This document discusses integrating SAP Dispute Management and SAP Collections Management to speed up the invoice-to-cash process. It describes how dispute management can help streamline the dispute resolution process and control workload. Implementing these SAP solutions can optimize collections by automating processes and providing collectors with work lists and customer information.

1. Karen Hartnett
SAP
Speed Invoice-to-Cash by
Integrating SAP Dispute
Management and
SAP Collections Management

2. SAP Collections Management
Today’s business issues
SAP Dispute Management
Wrap-up

3. SAP Collections Management
Today’s business issues
SAP Dispute Management
Wrap-up

4. SAP AG 2005, 4
Transaction Processing Time
Source:Killen&Associates, Inc.
Order
Delivery
Invoice
Payment
1960s
4 - 7 days
14 - 21 days
4 - 7 days
45 - 60 days
Today
Today
Next day
Same day?
45 - 60 days
(or more!)

5. SAP AG 2005, 5
The Dispute Dilemma
* CRF 1998 Management Reports
** National Association of Purchasing Management
*** University of Tennessee
**** Credit Research Foundation survey
***** Grocery Manufacturers of America survey
! 20% of all sales transactions have one or more data issues that
cause reconciliation problems and delay payment *
! It costs between 14 to 162 USD to process a receivables
transaction **
! Over 61% of accounts receivable are over 50 days outstanding ***
! 5-15% of a consumer product company’s sales revenue ends up as
payment deductions****
! Payment deductions are on the rise! (growing at 20% per year)*****
“We believe that collectors spend more than 50% of their
time on dispute resolution.”
(Meta Group, 2002)

6. SAP AG 2005, 6
The Dispute Disease
Company A
Annual sales: $200M $10M annual deductions
Deduction rate: 5%
Typically, 85% allowed; $1.5M still in disputed receivables
Result:
o 5-10 days more in DSO
o 75% of credit and collection, A/R, and customer service resources spent
on deduction resolution
o Strained customer relations
Source: BusinessFinanceMag.com

7. SAP AG 2005, 7
Top Five Deductions Industry-Wide
0%
10%
20%
30%
40%
50%
60%
70%
Pricing Errors Advertising &
Promotional
Allowances
Returns &
Refused
Merchandise
Lost or
Damaged
Goods
Concealed
Shortages
Source: Credit Research Foundation
•Pricing errors
•Advertising and promotional allowances
•Returned and refused merchandise
•Lost or damaged goods
•Concealed shortages
%
of
respondents

8. SAP AG 2005, 8
Types of Deductions
Intentional:
# Promotional or advertising related (for example, coupons, stocking
fees, quantity discounts, rebates)
# Anticipated, simply need better dispute management
Preventable:
# Pricing discrepancies, processing errors, disputes over terms,
confusion over promotions
# Identify root causes and address
Unauthorized:
# Unearned discounts, duplicate claims, unsupported short payments
(typically 10-20% of claims)
# Act quickly and aggressively with notification rejecting deduction;
repeat offenders need to be addressed
Source: BusinessFinanceMag.com

9. SAP AG 2005, 9
Can You Ever Eliminate Deductions?
! No, 80-90% of all deduction claims are legitimate
! For Consumer Packaged Goods (CPG) companies, and a
growing number of industries, deductions are preferred, or
even demanded, by customers
! More than 90% of invoices deducted in CPG, approximately
22% for high tech
85%
15%
Legitimate
Deductions
Illegitimate
Deductions
Source: “Credit’s Worst Nightmare”, Rob Hand

10. SAP AG 2005, 10
It’s Not Over Yet …
Post-audit claims: a vicious cycle
# Audit firms look for previously unnoticed billing
discrepancies, discounts, or credits due to their clients
# Vendors need to review old documentation
# Audit firms work on a contingency basis and target
companies that cannot challenge post-audits due to poor
systems and recordkeeping
# Inability to defend company affects the bottom line!

