requisite areas of the accounts receivable system. If automated clearing doesn’t work, the operator has the option to do manual clearing. Cleared invoices refer to payments or credits that make up the owed amount to the company and are not subject to collection efforts.
Credit management is among the oldest practices in business and answers the question, “When should we stop doing business with this customer?” Business partner records in SAP S/4HANA help solve the credit management problem. These records keep track of pertinent details about a customer, such as their payment behavior and the last time they paid the company. In the past, businesses would use a credit limit to determine whether a customer is “good for it.” However, while SAP does have a credit limit, the limit doesn’t need to be reached for the system to deny the customer. When the sales to a customer are blocked, an authorized person will have to decide manually whether to let the sales proceed. In this way, a business has a more robust system to manage customer credit. This system is further simplified by integrating SAP Fiori apps, giving credit managers valuable tools.
Dispute Management with SAP S/4HANA relies on record management functionalities. Within the SAP frontend, dispute cases are constructed, which allow investigations to occur within the company’s accounts receivables department. Dispute cases constitute three elements:
- Header, contains data fields, and attributes
- Folder structure known as linked objects, containing data such as the business partner records, disputed objects, etc.
- Pertinent notes to the case
These dispute cases can be investigated and resolved independently. Dispute management also offers functionalities such as automatic write-offs, which update the dispute case to close and credit the business with the write-off. The accounts receivable system also contains reason codes, which capture why something was done. This process ensures that dispute cases aren’t raised in cases with a valid reason for a short payment, for example.
Collections management is also seamlessly integrated into the Accounts Receivable system. Business partner roles include collections management as a role which can then be subdivided into different elements within the collections agency. A collections profile is used to manage individual collection partners. Transactional data from accounts receivable (overdue invoices) can be forwarded directly to the organizational partner. Prioritization makes the system more efficient by highlighting the most viable clients for collection actions. Collections management is also tied to dispute management, and cases can be closed after collection.