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August / September 2008 Volume VI Issue 4
Collections Management (FSCM-COL) – Part I:
The Process
Editor’s Note: The key to a happy financial outlook
includes keeping track of who owes you – and collect-
ing on those outstanding debts. Within SAP’s Financial
Supply Chain Management applications exists a Col-
lections Management application specifically designed
to proactively streamline the collection process in such
a way that not only helps your bottom line, it helps
maintain customer relations. In Part I of his series on
FSCM-COL, Dimitris Langas provides an overview of
this application’s processes, including set-up configura-
tion.
Introduction
I can’t overemphasize the importance of an efficient
financial supply chain management (FSCM) process in
any company, no matter its size or the industry in which
it is competing. After all, an efficient financial supply
chain reveals hidden working capital, thus allowing
more productive use of a company’s financial resources.
SAP’s answer to the challenging task of managing the
financial supply chain is a number of applications under
the collective name FIN-FSCM (FIN standing for Finan-
cials).
FIN-FSCM (or FSCM for short) is a group of integrated
applications that allows companies to manage their
financial supply chain efficiently. While the earliest
FSCM applications have been available since SAP R/3
Enterprise 4.7, it was not until the first SAP ERP ver-
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sions, and component FINBASIS 3.0 of ERP 2004, that
FSCM started to have the look and feel that it has today.
The FSCM Collections Management (FIN-FSCM-
COL) module supports proactive Accounts Receivable
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(A/R) management with the aim to reduce DSO (Days
Sales Outstanding) and bad debt write-offs, improve
cash flows, strengthen the working capital position,
and improve customer relationships through targeted
customer communication. FSCM-COL is particularly
helpful for organizations with a high level of customer
open items. In this article, I’ll present the FSCM-COL
module’s main processes, its functionality, and its con-
figuration settings.
All the transactions were executed on an SAP ERP 6.0
system. As mentioned earlier, SAP has made a number
SAPtips.com
By Dimitris Langas, SAP® Consultant
of important improvements in their FSCM applications,
starting from the SAP ERP 2004 version up to the cur-
rent SAP ERP 6 (ECC 6.0). In order to take advantage
of these improvements and all the added functionality,
I would advise that you consider using FSCM – Col-
lections management only if you are running on that
version. If you are running SAP on a version earlier
than ECC 6.0, please consult that version’s release notes
in the SAP Support Portal before delving further into an
installation of any FSCM modules.
After all, an efficient financial
supply chain reveals hidden
working capital, thus allowing
more productive use of a
company’s financial resources.
FSCM-COL Overview
The FSCM group of applications takes companies a
step beyond mundane financial transaction processing
to treating their financial processes as a “supply chain”,
which can and should be constantly monitored for its
performance and continuously improved. It contains
applications covering the complete cash flow cycle,
including:
• Credit Management (FSCM-CR)
• Cash and Liquidity Management (FSCM-CLM)
• Treasury and Risk Management (FSCM-TRM)
• In-House Cash (FSCM-IHC) – a component for opti-
mizing and streamlining internal and external pay-
ment transactions
• Collections Management (FSCM-COL)
• Dispute Management (FSCM-DM)
FSCM-COL supports the proactive management of a
company’s receivables via a flexible prioritization of
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August / September 2008 Volume VI Issue 4
these items, and thus a more structured and efficient
customer communication process. The COL mod-
ule is highly integrated with the Financial Account-
ing Accounts Receivable (FI-AR) application, which
is where the customer financial data originates. All
relevant customer transactions are transferred to COL
from FI-AR automatically via a background job. This
data is then prioritized according to “valuation rules”
set up when customizing; Collection Worklists are gen-
erated automatically, usually also in the background.
These worklists are basically lists of all the relevant
customers, along with important key figures, like out-
standing amount, promised amount, disputed amounts,
etc. Based on these worklists, the collection specialists
prepare and carry out the customer contact. By double-
clicking on a customer line on the worklist, all the open
invoices, payments, past contacts, promises to pay, and
other communication history are available to the collec-
tion specialist to simplify his/her communication with
the customer.
In addition to FI-AR, FSCM-COL is also highly inte-
grated with the Credit Management (FIN-FSCM-CR)
and Dispute Management (FIN-FSCM-DM) modules of
the FSCM suite. Data from FSCM-CR can be used to
prioritize the customer accounts and is displayed on the
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Figure 1: Collections Worklist
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worklists. The credit segment, the main organizational
unit of FSCM-CR, can be used to define a collection
segment, the main organizational unit of FSCM-COL.
Dispute cases are easily created and/or maintained
from inside the customer transaction data screen. To
take advantage of these integration points, it does make
sense in most cases to implement all three modules of
FSCM (Credit Management, Collections Management
and Dispute Management) at the same time.
FSCM-COL Process Flow
The FSCM-COL processes supplement the outbound
Order-to-Cash process, in particular, the process
between customer invoice and customer payment. I
will be taking you through the process steps that are
involved, explaining the relevant SAP terms and, as
always, providing screen shots to give you a good idea
of the actual “look and feel” of the system functionality.
I will then take you through the configuration settings
necessary to get the system up and running with FSCM-
COL.
As I noted earlier, one of the main tasks of FSCM-COL
is the generation of worklists for the collections special-
ist, based on the prioritization rules defined in custom-
izing. Figure 1 shows an example of such a list.
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Figure 2: Displaying All Relevant Customer Data in Order to Prepare the Customer Contact