11. SAP AG 2005, 11
What to Do
Recognize the
problem and
determine its
severity, as
systems
permit
Get
executive
buy-in to
address the
dispute
management
area
Review
your
dispute
resolution
process
Determine
your goals
for
improvement
Identify a
solution to
meet your
goals
(Hint: SAP)

12. SAP AG 2005, 12
Collections Shows the Whole Picture
Collections management according to Meta Group is
Customer-centric receivables management
Collections management supports
! Evaluation, identification, stratification, and prioritization of accounts
$ From a risk-management perspective
$ From a customer-relationship perspective
! Proactive collection of receivables
$ Payment reminders
$ Promise-to-pay arrangements
$ Follow-ups
$ …
! Process optimization and automation for high volumes of open items
! Workforce management

13. SAP Collections Management
Today’s business issues
SAP Dispute Management
Wrap-up

14. SAP AG 2005, 14
SAP Dispute Management Is ...
%A tool to track and process reduced payments while streamlining the
dispute resolution process
%A component in SAP’s new financial solution suite, Financial Supply
Chain Management (FSCM); available in FSCM 3.0 as of July 2004

15. SAP AG 2005, 15
Dispute
Management
2. Invoice
3. Reduced payment (without reason)
1. Purchase is made and order is fulfilled and shipped
4. Automatic
creation
of a dispute
case
7. Posting
Customer
Biller’s ERP
5. Email, letter
6a. Payment information
(telephone call, fax)
FSCM Biller Direct
(Web Portal)
6b. Access to
Dispute Management
(payment information)
(integration with Biller Direct
available in FSCM 3.0)
Real
time
Dispute Management – an Example

16. SAP AG 2005, 16
YES
End
End
Open and assign a
dispute case
NO “Assign, import” the relevant data
such as invoice, billing document,
master data, etc.
NO
Determined by dispute
accounting clerk
YES
Workflow message to
person responsible
Dispute case clarified and status set to clarified.
Info on the steps taken is stored in the Notes History
Dispute accounting clerk
subsequently checks this
Dispute accounting clerk
changes status to closed
Dispute case then
updated and closed
Dispute case then
updated and closed
Reason
code
known
Direct
clearing
possible
Postprocessing
bank statement
SAP Dispute Management – An Example

17. SAP AG 2005, 17
SAP Dispute Management
SAP Dispute Management
CRM SCM MM SD FI-Accounts Receivable Business Analytics ....
Or FI-Contracts Accounting
Customer
Customer AR-Clerk
AR-Clerk Sales Manager
Sales Manager
Input Input Input
Integration
Order
Shipment
Billing
Campaign
Receivables
Production
Cash
P
a
y
A
n
a
l
y
z
e
Quality Mgt.
Quality Mgt. ...
...
Input Input
Business process is managed within:
Integration Integration Integration

18. SAP AG 2005, 18
How Does SAP Dispute Management Help?
SAP Dispute Management controls and streamlines the dispute
case process
As central component for handling dispute cases, SAP Dispute
Management enables cross-department dispute resolution
SAP Dispute Management is integrated in financial but also in
logistical processes
SAP Dispute Management organizes and stores all information
and documents related to a dispute case
SAP Dispute Management includes sophisticated reporting
$ Detect quality issues
$ Control workload
$ Track dispute process

19. SAP AG 2005, 19
Dispute Management Screens
Case organizer #Creating and
processing cases
#Search cases
#My cases
#List of all cases where
the user is the processor
#Favorites
#Resubmission
#History
#List of objects that were
most recently processed

20. SAP AG 2005, 20
Basics of Dispute Management
Components of a case...
#Case attributes
#Title, processor, status,
reason, amount,…
#Case record/linked
objects
#Customer, residual item,
word document,
transactions…
#Case notes
#for the documentation
of the processing of the case
#Case log
#History of actions performed
on the case

21. SAP AG 2005, 21
Attributes of a Dispute Case
The case attributes
contain...
# Header, case ID
# Processor, coordinator,
responsible person
# Reason, status, priority,
escalation reason
# Planned close date
# Amount fields
# Created/changed/
closed by/at

22. SAP AG 2005, 22
Amount Fields of Dispute Case
Original disputed
amount
Amount
fields
Disputed amount
Paid
Credited
Cleared manually
Automatically written
off

