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S/4HANA Finance – Receivables ManagementSAP Credit ManagementStephen Ruzicka, CPA.CITP.PMP SAPFebruary 2020
S/4HANA Finance – Receivables ManagementSAP Credit ManagementStephen Ruzicka, CPA.CITP.PMP SAPFebruary 2020
6© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Digitalization is transforming your System of Record
1960s 1980s 2000s 2010s 2020sLive
streaming
7© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Digitalization Changes the Business Environment New challenges for Finance
Increased market volatility
Currency exchange risk
Changing consumer preferences
Proliferation of new business models
From product to digitally enabled services
Mergers and acquisitions
New tax rules against digital tax evasion
New digital reporting requirements
More complex regulations
8© 2017 SAP SE or an SAP affiliate company. All rights reserved.
The Intelligent Enterprise FrameworkA foundation for the best run businesses of the future
Live
Simple
Innovative
10© 2017 SAP SE or an SAP affiliate company. All rights reserved.
SAP Empowers all the Finance Roles within the Organization
SAP S/4 HANA Finance Chief Financial Officer
VP of Finance Head of Corporate Reporting
CorporateTreasurer
Head of Finance Operations
Governance, risk,and compliance
Financial Planning& Analysis
Accounting &Financial Close
TreasuryManagement Financial Operations Enterprise Risk &
Compliance Management
Mergers and acquisitions Continuous accounting Manage Daily Cash Operations
Real-time receivables management Three lines of defense
Dynamic planning and analysis Continuous consolidation Bank counter-party risk
managementAutomated cash application processes Access governance
Real-time customer and product profitability
Real-time line manager insights
Real-time actual to plan cash cycle Buyer-supplier integration Cybersecurity monitoring
and data protection
Revenue recognition and lease accounting (IFRS 15/16)
Manage FX Exposure and Risk Corporate real estate
managementInternational trade management
11© 2017 SAP SE or an SAP affiliate company. All rights reserved.
SAP Receivables ManagementIntroducing the automated world of Receivables Management
§ Centralizes, automates and simplifies the process of customer receivables management across global enterprises
§ Supports automated and intelligent processes for customer credit evaluation, cash collections and dispute resolution while providing transparency to customers with easy-to-use self-services
§ Acceleration of dispute resolution and improved customer service
§ Helps reduce bad debt write-offs and improve days sales outstanding and working capital management
12© 2017 SAP SE or an SAP affiliate company. All rights reserved.
SAP Receivables ManagementEnhancing core A/R processes with automation solutions
Credit Evaluation and ManagementEmbed proactive credit management in transactional processes and portfolio analysis.
Billing and E-InvoicingDeploy a customer bill payment portal or an e-billing process.
Collections ManagementProactively manage customer collections and customer service.
Dispute ResolutionClarify and resolve customer payment disputes quickly and efficiently.
Cor
eR
ecei
vabl
es M
anag
emen
t
Accounts Receivable – standard process automation for core invoice-to-cashManage all financial accounting–related aspects of customer accounts receivable.
13© 2017 SAP SE or an SAP affiliate company. All rights reserved.
SAP Credit Management – Balance risk and return with a unified global view of your customers
§ Cross-enterprise and cross-system credit evaluation and management process, including disputes and dunning information
§ Customer scoring based on your rules, including internal and external factors
§ Easy access to credit information for your sales team
§ Workflow for faster decision-making once credit limits reached
0.3% The amount of accounts receivable write-offs by the 25% top-performing companies (comparedto 3.1% for the bottom 25%) Source: ASUG Benchmarks
14© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Functional overview
Credit Limit Management§ Implement a company wide credit policy§ Manage a customer credit profile§ Central credit management in a distributed system
landscape
Credit Case§ Credit case for structured processing of credit limit
applications§ Track status and result of credit limit applications
Credit Rules Engine§ Categorize customers by scoring rules§ Automatically calculate and assign a customer-
specific credit limit§ Credit check rules§ Model and implement own customer credit score
cards
Credit Information § Interface to external credit agencies§ Input parameters for scoring rules
Credit Manager Analytics§ Role-based access to credit management
information and analysis
15© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Create limit application (example)
Sales assistant enters credit limit application (credit case)
Need more information?
