Obviously, it’s not worth it to call each customer immediately when a payment is late. Only a certain volume of collections creates the proper ratio between costs and benefits. Effective and early collections management builds on a transparent process. As a precondition, it identifies, segments, and prioritizes customers based on previously defined collections strategies. To accomplish these tasks, it must first collect the relevant information on the defaulting customers, information like open postings, incoming payments, dunning activities, and estimated risk. A telephone call is made only after the information has been collected. The purpose of the call is to remind the customers of the payment due and to agree on promises to pay or reviews. The process is documented and resumed later on if the conversation is interrupted.
Determining Collections Strategies
The SAP Collections Management application – part of SAP Financial Supply Chain Management (SAP FSCM) within mySAP ERP Financials – automatically identifies, segments, and prioritizes receivables. To enable these tasks, users set rules within their collection strategies that define how to deal with a customer in the case of a late payment.
For example, the collections process begins for a customer who has receivables of at least €100,000 that are due within 10 days. If the customer is already at the second dunning level, the priority of this case among those to be processed is moved ahead. If the SAP Credit Management application within mySAP ERP Financials has rated the customer as a risk, the case moves to the top quarter of all cases to be processed.
Customers are assigned to various collections strategies or groups in segmentation.
Comprehensive Information in Work Lists
The work lists of collections agents contain the names of the customers to be contacted along with comprehensive information. Employees gain an overview of a given case by using the information on receivables and on any broken promises to pay, risk classes, credit limits, reviews, and the current dunning level.
SAP Collections Management also suggests an amount to be collected, which need not equal the total amount of payment due. The amount might also be reduced by the amount of current promises to pay, credit memos, or disputed line items. Dynamically generated work lists consider currently broken promises to pay, current incoming payments, or reviews triggered by the complaints department.
The work lists also contain the satisfied payments. If the customer makes a promise to pay over the telephone, the customer is automatically sorted out of the open receivables and into the list of satisfied payments. The timing of the next call to the customer depends on the date of the last contact. The rules of the collections strategy also define this interval. The collections employee can also put cases on hold. If the contact person at the customer’s company is on vacation or can be reached only on Tuesdays and Thursdays, for example, this information can be stored in the customer master data.
SAP Collections Management frees collections agents from a variety of organizational or administrative activities and enables them to concentrate on contact with customers.
Aggregated View for Customer Contact
To contact a customer, the collections manager navigates from the work list that contains several customers to be contacted to the detailed view of an individual customer. The list of open line items displays a customer’s status in terms of accounting. The detailed view, however, displays an aggregated view of the original amount of the business transaction and the open amount remaining, including partial payments and residual items. The detailed view contains less information than the traditional list of open items, but saves time otherwise spent searching for details. It’s perfect for telephone contact.
During a telephone conversation with a customer, a single screen displays all essential customer information to the collections agent:
- Promises to pay
- Contact data
- Files on hold
Agents can create promises to pay for several invoices simultaneously. Integration with SAP Dispute Management (also part of SAP FSCM within mySAP ERP Financials), is also available. Reviews that result from a conversation can be captured directly in the application.
Documentation of the Contact
he collections agent has two options for documenting customer contacts. First, promises to pay for one or more business transactions are stored with each open receivable. Second, the employee can summarize all the procedures in the notes section of SAP Collections Management. This documentation makes it easier to trace the progress and result of a transaction later on. The categories of results of telephone calls in the application, “customer reached” or “customer not reached,” determine how the work list displays the items and provide the collections manager with statistics for a group of employees or an individual employee.
SAP Collections Management is an important element of the interplay among customer accounting, credit management, and reviews in dispute management. Proactive use of SAP Collections Management reduces the amount of receivables and contributes to better planning of liquidity.