23. SAP AG 2005, 23
Case Notes
In the case notes, the user documents the processing of the
dispute case
#Different types of
Case Notes
(description, internal
memo, answer ...)
#Customizable

24. SAP AG 2005, 24
Case Record
The case record contains links to objects that are related to
the case
The case record can
contain links to...
# Business objects
# Office documents
# ArchiveLink
documents
# Transactions

25. SAP AG 2005, 25
Folder Structure of Linked Objects
Business partner
Disputed objects
Resolved objects
Items assigned during clearing
Other objects
Miscellaneous

26. SAP AG 2005, 26
Case Action Log
MILLER
BROWN
PROCESSOR
BROWN
Attribute
Change
09:10:20
18.04.2003
BROWN
Access Case
Notes
09:12:45
18.04.2003
MILLER
Display Case
11:45:12
21.04.2003
Value new
Value old
Attribute
User
Activity
Time
Date

27. SAP AG 2005, 27
Dispute Case Locator
With the dispute case locator, the user can search for cases

28. SAP AG 2005, 28
My Cases
My Cases provides the user a list of all cases for which he is the
processor

29. SAP AG 2005, 29
Creating a Dispute Case
Can take place from different screens
& From display and change FI document (FB02, FB03)
& From line item display (FBL5N)
& From clearing with residual item creation (FB05)
& From post-processing of bank account statement (FEBAN)
& New: from lockbox processing and Biller Direct

30. SAP AG 2005, 30
Create Dispute Cases from FBL5N
From the open item list, all marked items will be taken into the
dispute case
Items from different customers or companies and with different
currencies can be selected

31. SAP AG 2005, 31
Create Case from Financial Transaction
Process integration
! Update amount field Original Disputed Amount
! Link FI document to folder Disputed Objects
! Automatic derivation of field content
User action
! Enter data for a few fields
! Write a note
Financial
transaction
Create dispute
case

32. SAP AG 2005, 32
Create Dispute Case in Case Organizer
SAP Dispute Management
Record and Case Record Models
Cases
Dispute Case
Dispute Case - Search
My Dispute Cases
Documents
Find
Create
Information

33. SAP AG 2005, 33
Display Dispute Cases from FBL5N
Attributes of the dispute case can be added to the line item display
Dispute data can be accessed from the list

34. SAP AG 2005, 34
Update Case by Financial Transactions
Amount fields
! Original disputed amount
! Disputed amount
! Credited amount
! Paid amount
! Amount manually cleared
Folders
! Resolved objects
! Items assigned during clearing
Financial
transaction
Update Dispute
Case

35. SAP AG 2005, 35
Effect of Clearing a Disputed Item
A partial payment
is received
for a disputed item...
... before clearing

36. SAP AG 2005, 36
Effect of Clearing a Disputed Item (cont.)
A partial payment
is received
for a disputed item...
... after clearing

37. SAP AG 2005, 37
Splitting Dispute Cases by FB05
The user can split the amount of a residual item from the dispute
case and create a new case for this item:
Result
Original amount
of old dispute case
will be reduced and
the two dispute cases
are linked together

38. SAP AG 2005, 38
Correspondence
Correspondence can be created
! Automatically by events like
$ Create dispute cases
$ Close dispute cases
$ Events that can be defined on project level
! Manually by the user when processing the dispute case
SAP delivers standard customer correspondence for
! Fax, email, and letter
$ Notification that a dispute case has been created
$ Notification that dispute case has been closed
$ Query regarding dispute case
$ Information about dispute case
! Customers can create their own correspondence
$ Use smart forms
$ Data available for correspondence
& All attributes
& External notes
& Object keys of objects stored in the dispute case folders (case record)
& …

39. SAP AG 2005, 39
Example of Manual Correspondence
Customer contact person
Select communication type
Select
correspondence
Select
external notes

