What is SAP FS-CD(Collections and Disbursements) ?
In the insurance sector, SAP has made its presence felt in quite a large way. All the processes that are present in this sector, such as policies, claims as well as calculations, are now being dealt by SAP. Earlier, these systems had no way of communicating directly with those who were availing them; but things have changed with the integration of important SAP modules like FS-CD. What SAP FS-CD (Collection and Disbursement) does is that it communicates with the users availing these services and provides an invoice regarding these systems.
How CD makes the Insurance processes easier to manage?
The basic processes of CD system include;
Posting and Documents
Clearing and Payment lots
Payment Program
Installment Plans
Broker Collections
What are the main concepts in SAP FS-CD?
The main concepts of FS-CD are;
Display of consolidated account balance to process requests for policy holders and agents
Direct integration with SAP Business Partner (BP)
Invoicing of agencies (brokers) and maintenance of the customer hierarchy
Premium invoicing of customers with customized payment plans
Payment engine to process payment including bank transfer or check
Payment engine to process recurring monthly customer payments for outstanding premiums
Automatic reminders and passing to collection agencies for overdue accounts
Direct interface to SAP FI-GL for posting premium revenue, claims and liabilities
Check management to void, reissue or cash checks
Automated returns processing functionality for rejected customer payments
Automated depreciation functionality for items within an adjustable tolerance
External interfaces to banks for processing incoming and outgoing ACH transactions, credit card transactions, payment transactions, check cashing, returns and positive payments
External interfaces enabling policy management systems to create billing data for clients and maintain policies
Flexible reporting solutions enable seamless access to customer activities
Integrated web portal for customers who pay bills online (Biller Direct)
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How do I design a global template for SAP FSCM?
Before designing the processes to support the Credit Collections team, the organizational units need to be defined. Collections and Credit Management have separate organizational units to represent the various levels within a Company. Where measure are to be common, organizational units can be shared, and where differences are required unique values are required. Breaking out the full implementation into smaller chunks enables the solution to be rolled out and enabling quick wins.
How the Integration will work in SAP FS-CD?
SAP for Insurance is an integral component within the SAP solutions, and can be combined with them to deal with more business-related tasks.
Collections/Disbursements form the integrated interface to the SAP R/3 General Ledger and SAP R/3 Controlling. An open interface allows the inclusion of administrative systems such as Commission Management, Claims Management, Reinsurance Management and Policy Management.
What is the use of Contract Accounts Receivable and Payable in SAP FS-CD?
It is a sub-ledger developed for industries with a large customer base and a correspondingly high volume of documents to post. These include insurance, utilities, and telecommunications companies. This component provides standard accounts receivable and accounts payable functions including posting, payments, and dunning.
How do you implement SAP FSCM?
It is really important to note that a SAP FSCM project is 80% process re-design and 20% software implementation. It is therefore imperative that any business implementation of SAP FSCM aligns to these percentages. An implementation team cannot work in isolation from the business as the screens, terminology and processes are considerable different to core SAP FI-AR.
What is SAP Biller Direct and how it works?
Biller Direct provides an online view of a customer’s account. This is aimed at two markets.
Client who have lots of small customers, like utility clients or telecommunication sector clients. This offers the customer an online view of their account, ability to make payments, update master data and dispute open items.
Clients with large and difficult customers. By providing large and difficult customers with an online view of their account, they can raise their own disputes, removing the need for the client to do this as well as pull off copy invoices. Certain customers may make large requests, and rather than ask the clients cash collectors they can do this all themselves.
What is Company Codes?
The company code is the central organizational unit of external accounting within the SAP System.
You must define at least one company code before implementing the Financial Accounting component.
What is Clearing Control?
Open Item Management is used to clear open items belonging to a contract account either partially or in full. With clearing control the company’s automatic assignment and clearing strategy can be defined. It can be displayed differently depending on the contract account or the business transaction.
What are the services SAP Biller Direct provide?
SAP Biller Direct provides following services to the Customers:
Allows customers to review their Account status.
Allows customers to review Billing Information (Invoices, Credits, Payments etc)
Allows customers to download the Invoices, Credits copies for references.
Allows customers to make payment using Credit Cards, Debit cards or Online Banking.
Allow customers to view there transaction information online as soon as data reach to R3 system.
Which ways the Interest can be Calculated?
