Download - Oracle Apps R12_White Paper on Advanced Collections Setup

Oracle® Applications Release12 Advanced Collections Setup

White Paper

<Sanjukta Choudhuri>

Oracle E Business Suite

Advance Collections Setup – Oracle Applications

Confidentiality Statement

The information contained herein is proprietary to TATA CONSULTANCY SERVICES

LIMITED and may not be used, reproduced or disclosed to others except as specifically

permitted in writing by TATA CONSULTANCY SERVICES LIMITED. The recipient of this

document, by its retention and use, agrees to protect the same and the information contained

therein from loss or theft.

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Abstract

This document provides an overview of Advanced Collections setup in Oracle Applications

R12. This whitepaper discusses all sections of functional design document and lists the

corresponding sections required to configure to use the Collector’s work queue.

In today’s business environment, cash flow is most critical to a business’s success. In order to

collect cash faster and more efficiently using streamlined processes offer a real competitive

advantage. The implementation of Oracle Advanced Collections allows organizations to

proactively manage their overdue management efficiency, whilst retaining its ongoing

customer relationships.

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About the Author

Sanjukta Choudhuri is a Techno-Functional consultant in TCS. She is an IT Analyst, worked in

two different ERP solutions over last 6 yrs. She has been involved in Implementation,

Maintenance, Support projects during her tenure and has work experience in ERP Supply chain

management and Finance modules.

About the Domain

The paper is aimed to talk about the Advanced Collections Setup, to develop a basic

understanding of how the main objective of debt collection has been achieved by setting up an

effective debt management tool to meet the requirement of the customers. Nowadays, many

companies are becoming bankrupt because of bad debt. In this situation collecting premium

from its customers on time has become a challenge. The collection process should be robust

enough to match with the current market situation.

Oracle Advanced Collections allows us to bridge the gap between back-office transactional

data and front-office customer management processes, while improving agent productivity and

collection results. Streamlined processes apply the right collections strategy to the right

customer to help the company collect more money faster and with less effort.

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CONTENTS

1. INTRODUCTION.........................................................................................................................................6

2. OVERVIEW ..................................................................................................................................................8

3. NECESSARY SETUPS ................................................................................................................................9

4. CONCLUSION ...........................................................................................................................................25

5. ACKNOWLEDGEMENTS .......................................................................................................................25

6. REFERENCES............................................................................................................................................26

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1. Introduction

Other than normal regular collection method for every business there should be one effective

debt collection process in place so that money that customers has not paid on time can be

collected from them. Advanced Collection is a module in oracle e-business suite which

provides an effective debt collection process for the money which is not collected on time. It is

very flexible. It can be designed differently for different industry, different territory and

different types of customers.

What is Advanced Collections?

Advanced Collections module of Oracle Applications provides advanced features of debt

management. This module deals specifically with customers who have not paid on time (These

customer are called as Delinquent Customers) and tries to collect overdue amount.

Why Advanced Collection needed?

In today’s world collection process has become very complex. Below mentioned are the points

which are key concern areas for which it is needed to opt for Advanced collection.

There is one Collection feature present in Receivables but that is not flexible enough.

There we can only send letters (Dunning Letters) to defaulters depending upon how many

days they are late for doing the payments (Aging Buckets). In Advanced Collection

different collection strategy can be implemented for different customers depending upon

customer’s debt history or debt amount. This feature is not present in Collections in

Receivables module.

Collectors are too busy to contact customers with overdue invoices with small amount.

Some customers pay these invoices but consequently, they end up writing off many of

these small balances. Many small amounts when added up do not remain small at all. How

can we stop this?

Business values their customers who have been with them for many years and would like

to develop a more gentle collections strategy to recover bad debt. But customers who have

been with them for less time should have a more aggressive collections strategy for them

so that business can control their bad debt, get financial relationship off to a better start and

ultimately retain and weed newer customers out based on their value. How to execute dual

strategies without confusing the collectors?

It has often seen that customers who pay on a quarterly or semi-annual basis are often days

or weeks late. Since these payments are less frequent, the amounts are often larger and

greatly impact cash flow. But, these customers are not necessarily bad customers but are

habitually late. How can we get these pre-delinquent customers to pay on time (or even

early!) without offending them by a collections call?

