Over the past few years there has been a great deal of interest around SAP Financial Supply Chain Management (SAP FSCM). SAP has invested a great deal of time and effort in designing and improving the product. This can be seen by the various business function sets — collections of new functionality within an enhancement package — that have been released:

• FIN_FSCM_CCD
• FIN_FSCM_CCD2
• FIN_FSCM_INTEGRATION
• FIN_FSCM_CCD_INTEGRATION

Many articles have focused on what SAP FSCM actually does and delivers (see the note for specific references). They are useful if you are aware of the current SAP accounts receivable (AR) functionality; however, some of the functionality is new within SAP FSCM and does not replace actual AR functionality.

Note
For some SAP FSCM references, see the articles, “Improve Your Receivables Management with SAP Collections Management” and “Adapt and Automate SAP Dispute Management.” 

I’ll review the current SAP AR transactions and then compare them to the new functionality that has been delivered so far within SAP FSCM.

What Does the AR Team Actually Do?

A company’s customer base is normally split across the AR team, providing a single team member to a customer, with the team member having many customers to manage. The AR team performs three commonly used processes:

1. Chasing outstanding balances
2. Logging, processing, and resolving disputes
3. Confirming and allocating payments

The diagram in Figure 1 shows the steps within these processes and is color coded to show which step relates to which process.

Figure 1

Standard steps performed within the AR process

To achieve these business processes, a team member may need to take some of the following actions:

• Contact the customer prior to the debt becoming due
• Confirm that the customer received all of its invoices
• Confirm if the customer has a dispute on any of its invoices
• Chase the customer for payment once the debt is overdue
• Obtain details of pending payments recording value and date of payment

You can see the interaction among the various actions in Figure 2.

Figure 2

A typical cash collection cycle

The key behind the process is to ensure the correct customer is contacted at the correct time in the collection process cycle. Some customers do not require any contact, as they will always pay their outstanding invoices when they are due.

However, for various reasons some customers do not pay according to the agreed payment terms. Some delay payment intentionally to improve their cash position, and others may want to pay on time but have issues with outstanding invoices.

How Does Standard AR Work?

Now I will look at how the standard SAP AR tools assist the team in performing key tasks. As with most AR teams and processes, the core process used is the aged debt report.

Many standard reports within AR show the outstanding debt of a customer. To access one of the most commonly used reports, follow SAP Easy Access menu path SAP menu > Accounting > Financial Accounting > Accounts Receivable > Reports for Accounts Receivable Accounting > Customers: Items > S_ALR_87012178 – Customer Open Items Analysis by Balance of Overdue Items (Figure 3).

Figure 3

Top selection screen of the standard aged debt report

Figure 4 shows some important settings you need to consider. The Due Date Sorted List field box is where you control the various aging buckets. In this example, the first box shows items due from 0-30 days, the second is for 31-60 days, and so on. The Summarization Level controls the level of detail that is provided in the report. Six, which sorts the list by accounting clerk and company code, is one of the most commonly used values. The Sort by Bal. of Overdue Items check box affects how customers are shown on the report. If this is checked, the customers with the highest overdue balances appear at the top.

Figure 4

Output control selection parameters for standard aged debt report

Figure 5 shows the output of the report with the settings made in Figures 3 and 4.

Figure 5

Output of the aged debt report

The report provides the AR resource a clear breakdown of the customer’s account. The downside is that users cannot drill into the detail of the account, nor can they record any notes. Lastly, and probably the biggest issue, is that there is no way of recording if contact has been made with the customer, so a customer could be contacted more than once or not at all. This is one way that SAP FSCM differs, which I’ll discuss later.

In practice, the aged debt report is printed at the start of each period. Assuming a client offers its customer net monthly payment terms, no new invoices raised should fall due in the monthly period. The printout allows the user to write notes and see the starting point. This frees up the user to access more detailed information with standard SAP functionality.

The main report used is transaction FBL5N — the customer open item list (Figure 6). To access this report, follow SAP Easy Access menu path SAP menu > Accounting > Financial Accounting > Accounts Receivable > Account > FBL5N – Display/Change Line Items.

Figure 6

A standard customer open item report

As you can see, there is now more detailed information regarding the customer’s account. This transaction provides full drilldown into the document, allowing, where applicable, access to the billing document, scanned image, and sales order or sales contract.

The benefit of the customer open item list is that it provides a single screen that breaks out the customer items. You can filter the report to just show overdue items, or items within a certain date range and number range. There is also the possibility to enter some text against line items. The issue here is that the field is only 50 characters, and you would have to copy the entries to the various line items if you wanted to add the same comment to many lines.

Occasionally, the user wants to record a generic message against the customer rather than the line items. This is not achievable in the aged debt report as it is just a static report, and cannot be done against the customer open items. This is another area that SAP FSCM satisfies, which I’ll discuss later.

A frequently used area to record notes against a customer is the credit master in transaction FD33. To access this, follow SAP Easy Access menu path SAP menu > Accounting > Financial Accounting > Accounts Receivable > Credit Management > Master data > FD33 – Display (Figure 7).

Figure 7

Detail of a credit master and the Texts button where the text is held

Double-click the Texts button in the credit master to see the notes that have already been entered (Figure 8). You can also enter more notes if necessary (Figure 9).