To determine the way in which interest is calculated, you can:
• Choose interest calculation methods by which the system determines the number of days on which interest is to be calculated for a given interest period.
• Define interest rates based on date and amount in the system.
What is Collections Management?
The cash collection against due and overdue items has become a very important function in increasingly competitive global marketplace for most organizations. The collections management function within SAP FSCM supports in active receivable management and helps to prioritize the customer receivables function based on defined rules. These priorities which are set up can then be used to set up distribution of collection work to collection specialists who can than record a history of collection related contacts with the customers.
List the phases of Collection Management?
Collection Management can be divided into four phases.
1) Selection of Customer (All customer should be business partners then only they can be assigned in collection management) – one of the key steps is to create all customers as collections management business partners.
For more information on this please refer to the following article.
2) Prioritization of Customer based on Collection Strategies.
3) Preparation of Customer Contacts
4) Processing of receivables.
What are the keys steps which are involved in defining a collection strategy?
The keys steps which are involved in defining a collection strategy are as under:
• Define Basic Rules
• Define Collection Rules
• Process Priorities
• Defining derivation of priorities
List the Tcodes in Collection Management?
The Tcodes i Collection Management are;
UDM_SPECIALIST – My Worklist.
UDM_SUPERVISOR – All Worklists.
UDM_BP – Business Partner Master Data – to create and maintain business partners.
UDM_STRATEGY – Strategies.
UDM_GROUP – Groups.
UDM_GROUP2SGMT – Assign Groups to Segments.
UDM_GENWL – Creation of Worklists.
UDM_RSM_DELETE – Deletion of Resubmissions.
UDM_BP_PROF – Assignment of Profiles.
UDM_BP_GRP – Change to Segment Data.
UDM_BP_SPEC – Assignment of Collection Specialists.
FDM_COLL_SEND01 – Distribution of Data to Collections Management.
FDM_JUDGE – Evaluation of Promise to Pay.
FDM_P2P_CONFIRM – Confirmation of Promise to Pay.
FDM_COLL01 – Edit Receivables (Old).
What is SAP Credit Management?
Credit Management is a process in which Company sells a product / service to customers on credit basis. The company collects payments from customer at a later time, after sale of product. The amount of credit fixed by a company for a customer is called credit limit.
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What are the different types of Credit limit?
Credit limit can be different for each customer.
Types of credit checks:
1.Simple credit check: Simple Credit Check = Value of all Open Items + Value of the Current Sales Order. Note: Open Items are invoices for which company has not received payment.
2. Automatic Credit check – Automatic credit check allows you to evaluate a transaction based on the credit rating of the customer, and ensures appropriate further processing of the transaction document. The credit limit check starts either automatically when you save a document or by selecting Check Credit.
Automatic credit checks are of 2 types-
Static Credit Check (Check for credit limit against total value of open sales order + open delivery not invoiced + billing value of open billing document not passed at accounting).
Dynamic Credit Check (Check for credit limit against open sales order not yet delivered + open delivery not invoiced + billing value of open billing document not passed at accounting + passed but not paid bill amount).
What module(s) should start with?
Collections Management is the most popular and most simple module to implement. However, to fully see the benefits of Collections Management the other 3 modules should be implemented as well.
When asked the question, I normally turn this around and try to align the customer’s strategic objectives from the implementation to decide the scope of the implementation. Customers who have high volumes of customer invoice disputes will obviously look towards Dispute Management – however aligning this with Collections Management joins the gaps between disputes and credit collections. Where a customer has bad debt issues and pays significant attention to Credit Limits and Credit Exposure, Credit Management will be more appealing – however the Credit Risk Class and Credit Exposure can be used to influence the Collections Work list.
What are the Major benefits of SAP FSCM?
The process improvement that can be achieved can be broken down into a number of different streams. Process efficiency and controls can be seen within the Credit Collection teams and other associated teams.
The Collection work list ensures the correct customer is called at the right time within the Collection process. This will enable more customers to be called, as the volume of effort to record a customer contact is simplified into a single transaction.
Logging disputes removes manual offline processes, and reducing the time spent to log and process disputes will directly improve the cash collection process leading to more cash being received in a quicker time frame.
The new version of Credit Management provides more accurate credit data using internal and external data, reducing the potential risk for bad debts.