Such worklists can also be created “online”, but usu-
ally they will be created via background jobs during the
night. Every morning, the collection specialists get new
lists, based on the latest data transferred from FI-AR,
prioritized in accordance with the customizing settings.
come. Click on the telephone icon on the top left of the
screen (see Figure 3). This opens a new “Create Cus-
tomer Contact” window, where the user can document
the details and outcome of the contact.

The collection special-

ists can then prepare
each customer contact
by double-clicking on
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one customer-line of the

worklist. The system dis-
plays all customer open
items, promises-to-pay,
dispute cases, resubmis-
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sions, and previous con-

tacts for that particular
business partner (Figure
2).

The next step is to carry

out the customer contact
and document the out-

Figure 3: Carry Out and Document

the Customer Contact

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Figure 4: Promise to Pay is Broken

Say the customer promises to pay a certain amount by and maintain the dispute cases for that customer, by
a certain date; the specialist creates a promise-to-pay simply clicking on the Dispute Case button (Figure 5).
record. If a payment for the promised amount is later
recorded in the FI module, the system updates the
promise-to-pay record as Kept; otherwise, it is updated
with status Broken. If the amount actually paid is less
than the promised amount, the promise-to-pay is valu- FSCM-COL is highly integrated
ated as Partially Kept. In Figure 4, the red button in the
State column indicates that a promise-to-pay has been with FSCM-DM Dispute
broken.
Management.
As I mentioned earlier, FSCM-COL is highly integrated
with FSCM-DM Dispute Management. From the cus-
tomer line item information, it is very easy to display
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Figure 5: Integration with FSCM-DM Dispute Management

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Figure 6: Displaying a Dispute Case

Figure 6 displays an example dispute case. Even though
Dispute management is not in the scope of this article,
it is worth mentioning that in order to take full advan-
tage of each one’s highly integrated nature, it does make
sense to implement FSCM-COL and FSCM-DM in
parallel.
• Define the collection specialists and specialist groups
and assign them to the collection segment(s) defined
earlier; simply state which of your company’s employ-
ees are responsible for which collection segment.

FSCM-COL Basic Configuration Settings

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After this short demonstration of the basic FSCM-COL The collection segment is the
business processes, let’s take a look at the basic con-
figuration settings that must be carried out in order to main organizational structure
have the system up and running. These settings consist
primarily of three main tasks: of FSCM-COL.
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• Set up collection segment(s), which are the main orga-

nizational structure of FSCM-COL; this is done by
assigning the company codes and/or credit segment(s) Let’s take a closer look at these settings, starting, as is
from FSCM-CR, if FSCM Credit Management is often the case when configuring an SAP module, from
active, to these collection segment(s). the necessary organizational settings.