Figure 8

The pop-up screen that appears after clicking the Texts button in the credit master

Figure 9

Actual text held within the credit master

It is simple to add the relevant text into the credit master and over time this can provide the user a detailed history of the contact made. The issue with these notes is that they can be deleted accidentally and cannot be accessed directly from the customer open line item report. There is a transaction (the credit master sheet) that provides access to the notes. However, it can be cumbersome navigating between the various linked screens. With Collections Management in SAP FSCM, you won’t need to do this.

One of the main objectives of the standard tasks for the AR team is to contact the customer at agreed upon times in the collection cycle. A way to automate this is via dunning. A customer needs to be assigned to a dunning procedure, and then it follows the dunning cycle, either sending notifications to the customer to chase for payment, or prompting the AR user to contact the customer based on the dunning cycle.

The issue with dunning is that some customers cannot follow a generic route. Therefore, they are seen as exempt from dunning and the AR team need to manage their contact manually. Use transaction XD02 to change the customer master, so you can add a new dunning procedure to the customer master (Figure 10). Transaction FBMP is the basic configuration screen for dunning (Figure 11).

Figure 10

Details where the dunning procedure is held within a customer master

Figure 11

Show the various configuration options available for dunning

Now that I’ve reviewed some standard processes and tasks within FI-AR, refer back to Figure 1 for comparison to Figure 12. Figure 12 shows an updated version of Figure 1, detailing which tasks can be performed by standard FI-AR, compared with the boxes in blue, which cannot be fulfilled by standard FI-AR. Now let’s look at how SAP FSCM works as a complement to FI-AR over these processes.

Figure 12

Tasks that can be achieved as standard with FI-AR against the standard ones in Figure 1

How Does SAP FSCM Tackle These Issues?

SAP FSCM enhances the standard capabilities in FI-AR. The two main submodules of SAP FSCM that the AR team should use are SAP Collections Management and SAP Dispute Management.

Other articles address other aspects of SAP Collections Management (including the one I referenced in the note at the beginning of this article), but the main area I am going to focus on is the creation of the worklist. An SAP Collections Management worklist is a prioritized list of customers that the AR team needs to contact. The list is displayed in order of importance. The way that this is achieved is that every customer receives a score based on a client-specific set of rules.

Follow SAP menu > Accounting > Financial Supply Chain Management > Collections Management > UDM_SUPERVISOR – All Worklists to see a typical worklist (Figure 13). You can view all worklists by using this transaction, or you can run an individual collections worklist by the following menu path SAP menu > Accounting > Financial Supply Chain Management > Collections Management > UDM_SPECIALIST.

Figure 13

A typical worklist within SAP FSCM

The worklist is similar to the standard aged debt report, but with some enhancements:

• Drill-down functionality in the customer record
• Each customer is assigned a collection score and the list can be sorted by this to prioritize customers to contact
• Summary information regarding disputes, promises to pay, and a To Be Collected column, which is configurable

All customers are linked to a collection strategy. To access a collection strategy, follow SAP Easy Access menu path SAP menu > Accounting > Financial Supply Chain Management > Collections Management > Current settings > UDM_STRATEGY – Strategies (Figure 14). Within the strategy, collection rules have a valuation. This then allows the customer to get a score based on a number of client-defined rules.

Figure 14

Definition of the collection strategy and the rules linked behind the strategy

When defining the strategy there is the functionality to simulate the strategy against a customer so you can see the score different customers receive. Simulating the collection strategy provides the score the customer would get based on the criteria in the collection strategy. It is also a way of testing the strategy to ensure it meets the company’s requirement. Click the display logs icon to see the pop-up screen shown in Figure 15.

Figure 15

Simulation of a customer for a collection strategy

You can provide whatever values you think are relevant to ensure the correct customers are contacted. This could mean all customers with the highest overdue debt are contacted first, or customers who are at a specific dunning level. This provides the client a uniformed approach to contacting customers, so if a team member was away, a temporary worker could step in and perform their daily duties without too much effort. Further, the AR team can actually monitor its productivity by seeing the number of customers contacted in a day.

Figure 16 shows that there are various tabs available for further processing. You can reach this screen by double-clicking the appropriate customer in the worklist in Figure 13. The main part of this screen details the customer open items. Figure 17 shows the information available for previous payments in the Payments tab. It shows that the customer made a payment on August 1, 2010. You also have the ability to create a promise to pay and or a dispute case.

Figure 17

A list of previous payments made against the customer

The Cust. Contacts tab shows all the contacts that have been made since the date specified in the Cust. Contacts Since field (Figure 18). You can drill into this to see the detail at the bottom of Figure 18.

Figure 18

Details in the Cust. Contacts tab

You can also highlight an item and click the Dispute Case button to see the pop-up screen in Figure 19. Here, you can create a customer dispute, which you can view when you access the customer again. You can assign this to various business users, as well as different reason codes and statutes.

Figure 19

Create a customer dispute via Collections Management

Similar to creating a dispute, when you create a promise to pay you need to select the line items that are to be included. After doing this, click the Promise to Pay button, which produces the bottom half of the screen in Figure 20, where you can fill in information. You can enter the amount that has been promised, some notes, and a reference, which could be the check number.

Figure 20

Create a promise to pay from Collections Management

With these functionalities, the AR team now has one single transaction in which it can perform three major tasks: chasing for payment, logging and resolving disputes, and making scheduled customer contacts, which is illustrated in Figure 21.

Figure 21

Tasks that can be achieved as standard with FSCM against the standard ones in Figure 1