One key consideration to ensure you get the best out of SAP Collections Management

30 March 2015

Catherine Wade

Catherine Wade

Consultant

In order to manage credit and maximise cash collection as efficiently and professionally as possible, it is essential to ensure that your organisational structure in SAP Collections Management is aligned to your strategic goals and can accommodate change simply and effectively.  

Whilst this may appear to be a straightforward, organisations often underestimate its importance as part of the process, and don’t give it the thought or attention required to get it right.

The objective of any cash collection team is to collect money owed from customers and this needs to be done in a proactive manner as efficiently and effectively as possible. The organisational model in SAP Collections Management is the backbone to achieving this. Prior to designing your organisational structure in SAP Collections Management, it is essential to identify the more important aspects of your strategy that the organisational model will need to address.  

Questions to consider when determining the organisational structure strategy for SAP Collections Management

  • How do you want your collection teams to be organised? For example, will they be centralised, split by region or split by line of business?
  • How do you want your customers to be contacted? For example, single call by single person, call per region or call per company code?  
  • How do you want to analyse customers in regards to debt? For example, do you want to analyse them by value, volume, credit limit utilisation or risk category?
  • How do you want to prioritise your customer contacts? For example, do you want to prioritise them at dunning level, by broken promise, or the amount to be collected?
  • How do you want to report on performance? For example, do you want to report on the performance of customers, individuals, or collections?

The answers to these questions may lead to contradictions for the Collections Management organisation structure so what may appear to be extraordinarily complex at first hand can be simplified by understanding the SAP Collections Management organisational objects and the flexibility and limitations they provide.

Aligning your collections organisation design to meet your strategic goals 

In order to design your organisational structure in SAP Collections Management, the first step is to understand the objects that it is made up of.

Collection profile

The profile is a grouping of collection segments, every business partner that is applicable to collections management must have a collection profile assigned.  By assigning the profile the segments within that profile will be applied to the business partner.

Collection segments

These are a grouping of company code(s) that are processed together for the purpose of collecting receivables. The business partner is assigned to segment(s) via the profile, the company codes within each segment can only have one collection group, one specialist and one strategy assigned at any given time therefore the grouping of company codes needs to take this into consideration.  If a different specialist or a different strategy needs to be applied to the same customer across a number of company codes, then the company codes need to be in different segments. The Collection segments are assigned collection groups.

Collection groups

These contain the collection team members for that group and a single strategy to evaluate and prioritise the business partners who are assigned to the group.  It is therefore vital to understand how the groups are to be split in order to evaluate the business partners of that type and ensure that the right specialist can be made responsible for that customer. Collection groups are not static, so specialists can be added and strategies can be changed.

Collection strategies

By assigning a group to a business partner, the strategy is automatically assigned. The strategy will contain the collection rules and valuations to prioritise and evaluate the business partner for collections. The process of evaluating and prioritising business partners should not be static and a different strategy may need to be applied as month-end or year-end looms. A strategy might also move from a re-active to a pro-active approach as relationships build and overdue accounts reduce.    

By drawing the potential organisational structure it will become clear if it aligns with the strategic goals, if the answers to the questions are realised through the structure then you may be there but it is important to challenge it from the bottom up and vice-a-versa.

Conclusion

The right organisational model will allow you to achieve higher collection success rates, thus accelerating cash flows, lowering DSO, and minimising the risk of bad debt write-offs. So any implementation of SAP Collections Management should focus on getting this right from the onset.

 

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