Send back credit case with financial data
Approve / reject credit limit application
no
yes
Assign credit manager manually / automatically
Send workflow item to credit manager
Send credit case to financial analyst
Change limit in master data (manually)
Customer exceeds credit limit frequently
Send workflow item to financial analyst
Close credit limit application
Send notification to sales assistant (workflow)
16© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Documented credit decisionPDF snapshot with all details for the account team
§ Handling of credit blocked sales documents centrally in SAP Credit Management
§ A “decision within seconds” approach to release a blocked sales document
§ Automatic assignment of credit analyst as processor
§ Comprehensive analysis of the credit account before taking a decision
§ Involved parties and their respective decisions are transparent and documented
17© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Credit limit request
Reason & Status Amount Fields
Tracking &Tracing
18© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Real-time customer credit exposures - monitoring critical transactions
10%Decrease in bad debt write-offs by enforcing global proactive credit management policies
Source: SAP Performance Benchmarking
19© 2017 SAP SE or an SAP affiliate company. All rights reserved.
SAP Credit Management: Risk Monitoring
Credit Decisions§ Automated (standard)
§ Order-triggered§ Schedule-triggered
§ Manual (exception)
Internal data External data (credit reports)
Alerts§ Changing conditions§ Process triggers§ Workflows
S/4 or ERP Cloud for Credit Integration
SAP Credit Management
Embedded Scorecard
Days Overdue
Sales Revenue
External Rating
Foundation date
10
520
16
PointsPoints
Risk Class = 4 Credit Limit = 115,000 USD
20© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Business partner in SAP Credit Management
Scoring Rule:
Rules that define how a customer is scored (e.g. industry, D&B, legal form, country)
Credit Check Rule:
Rules that define how a customer is credit checked (e.g. static / dynamic
check, oldest open item …)
External Rating from D&B
21© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Why the Cloud Solution is the Safest Option Choose from wide base of credit bureaus, easily expand to other agencies
Easy to implementOne-time effort to integrate our credit integration solution with your SAP Credit Management system
Lower responsibilityThe integration with credit agencies and maintenance of the infrastructure is done centrally by SAP on the SAP Cloud Platform
Modern UX designThe SAP Fiori user interface is intuitive and provides a simplified user experience
Improved business processCredit controllers can rely on accurate data and take faster decisions
For more details on available agencies and products, please check here
*technically two different interfaces: Creditreform DAL and Creditreform CH
*
22PUBLIC© 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Standardized Deployment, with Flexibility and Scalability
Rapidly connect to the world’s leading credit bureausSupported use cases
§ Search & lookup Determine the business partner’s unique identifier
§ Import credit reportStore PDF in the Cloud and push key data fields into Credit Management
§ Manage monitoringRegister or stop monitoring updates for specific business partners
§ Process monitoring updatesReview updated data sent by the agency and update credit analysis if necessary
§ Trigger investigation/researchRequest deeper investigation for a business partner not included in existing database
*1802 release
24PUBLIC© 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Real-time Receivables ManagementPowered by Intelligent Automation
ü Cross-system automation of collections processes to deliver superior customer service
ü Analytics and workflow alignment with sales, A/R, and executives to reduce DSO
ü Optimized for global business services deployment
ü Automated collaboration with external expertise
Receivables manager
Sales teamSenior executives
Cash collection team
Rating expertsRating agency/credit bureau• Update scores as conditions change• Monitor customers automatically
Customers• View/download invoices• Send remittance• Make payments
SAP S/4HANA
Data-driven process control for team management
Cloud for credit integration
Cloud for customer payments
SAP CashApplication
• Match invoice lines• Cash to customer accounts• Utilizes Machine learning
FinancialOperations
CollectionsCredit Dispute
Mobile analytics and insight to avoid credit blocks
and reduce DSO
Redesigned processesAutomation and workflow
SAP digital payments
add-on
25© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Automated, integrated credit evaluation processes with SAP Credit Management in S/4HANA
Automatic credit limit checksCredit limits checks carried out when entering orders, deliveries, good issues
Documented Credit Decisions create a PDF document snapshot with all details for account team
Real-time customer credit exposuresIntegration with Accounts Receivable for exposure details and payment behavior key figures
Reporting in Fiori Smart Business analytics
Any system can be connected
Ongoing scoring of customersRecalculation based on credit events (new orders, payments, changes in external credit ratings, etc)
Time-based workflow triggers for periodic updates
Workflow support for credit limit requests
TraceabilityChange documents, various logs, DCDs …
10% Decrease in bad debt write-offs by enforcing global proactive credit management policies
Source: SAP Performance Benchmarking
26PUBLIC© 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Order-to-Cash Customer Success: Mitsubishi ElectronicsSaving costs through improved efficiency
Mitsubishi’s new SAP application has helped its business on many fronts, as Seabrook explains. “We are handling more customers per credit controller and more disputes per credit controller,” he begins. “That is because our people are better prepared, more focused, and properly equipped to keep calls concise. We have fewer disputes, and those we do have are resolved more quickly. Our customers’ records for prompt payment are better, which has helped us register a small reduction in days sales outstanding even though it had little room for improvement. We are even doing better than ever in collecting from our higher-riskcustomers.”