40. SAP AG 2005, 40
Reporting
Ad hoc reporting in Dispute Management
! List-based reporting
$ Flexible layout
$ Search, filter functionality
! Data available for reporting
$ All attributes of dispute case
! Editing of dispute cases from list possible
Integration with SAP Business Information Warehouse (BW)
! Online Analytical Processing (OLAP) reporting
$ Drilldown
$ Slice and dice
! Available data for reporting
$ All attributes
$ Linked business partner
$ Disputed and resolved items (history)
$ Cross-component data, for example, master data of business partner

41. SAP AG 2005, 41
Example: Time Grid for Disputes

42. SAP AG 2005, 42
Implementation
R/3 release required
! 4.6c or higher release of FI-AR. FI-CA is possible backend for FSCM 3.0.
Resources required
! Dispute Management/Accounts Receivable consultant
! ABAP consultant
! Basis consultant
Estimated time frame
! Depends upon amount of customization: approximately three months
! Possibilities exist to extend functionality via BAdIs (i.e., setting defaults)
Key actions to take before implementation
! Map out processes desired
! Obtain statistics on current processes and determine goals for
improvement

43. SAP AG 2005, 43
Customer Enhancements for Default Values
Case Type
Category
Reason
Priority
External Reference
Processor
Coordinator
Person responsible
Title
Case notes
Create
Dispute Case
Find default
value for
Accounts receivable

44. SAP AG 2005, 44
Customer Enhancements
BAdI: Change cases during initialization
BAdI: Change cases before validation
BAdI: Customer-specific validation of cases
BAdI: Change cases before saving
BAdI: Customer-specific validation before saving
BAdI: Save customer-specific data when saving cases
BAdI: Mass activities on dispute cases

45. SAP AG 2005, 45
Deployment for mySAP ERP 2004 (1 System)
SAP ECC 5.0
(FI-AR)
SAP Dispute
Management
3.0
SAP Web Application Server (Web AS)
6.40

46. SAP AG 2005, 46
Deployment for SAP R/3 Enterprise 4.7*
SAP R/3 Enterprise
4.7
SAP Dispute
Management
3.0
SAP Web AS 6.20 SAP Web AS 6.40
ALE
*Deployment for 4.6c would look similar

47. SAP AG 2005, 47
SAP Dispute Management Demo

48. SAP Collections Management
Today’s business issues
SAP Dispute Management
Wrap-up

49. SAP AG 2005, 49
SAP Collections Management
%Solution to optimize collections by providing collectors with work lists,
collections information, and related functionality
%High customer interest in this area
%First release was in FSCM 3.0 July 2004

50. SAP AG 2005, 50
The Functionality
SAP Collections Management comprises a new possibility to
process and view open items per customer account for
cash collection
! All open invoices and their statuses at a glance
! Invoice history
! Actions for one or several invoices can be directly taken
! Tight integration with SAP Accounts Receivable
SAP Collections Management offers work lists that can be created
manually
! Search criteria to select customer accounts
! Criteria to prioritize customer accounts
! Direct access to customer account from worklist
SAP Collections Management offers new collection procedure
! Promise-to-pay agreements
! Automatic integration with payments and clearing postings

51. SAP AG 2005, 51
Select
customer
accounts
Prioritize
customer
accounts
Prepare
receivables
for collection
Process
receivables
per customer
account
Selection by
•Company code
•Account no.
•Clerk
•Sales area
•Total open amount
• ...
Prioritize by
•Total open amount
•Due today
•Amount promised
•Amount broken pr.
•Amount dunned
• …
Prepare by
•Sorting
•Filtering
•Viewing history
•Assigning contact
• …
Process account by
•Creating promises to pay
•Renewing promises
•Creating dispute cases
• …
Collections process
SAP Collections Management

52. SAP AG 2005, 52
Prepare Customer Contact
Collection agent gets the following information on customer
account level
! All open invoices of customer account (invoice view)
! Open promises to pay – navigation to detail view possible (promise-to-pay view)
! Open dispute cases – navigation to detail view possible (dispute case view)
Collection agent gets the following information on invoice level
! Invoice history
! Promises-to-pay list per invoice – navigation to detail view possible
! Dispute case list per invoice – navigation to detail view possible
Collector can define layouts that allow him to view status of invoice at a
glance like
! Invoiced amount
! Open amount
! Paid
! Credited
! Promised