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There are unique collections requirements for each country that determine how and when

to contact delinquent customers. Company spends lot of money in training keep collectors

clear on these country-specific rules and regulations. It has also seen that customers in each

country often respond differently to the dunning and calling process. How to easily create

country-specific collections best practices strategies?

Collectors struggle with customers who continue to refuse to pay. They waste extra calls to

these delinquent customers when they should really refer these customers to managers or

collections specialists who can take more drastic collections measures to litigate repossess

and/or write off these debts. Also, customers sometimes claim bankruptcy which, whether

this is true or not, needs to be addressed quickly to reduce additional bad debt exposure as

well as adhere to strict bankruptcy laws. How to address these later stage delinquencies

activities without bogging down the collections process?

When there are many defaulters, collectors are confused as to who to call first and when to

stop calling. Automation to ease their burden. How to prioritize their work so that recovery

rate improves?

Important Terms 1

2 Delinquency: Delinquency means condition of a debt when overdue. The customers

who do not pay on time are called delinquent customer.

Strategy: Used for applying specific debt management business rules for collection.

3 Aging Bucket: Different Aging Bucket can be defined in Receivables depending upon

number of days. E.g. Seven days aging bucket. Then all the transaction for which payment is

late for 7 days will come to this bucket.

4 Dunning Letter: Dunning letters are notification or warning letters send to customers

if they do not pay on time. Each Aging Bucket will be having a set of Dunning Letters.

Depending upon the Aging Bucket the customer falls dunning letters are sent.

5 Scoring Engines: Scoring Engines determines customer’s delinquency status and

customer scoring.

6 Score: Every delinquent customer is assigned to a value called score. Score is

calculated depending upon many factors like debt amount, debt duration etc.

7 Competency: Competence is a standardized requirement for an individual to properly

perform a specific job. Job wise competency is defined in system and assign to particular

person who can do that job. E.g. Calling Customer a competency. Some people who are

enough skillful to call and convince customer is assigned to this competency.

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2. Overview

Advanced Collection is an extension of collection process in Receivables module therefore it is

obviously linked with Receivables in oracle applications. Customer information and the

transaction details for which customer has not paid on time, all this information will come to

Advanced Collection from Receivables module. Other than that it is linked with the following

modules-

HR Management (Full implementation): Collectors are employee of the

organizations. So they should be set up as an employee in HRMS. This one is

mandatory.

CRM Resource Management: Groups, Roles and Resources everything needs to be

managed by CRM Resource Management. This module implementation is also

mandatory.

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3. Necessary Setups

Setup is very important for Collections. Once the setup is done collection process will continue

executing using the collection strategies defined at the time of set up. It is also possible to

modify or create a new strategy.

Below mentioned are the detailed steps required for Advanced Collection setup

1 Step 1 – Create Responsibility

2 Step 2 – Assign Responsibility Profile options

3 Step 3 – Set up Employees

4 Step 4 – Assign Users to Responsibilities

5 Step 5 – Assign Resource Roles and Used In

6 Step 6 – Import Resources

7 Step 7 – Create Collectors

8 Step 8 – Set up Level for Dunning

9 Step 9 – Set-up Scoring Component

10 Step 10 –Setup Scoring Engine

Step 11 – Create Work Item Template

11 Step 12 – Create Collection Strategies

12 Step 13 – Concurrent Programs - Create delinquencies

13 Step 14 – Set up Profile Options Universal Work Queue

14 Step 15 – IEX: Enable the AR transactions summary tables

Collector Setup:

Step 1: Create Responsibility

First responsibilities for Advanced collection which will be used by collectors need to be

created. Ex – Collections Agent

Responsibility: System Administrator

Navigation: Security >> Responsibility >> Define

Step 2 – Assign Responsibility Profile options


Navigation: Profile >> System

Assign all the required profile options for Advanced Collections Setup

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Step 3 – Set up Employees

Collectors are first employees of the organization. So it is required to set them as Employee

first.

Responsibility: HRMS Manager

Navigation: People >> Enter and Maintain

Step 4 – Assign Users to Responsibilities

Responsibilities are created for Collectors, now these responsibilities should be assigned to

respective user.


Navigation: Security >> User >> Define

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