SAP Financial Supply chain

Management (FSCM) Solutions

Presented by
Vikram Gollakota

1 Copyright 2011, HighRadius Corporation. All rights reserved.

 About HighRadius

Founded by a team with an extensive background in SAP

and financials process automation

Specialize in Cash Application, Collections, Deductions

and Credit Management

Provide Accelerators to SAP FSCM modules (to fill SAP

gaps)

Provide Hosted Software-as-a-Service (SaaS) Solutions

Ranked among fastest growing technology companies in

Houston in 2008, 2009 & 2010
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 Partial List of Customers

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 HighRadius Product Lines

SAP FSCM ReceivablesRadius SaaS

Accelerators Products

Dispute Resolution Accelerator POD & Claims Automation

Credit Memo Approval Deductions Management

Credit Debit Matching Engine Trade Promotions Settlement

FSCM Correspondence Automation Cash Application Automation

Cash Collections Forecasting Document Management

Credit Decision Accelerator for SAP Credit Data Aggregation

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 FSCM Modules At-A-Glance

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 Receivables
Management

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 SAP Credit Management

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 FSCM Credit Management Overview

New Module from SAP as a part of FSCM Suite.

Latest version is FSCM Credit Management 6.0
Enhancement package 4.
This is independent module and not an upgrade
for SD Credit Management (FD32).
According to SAP this will eventually replace SD
Credit Management.

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 FSCM Credit Management
vs. FI-AR Credit Management
SAP

Description FSCM Credit FI-AR Credit

Management Management

Credit Checking.

Integrate SAP and Non SAP Systems for a

centralized Credit Management.
Integrate external credit rating agency information.

Credit Sore and Limit Calculations.

Workflow.

Decoupled Risk Assessment to Credit Checking.

Standard BI content and Portal Access for

reporting and analysis
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 SAP Credit Management
Business Partner Overview

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 A Business Partner can
have many roles For
example (Credit Mgmt,
Collections Mgmt etc)

Business Partner Master Data

(UKM_BP) similar to Customer
Master Data (FD01).
If Customer Master exists in
FD01, Auto synchronization
process available for BP to be
created / updated upon
Customer creation / change

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 Various Identification
Numbers of the
customer like DUNS
number, Legacy
Customer Number,
Ticker Symbol etc
can be configured
and stored here.

Tax Number and

other legal
identifications of the
customer can be
stored here. VAT
Number, US Tax
Identification Number
etc

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 Scoring Rule
computes Credit
Score / Credit Limit

Risk Class is derived

from the credit Score
above

Check Rule defines Credit

Checking Rules. For
example Dynamic Credit
Check, Oldest open item
etc

Integrate External Agency

Rating information. For
example D&B Cap, D&B
Financial Strength, Moodys
etc

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 Info Categories are
available to store
additional information
like Credit Insurance,
Negative Events etc

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 Credit Segment = Credit
Control Area
Credit segments are required
for calculating the credit limit
and enable you to carry out
detailed checks at business
partner level.

Credit Limit /
Exposure and
Utilization %. Can
take you to a
detailed view

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 Double click to get
to the transaction
details

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 Double click to get
to the transaction
details

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 Additional
Information which will
effect the credit
decision an be added
here. For example
Security, Seasonal
increase in limit etc

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 Payment Behavior key
figures are fields that
summarize the
customers payment
history

Information Available on
this Screen:
1. Dunning Data
2. Oldest Open Item
Data
3. Last Payment Data
4. Key Figures (DSO,
Sales of the last 12
months, Highest
Sales in last 12
months etc)

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 A business partner relationship
represents the business connection
between two business partners and is
characterized by the business partner
relationship category.

Some of the Relationship Categories that are

important for Credit Management are
1. Higher-level Credit Management Account of
2. Lower-level Credit Management Account of
3. In Credit Management is managed by
4. Has Contact Person

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 SAP Credit Management
Credit Checking

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 Credit Checking

Credit Check Rule is a set

of conditions that are
checked during Order to
Cash process to
determine if the process
can continue without a
block

Credit Check Rules can be

assigned to the BP
irrespective of the Risk class.
For example a High Risk
Customer having a Cash in
Advance Payment Terms can
have Limited Credit Check

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 Credit Checking Definition

A Credit Check Rule

consists of Check Steps
each step consists of
parameters that must be
fulfilled for order
processing to complete

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 Credit Checking Standard Checks

Standard Check Explanation

Statistical Check of Credit Static check includes total exposure of all Open
Exposure Orders, Delivery, Billing and Open AR. It can also
considers Collaterals and Credit Insurance.
Dynamic Limit Check with Dynamic check includes total exposure of all Open
Credit Horizon Orders (with in a Horizon period of days), Delivery,
Billing and Open AR. It can also considers
Collaterals and Credit Insurance.
Check for Maximum Maximum Document Value, can be defined for
Document Value each Segment.
Check for Maximum Dunning Maximum Dunning Level
Level
Check for Age of Oldest Open Age of the Oldest Open Item
Item
Check of Payment Behavior DSO
Index

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 Check Checking Rules Summary

SAP FSCM Credit Checking can be enabled to

integrate with both SAP and non-SAP instances
New Credit Check steps can be customized by
adding custom rules and also make them
configurable
This will switch off SD credit check

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 SAP Credit Management
Credit Scoring

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 Scoring Rule
computes Credit
Score / Credit
Limit

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 Credit Score Scoring Formula Example