“From a management perspective, we have better control,” Seabrook continues. “We establish ourcredit controllers’ priorities instead of too often leaving them on their own to decide how to spend their time. The reports that SAP software provides are excellent, giving us the information we need to make the right collection and dispute decisions. Finance is doing a better job of cash flow forecasting because of the visibility it has into customer promises to pay.”
“When we call a customer, it is for a good reason and at the right time. Our credit controllers come across very professionally because they have full records of prior communication in front of them. These are all things that customersappreciate.”
Simon Seabrook, Credit Operations Manager, Mitsubishi Electric Europe B.V.
CompanyMitsubishi Electric Europe B.V.
LocationUK branch, Hatfield, UnitedKingdom
Industry, products, and services Industrial machinery and components – heating andair-conditioning systems, elevators, escalators,machinery, and much more
Web sitewww.mitsubishielectric.co.uk
SAP® solutionsSAP® Collections and Dispute Management application
27PUBLIC© 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ
Visit the Web sitewww.sap.com/finance I www.sap.com/Receivables
Experience the journey mapS4hanafinance.sapjourneymap.com
Read the digital finance white paperRegister for the digital finance white paper
Join the conversationDigitalist Magazine: Strategic CFO
Make the business caseCustomer Brochure: CFOs discuss the benefits of SAP S/4HANA Finance
Watch YouTube Finance Playlist
Explore Fiori Library
Find more Information on SAP S/4HANA Finance
28PUBLIC© 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ Internal
Thank you! Contact information:
Stephen F Ruzicka, CPA.CITP.PMP
NA Regional Treasury Expert| Treasury and RiskSAP America, Inc. | www.sap.com
© 2019 SAP SE or an SAP affiliate company. All rights reserved.
No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission ofSAP SE or an SAP affiliate company.
The information contained herein may be changed without prior notice. Some software products marketed by SAP SE and its distributors contain proprietary software components of other software vendors. National product specifications may vary.
These materials are provided by SAP SE or an SAP affiliate company for informational purposes only, without representation orwarranty of any kind, and SAP or its affiliated companies shall not be liable for errors or omissions with respect to the materials. The only warranties for SAP or SAP affiliate company products and services are those that are set forth in the express warranty statements accompanying such products and services, if any. Nothing herein should be construed as constituting an additional warranty.
In particular, SAP SE or its affiliated companies have no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation, and SAP SE’s or its affiliated companies’ strategy and possible future developments, products, and/or platforms, directions, andfunctionality are all subject to change and may be changed by SAP SE or its affiliated companies at any time for any reason without notice. The information in this document is not a commitment, promise, or legal obligation to deliver any material, code, or functionality. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, and they should not be relied upon in making purchasing decisions.
SAP and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP SE (or an SAP affiliate company) in Germany and other countries. All other product and service names mentioned are the trademarks of their respective companies.
See www.sap.com/copyright for additional trademark information and notices.
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Basic vs Advanced - Detailed
Master Data SAP Business Partner SAP Business Partner
FI Data SAP Business Partner FI-AR, FI-CA, others
Monitor Credit Exposure Distributed system-landscape (multiple FI, SD and CRM systems); SAP and non-SAP
Distributed system-landscape (multiple FI, SD and CRM systems); SAP and non-SAP
Automated Customer Scoring, Rating, and Limits
Not available Credit Rules Engine
External Credit Information (e.g. D&B)
Not available in standard Any XML-based credit information service
Workflow Documented credit decisions Any credit event, documented credit decisions, credit limit requests
Analysis Fiori Smart Business / HANA Live Fiori Smart Business / HANA Live; OLAP/OLTP (incl. BW Content)
Basic S/4HANA Credit Management – technical foundation is SAP
Credit ManagementSAP Credit Management
*No additional license required for this basic functionality; if additional functionality required (scorecards, automatic determination of limits, workflow, integration of external credit information, customers must license SAP Credit Management
31PUBLIC© 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ
SAP S/4HANA Cloud for customer payments Let customers access their account details with self-service scenarios
§ Customer access to account data and financial documents
§ Increased customer collaboration and satisfaction
§ Enhanced transparency for customers and back office
§ Reduced effort and higher accuracy in A/R
Prerequisites:ERP 6.0 EhP 6 or higher (FI-AR) orS/4HANA FI-AR (on premise or cloud)
SAP S/4HANA Cloud for customer payments provides a self-service offering to enable our customers to deploy electronic bill presentment and payment processes as part of their digital business strategy to improve customer collaboration and reduce repetitive calls into the back office.
