Advanced Credit Management Functionality in SAP S4HANA.pdf

S/4HANA Finance – Receivables ManagementSAP Credit ManagementStephen Ruzicka, CPA.CITP.PMP SAPFebruary 2020

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LINE DANCE THE NIGHT AWAY…

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


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


The Intelligent Enterprise FrameworkA foundation for the best run businesses of the future

Live

Simple

Innovative


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


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


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.


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


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


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)


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


Credit limit request

Reason & Status Amount Fields

Tracking &Tracing


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


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


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


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

*

https://help.sap.com/viewer/f5f34450114e499489882ce1ad310506/1.0/en-US/524b07a73a1e460c8977143c59741814.html

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


Q&A


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


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


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

http://www.mitsubishielectric.co.uk/


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

http://www.sap.com/finance

http://www.sap.com/Receivables

http://www.s4hanafinance.sapjourneymap.com/

https://go.sap.com/cmp/dg/crm-xf16-soc-027/index.html

http://www.digitalistmag.com/finance/strategic-cfo

http://www.sap.com/documents/2016/09/622179da-887c-0010-82c7-eda71af511fa.html

https://www.youtube.com/playlist%3Flist=PL3ZRUb1AKkpTQscw2i-DjiEv0C-PTQINd

https://fioriappslibrary.hana.ondemand.com/sap/fix/externalViewer/

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

http://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.

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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


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

https://youtu.be/gpFnj_YzA_4%3Flist=PL3ZRUb1AKkpTQscw2i-DjiEv0C-PTQINd

https://sapvideoa35699dc5.hana.ondemand.com/%3Fentry_id=0_ueo374l2

http://www.sap.com/invoices


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

https://video.sap.com/media/t/1_dnrmrdsp

https://help.sap.com/viewer/p/DIGITALPAYMENTS


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


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

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Advanced Credit Management Functionality in SAP S4HANA.pdf

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