While required in any business climate, an effective SAP order management system takes on added importance in slow economic times, when companies have to operate more efficiently, according to one consultant.
A major part of that equation is taking advantage of financial tools within SAP order management, which can help ensure that companies get paid faster and more accurately, according to Rohana Gunawardena, SAP practice director for Quality Systems & Software, a consulting firm based in Las Vegas. Those tools include SAP applications in billing, credit, collections and dispute management, he said.
In SAP order management, the customer data, including leads and other marketing information, resides in the SAP CRM system. The order moves to SAP ERP for tasks ranging from order fulfillment to billing. Order management is integrated with SAP Supply Chain Management (SCM) for more sophisticated products. Financial tools within order management can also minimize credit risks that companies face when doing business with new partners whose stability may not be clear.
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“There’s a lot of emphasis around these areas from CFOs [chief financial officers],” Gunawardena said, “given the state of the economy.”
SAP Credit and Collections Management
Wise use of SAP Credit Management starts with deciding how much credit to give new customers -- if at all, according to Gunawardena. After that, it’s a matter of monitoring those clients to see if that credit rating should be changed, he added.
The SAP BusinessObjects analytics that are embedded in SAP Credit Management and other applications across the order management portfolio help make that happen, according to Craig Himmelberger, SAP’s director of systems marketing for SAP ERP Financials. By pulling in real-time credit ratings information, companies can make better credit decisions, thereby minimizing any potential risk associated with granting too much credit to a company that may not deserve it.
“Embedded analytics can refine the scoring of an applicant based on past payment history and behavior [or] external credit rating data, [the customer’s] importance to profitability margins and provide insight to the credit manager in order to make the decision ‘on the spot’ rather than after exiting the financial system and accessing other external records,” Himmelberger said.
Analytics plays an important role in collections and dispute management, Himmelberger said.
In the past, he said, collection agents would get a partial list of customers with outstanding receivables, “and then get on the phone and start calling blindly.”
SAP collections and dispute management applications take that worklist and put it behind a prioritization analysis, he said. That helps make sure that a company’s collections department only sees accounts that truly need its attention, Himmelberger said.
“With collections teams, the challenge is to take the finite resource of the collections agent’s time and apply it against a seemingly never-ending list of potential actions,” such as phone calls, dunning letters and inquiry research, he said.
“Calling a customer who always pays after 10 days on the ninth day is not an effective use of time. Embedded analytics can alert agents to this kind of payment behavior, or better still, automatically adjust the worklist so that such customers never show in the to-be-called list until after the 10th day,” Himmelberger said.
Companies can also use SAP BusinessObjects analytics can to evaluate the performance of their collection agents, including which agents are most effective at collecting on outstanding accounts. “It can also be used to analyze what your customer rating satisfaction is, compared with how efficient the agent is, and see the correlations between those two,” Himmelberger added.
SAP Biller Direct
The SAP Biller Direct portal is a part of SAP Financial Supply Chain Management. It includes functions for electronic invoice and bill presentment and payment (EIPP/EBPP), which companies can employ to gain better visibility into the status of their accounts receivables, according to SAP.
In the portal, companies keep electronic records of just about every part of the company’s business relationship with its customers, so that either side can access that information at any time. That allows customers to see their account balance with the company, make payments and view credits as well as past payments and bills, credits or payments. It also enables real-time integration between the SAP back-end system and the Internet without any data redundancies, according to SAP.
More and more companies are looking to pay electronically in order to reduce their financial cycles and reduce the cost of doing business, according to R. "Ray" Wang, an analyst and CEO of Constellation Research Inc., all of which helps “minimize the friction of the transaction.”
SAP Biller Direct was also created to make it easier for companies and their customers resolve payment disputes in less time by providing the capability to work off the same financial information.
“The big hassle in the past was that one company’s accounts receivable and another company’s accounts payable department would spend days, weeks, if not months, dancing around one number they both could agree on before the payment could be completed,” Himmelberger said. “And it’s nobody’s interest to waste effort in that regard.”