• Set up the collection rules and collection strategies; Step 1: Define Collection Segments
these are simply the rules that you want the system to The collection segment is the main organizational struc-
use in order to prioritize the customers when creating ture of FSCM-COL. It is defined by a simple assignment
the worklists. of the relevant company codes and/or credit segment(s)

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August / September 2008 Volume VI Issue 4

from FSCM-CR, if FSCM

Credit Management is
active.

Before proceeding with

these assignments, you must
first activate your company
code(s) for FSCM-COL. You
can make this setting via
IMG _ FSCM _ COL _ Basic
Settings for COL _ Basic
Data _ Define company
codes for COL, as shown in
Figure 7: Company Codes in FSCM-COL
Figure 7.

You are now ready to define

your required collection segment(s). This is done by
simply assigning one or more company codes to it. If
you are using the FSCM Credit Management (FSCM-
CR) component, you can also assign credit segments to
them. The credit segment is a unit that groups together
a company’s business activities from a credit manage-
ment perspective.
This assignment of company codes and/or credit seg-
ments is done via IMG _ FSCM _ COL _ Basic Settings
for COL _ Organizational Structure _ Define Collection
Segments. In my example (Figure 8), I defined a col-
lection segment BE03 by simply linking company code
BE03 to it.
Step 2: Define Collection Rules, Strategies, and
Priorities
A Collection strategy consists of the (collection) rules for
prioritizing the business partners in the worklists; it also
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contains important customizing settings relating to the
display and the contents of the worklist. The sequence
for defining a collection strategy is to start by defining
the Basic Rules, proceed to define the Collection Rules,
and then combine these to define a Collection Strategy;
I’ll explain these steps next.
The system comes pre-configured with some Basic
Rules; these constitute the technical implementation (in
the form of BAdIs), of the conditions that will be used
in the next step to define collection rules. As the basic
rules are implemented as BAdIs, their maintenance is
cross-client. In most situations, there will be no need to
create new rules or to change the existing basic rules.
Figure 9 displays a list of some of the basic rules that
come with the standard system settings, accessible via
IMG _ FSCM _ COL _ Basic Settings for COL _ Col-
lection Strategies _ Basic Rules _ Define Basic Rules.
Figures 10 and 11 show some specific rule examples.

Figure 8: Define a Collection Segment

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Figure 9: List of Basic Rules

Figure 10: Basic Rule BR00000008 – Amount to Be Collected

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Figure 11: Basic Rule BR00000015 – Customer Has Paid Less Than Minimum Amount Since n Days

Using the basic rules, it is then possible to create col-
lection rules. These Collection Rules are the main
instruments that allow the prioritization of business
partners (customers) during generation of the collection
worklist(s). See Figure 12 for a list of Collection Rules.
Usually, a collection rule will only be including one
basic rule. See for example the two collection rules for
the Amount to be collected and the Customer has paid
less than minimum amount since n days (as shown in
Figures 13 and 14).

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Figure 12: List of Collection Rules

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Figure 13: Collection Rule CR00000008 – Amount to Be Collected

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Figure 14: Collection Rule CR00000015 – Customer has Paid Less Than Minimum Amount Since n Days

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Figure 15: Collection Rule CR0000015A – Amount to Be Collected/Less Than Minimum Amount Paid

It is also possible,
and indeed some-
times required, to
create a Collection
Rule by combin-
ing two or more
basic rules. In my
collection rule
CR0000015A, for
example (see Figure
15), I have com-
bined the two basic
rules BR00000008
(Amount to Be
Collected) and
BR00000015
(Customer has paid
less than minimum
amount since n
days) to create such
a collection rule.

