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SAP FSCM Interview Question and Answers

1. Why should I use SAP FSCM?
if you are using standard FI-AR to manage your credit collections process, SAP FSCM
provides tools to enhance your process. The tools in isolation will not solve any problems or
add any direct benefit. However, the various modules will improve control and visibility,
and enable the team to process more customers with a common process.
2. What version of SAP do I need to be on?
If you are using SAP ERP 6 then the core processes and functionality can be accessed.
However, it should not be overlooked that new functionality has been released in the latest
Enhancement Packages. Some customers can see the benefit of implementing SAP FSCM
immediately and will work with their existing Enhancement Package version. Others will
recognize some of the new functionality and wait until their ERP system is on the relevant
Enhancement Package.
3. Is my business too small/ big to use SAP FSCM?
As I mentioned before if you currently manage your Credit Collections process utilizing the
SAP FI-AR module then you can use SAP FSCM. The size of your business should not be
seen as a blocker to move to SAP FSCM. In some cases, having large volumes of customers
or large volumes of invoices increases the potential benefits. The real measure is to look at
the potential process improvements. If you want to perform credit checking and scoring in a
more efficient manner SAP FSCM will improve your existing process.
SAP has recently released an RDS to provide an efficient process to implement SAP FSCM,
reducing the cost of implementation. This is targeted at smaller customers wanting an
accelerated implementation. Please note this is only available for customers on
Enhancement Package 5 and beyond.
4. What module(s) should I start with?
Collections Management is the most popular and most simple module to implement.
However, to fully see the benefits of Collections Management the other 3 modules should be
When asked the question, I normally turn this around and try to align the customer's
strategic objectives from the implementation to decide the scope of the implementation.
Customers who have high volumes of customer invoice disputes will obviously look towards
Dispute Management - however aligning this with Collections Management joins the gaps
between disputes and credit collections. Where a customer has bad debt issues and pays
significant attention to Credit Limits and Credit Exposure, Credit Management will be more
appealing - however the Credit Risk Class and Credit Exposure can be used to influence the
Collections Worklist.
5. What are the Major benefits of SAP FSCM?
The process improvement that can be achieved can be broken down into a number of
Process efficiency and controls can be seen within the Credit Collection teams and other
The Collection worklist ensures the correct customer is called at the right time within the
Collection process. This will enable more customers to be called, as the volume of effort to

Logging disputes removes manual offline processes, and reducing the time spent to log and
process disputes will directly improve the cash collection process leading to more cash being
The new version of Credit Management provides more accurate credit data using internal
and external data, reducing the potential risk for bad debts.
6. Where is reporting found for SAP FSCM?
As with most new SAP functionality, reporting in core ERP is limited within SAP FSCM.
Implementing just the core SAP FSCM modules alone will leave a gap in terms of business
reporting. Within SAP BW there is some good business content which is simple to
implement. Reporting should be part of the initial build within the project. Some customers
who do not use SAP BW will design their own ABAP reports which is must better than using
the standard content. Any project that does not consider reporting will find it almost
impossible to measure the performance of the various teams.
7. How do you implement SAP FSCM?
It is really important to note that a SAP FSCM project is 80% process re-design and 20%
software implementation. It is therefore imperative that any business implementation of
SAP FSCM aligns to these percentages. An implementation team cannot work in isolation
from the business as the screens, terminology and processes are considerable different to
A business cannot input into any solution unless they understand the full capability of a
system, otherwise they are over reliant on the implementation partner to make decisions for
them. With this in mind, running business workshops on a proof of concept within the
customer's landscape enables the customer to make decisions with a better understanding.
In turn this will reduce the subsequent phases including, build, test and training.
8. Do I need to have PI to use SAP FSCM Credit Management?
The simple answer here is no if you have Enhancement Package 5. However you need to
implement WS-RM to replace the job PI does. If you have a PI server it does not make sense
to look at the WS-RM option. If you do not have PI and want Credit Management it is worth
considering WS-RM (if you have Enhancement Pack 5). To be fair this is more of technology
question for your BASIS team to decide the landscape approach they plan to adopt.
9. How do I design a global template for SAP FSCM?
Before designing the processes to support the Credit Collections team, the organisational
units need to be defined. Collections and Credit Management have separate organisational
units to represent the various levels within a Company. Where measure are to be common,
organisational units can be shared, and where differences are required unique values are
required. Breaking out the full implementation into smaller chunks enables the solution to
be rolled out and enabling quick wins.

What exactly is SAP FSCM - a high level guide to the

processes and the benefits?
At the end of last week I was having a chat with a fellow consultant who approached me on the subject of my recent
blogs on FSCM.

The conversation focused on what ACTUALLY is SAP FSCM. I was a bit taken aback from this comment - didn't
everyone know what FSCM was, what is stood for and what area of the business it supported? The world of SAP is a
big one, and I am the first to say I only know a fraction of non ERP technology. I, like my fellow college read other
blogs and articles and are constantly encounter anachronisms and don't fully know what they mean to me.

Please treat the following blog as a high level overview of FSCM, what it actually is, what it replaces and the actual
benefits of the suite of products.

What is FSCM?

FSCM = Financial Supply Chain Management.

Bit of a mouthful, and as the name suggests it is focused on the supply chain within finance. What is the supply chain
within Finance I hear you ask? A simple answer would be "improving the efficiencies of the accounts receivable and
accounts payable teams leading to an improvement of the business's cash flow". By focusing on your cash flow you
can provide extra working capital for your organization to invest in product development, stock or expansion. In
today's current market cash flow is even more important due to the reduced availability of cash in the market. This
has lead to the associated business processes being put under the microscope to find ways of improving the cash
flow to provide a competitive edge against an Organization's competitors.

What business area does it tackle?