1. If Customer is in Negative List Set Score = 0 and exit

2. If Customer is in Positive List set Score = 100 and exit
3. If Customer has a Foreclosure, Bankruptcy or any other
negative characteristics Set Score = 0 and exit
4. Normalize external rating and add it to final score
5. Normalize Legal form and add it to final score
6. Normalize Industry and add it to final score
7. Normalize country and add it to final score
8. Normalize age of country add it to final score
9. Normalize Net Profit Margin and add it to final score
10. Normalize Equity Capital add it to final score

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 Score Formula: Define Steps , each
step has a condition and points that
can be assigned. All these points
can add up to a credit score

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 Credit Score Limit Formula Example

1. If Credit Score = 0 Set the Credit limit = 0

2. If Credit Score > 0 and <= 40 set the credit limit =
(MAX_SALES in last 12 months)*0.5
3. If Credit Score >= 40 and <= 60 set the credit
limit = (MAX_SALES in last 12 months)*1.0
4. If Credit Score >= 60 and <= 90 set the credit
limit = (MAX_SALES in last 12 months)*1.5
5. If Credit Score > 90 set the credit limit =
(MAX_SALES in last 12 months)*2.0

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 Score Formula: Define Steps , each
step has a condition and Limit
subsequently credit limit can be
calculated and assigned.

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 SAP Credit Management
Credit Workflow

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 These events can trigger workflows, calculate
the credit score / credit limit etc. For example
External agency has downgraded the
Customer and the information has updated in
the BP. In this event we can configure the
system recalculate Credit Score and start a
workflow to have the Credit Analyst review the
customers account

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 Credit Case and
Credit case
attributes.

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 Approval Steps for
the Credit Case

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 SAP FSCM Collections Management

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 SAP Collections Management
Roles & Responsibilities

Collection Manager Collection Specialist

Define collection strategies Incoming / Outbound

/ rules collection calls
Define work item Process daily worklist based
assignment to users / on prioritization
groups Record customer contact and
Monitor and reallocation of follow up
workload
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 SAP Collections Management
Collection Manager

Monitor &
Work Item Work Item
Reallocation of
Prioritization Assignment
Workload

When should a How do you Monitor

customer be categorize your collector
contacted for customers for performance
payment? collection
activities? Reallocation of
How do you workload
prioritize How do you through
customers that assign and reassignment or
should be distribute work temporary
contacted for items to reassignment of
payment? collectors? work items

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 SAP Collections Management
Collection Strategy

Collection Rule 1
30 Points
Collection Rule 2
20 Points
High Risk Class
Item greater than 30 Dunning level is
days past due greater than 2
Amount to be Amount to be
collected greater than collected greater
$0.01
Collection than $0.01
No successful contact
within 5 days Strategy
Collection Rule 4
Collection Rule 3 10 Points
15 Points
There is a
resubmission due
Credit limit utilization
is greater than 95% Collection Rule 5
20 Points

There are
broken
promises to pay
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 SAP Collections Management
Demonstration: Collection Manager Role

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Collection Rules
within the
Collection
Strategy

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Conditions within
a Collection Rule

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Automatic
Prioritization of
Customer Work
Items

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Priority is determined
by the valuation of each
collection rule

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 SAP Collections Management
Collection Specialist

Record
Access Contact
Customer
Worklist Customer
Contact

Review Review customer Create promise to

prioritization of work item pay to record
customer work invoice-level
customer contact
items Receivables,
payment history,
Create dispute
Check degree of dispute cases, case for disputed
worklist promise to pay, items
processing notes and
contact person Create
Review resubmission for
customer-level customer follow
information up

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 SAP Collections Management
Demonstration: Collection Specialist Role

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Double-Click to
open customer
work item

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Review open items

to be collected

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Review payment
history

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Review open and

closed dispute
cases

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Record promise for

payment or customer
contact at the invoice
level

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Promise for payment

has been recorded

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Record customer
contact resulting in
completion of the
work item

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Work item completed until worklist

is regenerated

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 SAP FSCM Dispute Management

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 SAP Dispute Management
Centralize Information

Amounts
Priority
Customer
Contact

Reason

Attachments
Dispute
Case Object
Status

Notes

Customer

SAP Action Log

Documents

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 SAP Dispute Management
Dispute Case Processing

Dispute Dispute
Case Research Resolution Case
Creation Closure

Automatic Identify reason Credit Issuance Automatic

creation from code for valid claim closure based
incoming on clearing
deductions Update Generate activity in
attributes, notes Correspondence accounts
Manual creation and for collection of receivable
from open AR attachments invalid claim
line item
Cross- Write-off of
Manual creation Departmental uncollectable
for pre- collaboration claims
deducted claim
notifications
(Customer-
Disputed Objects)

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 SAP Dispute Management
Demonstration: Processing of a Dispute Case

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Creation of
Dispute Case

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Input selection
criteria and hit
search

Double-Click to
open dispute
case

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Click on reduce
attributes
button to input
notes

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Select note
type

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Input notes
and click on
copy

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Click on increase
attributes button to
change dispute
case attributes

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Update attributes
and send to Andy
in the Logistics
Department

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Double-click to
open dispute
case

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Click on the
notes button

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Review
notes

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Attach POD to
dispute case

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Input internal
notes and
return to
analyst in the
deductions
department

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Double-Click
to open
dispute case

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Review
notes

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Review
attachments

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Update status and

root cause code

Update Concluding
Remark notes for
correspondence

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Generate Claim
Denial
Correspondence

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Display
Correspondence

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Claim denial
correspondence

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Status
automatically
updated to closed

Amount re-paid by
the customer

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 SAP Biller Direct

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 Dispute Invoices Online

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 Enter Dispute Details

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 Customer Master Administration - Contact Info

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 Customer Master Administration - Bank & Credit Card

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 Questions?

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