S/4HANA Cloud for customer payments enables YOUR customers to § View bills and make
payments§ Create payment advices for
open bills and payments
§ View their master data and inform you of any changes
§ Start the dispute resolution process
§ View account statement
Organizations where customers are billed electronically and can view their account/payment status have on average 64.9% lower AR costs (as % of Revenue) and 17.6% lower Overdue Receivables.
Demo Video
Promo Video
www.sap.com/receivables
SAP Performance Benchmarking
IssueInvoice Handle Payments
32PUBLIC© 2019 SAP SE or an SAP affiliate company. All rights reserved. ǀ
SAP digital payments Enable implementation of digital payments based on a single cloud platform
SAP digital payments offers connections to payment service providers (PSPs) to have standardized processing of credit cards. With this solution, SAP provides an alternative to complex customer-specific implementations by an out-of-the box integration to SAP products/components. It increases efficiency and reduce errors in reconciliations in the finance department. SAP manages the operation, maintenance and support of connectivity centrally, giving companies a flexible choice of PSPs.
SAP digital payments enables customers to…
Integrate Credit Card payment processes between • SAP S/4HANA Cloud for customer
payments integrated with S/4HANA FI-AR (Cloud and on premise)
• S/4HANA SD Order (Cloud and on premise)• Convergent Invoicing in S/4 HANA FI-CA
(Cloud and on premise)• Hybris e-Commerce integrated with S/4
HANA SD Order (on premise)• Hybris Revenue Cloud integrated with
S/4HANA SD Billing (Cloud and on premise)
and Paymetric and Stripe as PSPs� External payment integration� Security and data privacy improvement
(esp. PCI DSS certification)
• Central operation, maintenance and support in one place
• Easy onboarding of new PSPs
• Stable and harmonized interfaces for all SAP solutions
Further informationDemo Video
Help Portal
Companies that allow customers to pay by credit card can save about 80%* of implementation and maintenance cost with SAP digital payments add-on (*depending on PCI compliance, audit cost, number of PSPs and transactions).
PrerequisitesS/4 HANA CE or On PremisePSPs: Paymetric or StripeSupported processes: see Functional Scope
Handle Payments
33© 2017 SAP SE or an SAP affiliate company. All rights reserved.
SAPBusinessPartner
ExternalProvider
Credit Management PortalSales Credit Financial
Credit Analysis
Credit Management
Credit Limit / Scoring
Credit Check Workflow
Credit Limit
Definition
ext. / int. Credit
Information
Credit Limit Check / Open Items
Credit rules engine
Credit Check Rules
Application(e.g. Dispute)
Credit Decision Support
Application(e.g. CRM, SD,
FI)CreditLimit
Mgmt.
Credit Limit Control
CreditRulesEngine
34© 2017 SAP SE or an SAP affiliate company. All rights reserved.
Calculate internal credit scoring (existing customer)
Credit Rules Engine
IF (Black List Entry exists):S = 0ELSES = (2*A + 3*B + 5*C) / 10
CustomerAddress
Mapped Score B:
B+ = 30
Mapped Score A:
AAA = 50
Birth Date Profession
Region Age Group Profession Score...
ATL <20 Student 17NYC 20-30 Student 18
... Score C: 17
Black ListInt. Scoring S = 27.5
Credit Agency IAAA
Credit Agency IIB+
Sales Volume Dunning Payments
Score D: 3
Int. Scoring S = 19.3
Credit Rules Engine
IF (Black List Entry exists):S = 0ELSES = (2*A + 3*B + 5*C + 5*D) / 15
Sales Volume Score SV 0 – 100 0
101 – 300 5301 – 1000 10
...Dunning Score DU
0 01 3
...Paym. (days after Due) Score PY
0 0<5 4
<10 8<20 15
... à Score D = SV – DU – PY = 3
Credit Information
S/4HANA Finance – Receivables ManagementSAP Credit ManagementStephen Ruzicka, CPA.CITP.PMP SAPFebruary 2020