One stand out "stat" that was presented to me when I was first introduced to FSCM nearly 5 years ago now was that
over time efficiencies have been achieved in the sales order process relating to order creation, customer deliveries
and invoice creation. This has reduced the time in the supply chain from order capture to invoice creation and
distribution to the customer. However one area that has stayed static is the time it takes a business to collect the debt
from its customers after invoices have been created. Please see table below that highlights the benefits.




Process an order

4 - 7 days

Same day

Process a delivery

4 - 7 days

Same day/ next day

Process an invoice

7 - 10 days

Same day/ next day

Collect cash

45 - 60 days

45 - 60 days

The process should be simple. You produce a customer invoice, send it to the customer, and in theory when the
invoice is due for payment the customer should pay that invoice in full. However in a world where a business may
have tens of thousands of customers, and some of those larger customer could again be receiving thousands of
invoices a month the likelihood of the process being followed correctly for all customers for all invoices is not that

Add to this, that the invoice could be wrong (the price or quantity or even a missing purchase order number) then the
number of invoices being paid on time reduces further. The goods supplied could be faulty, might not have arrived,
might have been sent to the wrong customer, the wrong good supplied to the customer, and you should now
understand that managing this process can be tricky. Add into the equation that the customer might have some
Financial difficulties of their own, as their customers are not paying them to the agreed terms and the whole cash
collection process could be a tricky process to manage.

Financial impact of cash collection

OK - so this addresses in part the business process issue. However lets look at the financial impact of the process.
All organisations will sell to customers, and have either purchased a product to re-sell at a profit, or bought a product,
amended it and then sold it at a profit, or lastly provided a service, and have the cost of the individual who provided
the service. Either way, there will be some form of "cost of sale".

So - if you buy something for $100 and are looking to sell it for $120, you need to outlay $100. If you buy ten
products, you need to spend $1000, and in theory you could sell all 10 of your products. A common payment term is
net monthly, so your customers would pay you a month after you provided them with an invoice. You may now want
to purchase some more products, in order for you to sell some more. However if you do not have the funds to buy
more products, you may need to take out a loan from the bank or use your overdraft. Either way you would be paying
a fee to be able to purchase more goods. This in turn is reducing your profit. The quicker you receive your payments
from your different customers the quicker you can either buy new products without paying for a loan, or the quicker
you can pay off your loan. Put this into the SAP world and the organisations that are using SAP, their turnover may
well run into the billions of dollars, and the speed which you need to receive money becomes more important.

How can SAP FSCM help you?

So the business process should now be clearer, how does SAP FSCM actually help organisations that use SAP? The
main business issues are:


Contacting your customers to chase for payments

Being able to record and track customer disputes
Ensuring that you provide significant mitigation for bad debt issues

1 - Contacting your customers to chase for payments

As mentioned - Organizations that use SAP will in the main have plenty of customers. This requires a team of "cash
collectors" to call customers to chase for payments. This could be pro-active calling ensuring the required payment
will be met, or chasing debt that is now overdue. The standard SAP solution would be to use the aged debt report,
and then randomly select customers to call.

Within FSCM there is a sub-module called "Collections Management". The number 1 benefit, is that it provides the
cash collectors a prioritised work list of customers for them to call. The work-list is defined through a number of
measures that are defined via configuration. This provides an organisation a structured process to tackle the cash
collection process. Further to this, the customer can add notes around the call with the customer, record a promise to
pay and raise a dispute that a customer has raised. All of this is done via ERP 6, is a single screen which removes
the dependency to use 3rd party systems or spreadsheets.

2 - Being able to record and track customer disputes

The second area is the logging and resolution of customer raised disputes. As mentioned before, there are a number
of reasons why a customer could raise a dispute against an invoice or group of invoices. An efficient process is
required to log customers disputes and ensure the correct person within an organisation has visibility of that dispute
so it can be resolved.

"Dispute Management" is the sub module within FSCM to tackle this. A SAP case record is created to capture the
dispute information. Various users can be assigned to a dispute to process or resolve the dispute. Further to this
dispute creation can be automated, workflow can be used to ensure the correct individual is passed the correct
dispute dependant on the reason of the dispute, type of customer etc. By designing and implementing an efficient
dispute management solution in ERP 6 ensures that the customers can pay more invoices in a quicker time reducing
the value and volume of unpaid overdue invoices.

3 - Ensuring that you provide significant mitigation for bad debt


The last area focuses on the credit limit that you provide your customers. There is no point selling a customer a
product for say $100,000 if they cannot afford to pay for that. This will lead to a bad debt where you will need to
"write-off" the fact that the customer cannot afford to pay for you product. At the same time, where a customer is a
good payer, and they are growing you may want to increase their credit limit so they can buy more, and you sell more
to them.

The traditional SAP solution for credit management was fairly manual. You would take data from 3rd party systems
that provided a credit score against a customer. This was based on how that customer was perceived as a payer
against a number of other organisations. This information whilst useful does not provide accurate information to your
Organisation, as you are basing their paying power based on other Organisations.

Within FSCM Credit Management the main benefit, is that you can create your own rules to calculate a credit score
against a customer. This can be based on a number of factors, internal and external. You can still use the external
credit score, but you can also see how well that customer pays you, what their current credit exposure is and the
sales the customer has made in the past. This provides you more relevant credit information for you, allowing you to
make a better more informed decision when granting a credit limit to a customer.

Hopefully this now answers some questions that you may have had. You should also be able to see the true benefits
to an organization. Hopefully you will be able to talk about the product to your peers as I believe most SAP ERP 6
users would benefit from some form of SAP FSCM implementation. Please feel free to re-read my earlier blogs and
hopefully the bits that did not make sense now do - if not let me know and I will iron them out.