53. SAP AG 2005, 53
Prepare Customer Contact: Invoice View

54. SAP AG 2005, 54
Create Dispute Case: Example

55. SAP AG 2005, 55
Promise to Pay
Customer promises to pay one or several invoices
! Collection agent creates promise to pay
$ Creation possible for one or several invoices
$ Promise is traced on single invoice level
! Collection agent renews promise to pay
$ Existing promises can be renewed
$ Renewed promises get higher promise level
Promises to pay are updated by incoming payments
! State “kept” if incoming payment equals promised amount
! State “partially broken” if payment amount is smaller than promised amount
! Promises that are not kept are labeled “broken”
! Partially broken and broken promises can be followed up
For invoices that have been fully cleared, promises to pay can be
closed automatically
Collection agent can create, change, renew, withdraw or void promises
to pay

56. SAP AG 2005, 56
Create Promise to Pay: Example
Selected invoices
Sum is taken over as default value for promised amount
If promised amount is smaller than total open amount ' distribution

57. SAP AG 2005, 57
Deployment for mySAP ERP 2004
SAP Enterprise
Core Component
(ECC) 5.0
(FI-AR)
SAP Dispute and
Collections
Management
3.0
SAP Web AS 6.40

58. SAP AG 2005, 58
Deployment for SAP R/3 Enterprise 4.7
SAP R/3 Enterprise
4.7
SAP Dispute and
Collections
Management
3.0
SAP Web AS 6.20 SAP Web AS 6.40
ALE

59. SAP AG 2005, 59
SAP Dispute Management Demo

60. SAP Collections Management
Today’s business issues
SAP Dispute Management
Wrap-up

61. SAP AG 2005, 61
Focus:
• Biller Direct
• Dispute Management
• Credit Management*
Credit manager portal, credit rating,
credit rules engine
• Treasury and Risk Management
Parallel valuation area, position monitor,
new instruments
SAP
FSCM 2.0
FSCM Roadmap
Focus:
• Biller Direct
Dispute Management integration, collection authorization
• Dispute Management
Automation and prioritization, workflow integration, correspondence
• Collections Management
Manual worklists, promises to pay, integration with Dispute Management
• Credit Management
Credit Limit Check, Credit Analysis, Credit Eventing, Workflow
• In-House Cash
Prima Nota, Integration with Cash and Treasury and Risk Management
• Treasury and Risk Management
New instruments for foreign exchange and derivatives, Hedge Accounting,
enhancements in Market and Credit Risk Analyzer
mySAP ERP 2004
(incl. SAP FSCM 3.0)
Ramp-Up
Q2/2004
Release to Customer
Q3/2003
* Pilot customers only
mySAP ERP 2005
(incl. SAP FSCM 6.0)
Planned
Q3/2005

62. SAP AG 2005, 62
Resources
' Direct contact:
Contact your SAP Account Executive or …
Karen Hartnett, FSCM Product Manager
(Biller Direct, Dispute Management, Credit
Management, Collection Management)
karen.hartnett@sap.com
' Web site:
www.sap.com/fscm
•Brochures
•White papers
•News and events
•Customer success stories

63. SAP AG 2005, 63
7 Key Points to Take Home
( Dispute and Collections Management is an important focus area for
most companies today
( Poor dispute resolution diverts company focus, worsens customer
relations, and negatively affects profitability
( Most companies are still using a manual, paper-based process with
no standardization to address disputes
( Deductions are not avoidable, but the associated pain is
( SAP Collections Management lets you manage collections at the
customer level, while Dispute Management is at the individual
dispute or line-item level. The two solutions together provide a
comprehensive solution to improve collections and customer
satisfaction.
( Implementations of Dispute and Collections Management are
relatively fast
( Integration within FSCM and with other SAP solutions is key

64. SAP AG 2005, 64
Your Turn!
Questions?
How to contact me:
Karen.Hartnett@sap.com

65. SAP AG 2005, 65
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