Notice how
the basic rule
BR00000008
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(Amount to Be
Collected) is defined Figure 16: Collection Strategy Overview (Transaction UDM_STRATEGY)
as a prerequisite
in the definition of
the collection rule
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CR0000015A (see Figure 15), meaning that an entry
for the total amount to be collected will be required
during maintenance of any strategy that uses this rule.
As mentioned earlier, collection strategies comprise rules rule CR00000017 has valuation 20, and so on. The
for collecting receivables. Now that we have defined the
collection rules we need, we are ready to combine these
into collection strategies. This is done via Accounting _
FSCM _ COL _ Current Settings _ Strategies or transac-
tion code UDM_STRATEGY. An overview of a Collec-
tion Strategy can be seen in Figure 16.
The collection strategy BE03 consists of six collection
rules, each one carrying a valuation (2nd column from
the left). Collection rule CR00000003 has a valu-
ation 30, rule CR00000013 has also valuation 30,
total of all the individual valuations is the maximum
valuation of the strategy, and in this case this is: 120
(30+30+20+15+15+10).
The system uses these valuations to calculate and assign
a priority to each customer in the worklist (see column

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“Priority” in Figure 1). To

do that, you will need to
define these priorities via
IMG _ FSCM _ COL _ Basic
Settings for COL _ Collec-
tion Strategies _ Priorities _
Define Priorities, as shown
in Figure 17.

You should instruct the sys-

tem to derive each custom-
er’s priority on the worklist
based on the percentage Figure 17: Definition of Priorities
valuation as calculated from
the collection strategy. This
is set up in IMG _ FSCM
_ COL _ Basic Settings for
COL _ Collection Strategies
_ Priorities _ Define Deriva-
tion of Priority (Figure 18).

Step 3: Define Collection

Groups and Assign Them
to Collection Strategies
Collection Groups are
basically groups of your
company’s collection special- Figure 18: Priorities Based on Percentage Calculation
ists; you can assign one or
more employees to collection
groups via their SAP user IDs. To maintain collection As shown in Figure 20, it is also possible to assign
groups and assign them to a collection strategy, use substitute specialists. This is, for example, required for
transaction UDM_GROUP. This can also be done in those specific periods of time when a certain employee
customizing via IMG _ FSCM _ COL _ Basic Settings will be unavailable to perform her or his collection
for COL _ Organizational Structure _ Define collection management tasks.
groups or in the SAP front-end, via Accounting _ FSCM
_ COL _ Current Settings _ Groups (Figure 19). Please notice in Figure 19 that a collection strategy is
also assigned to a collection group. This simply means
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In collection group BE03, I have entered my user ID as that all customers to be managed by this group will be
the only collection specialist in that group (Figure 20). prioritized using that particular collection strategy.
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Figure 19: Definition of Collection Groups (Transaction UDM_GROUP)

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Figure 20: Assign Processor to Collection Group
Finally, we need to assign our collection groups to the
collection segment – that’s the organizational unit we
created in Step 1, at the beginning of this section.
This is done with transaction UDM_GROUP2SGMT
or via IMG _ FSCM _ COL _ Basic Settings for COL _
Organizational Structure _ Assign Collection Groups to
Collection Segments, as shown in Figure 21.
To summarize this section, it is important to note that
the two most critical configuration items in FSCM-COL
are:
• The collection segment that basically “ties” together
the company code(s) and/or credit segments to the
employees in your company’s collections department,
via the respective mappings, and
• the collection strategy that contains all the rules for
prioritizing the customers in the worklists.
Conclusion
Financial supply chain processes have received
increased attention over the last few years as many
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companies increase efforts to improve their cash flows
and gain insight into their working capital resources.
SAP’s reply to the demand for financial supply chain
software has been the FSCM suite of applications.
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Figure 21: Assign Collection Group(s) to Collection Segment (Transaction UDM_GROUP2SGMT)
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In this article, I presented the Collections Management
module (FSCM-COL) functionalities including an intro-
duction to the main business processes that it supports,
and the basic configuration settings that are required.
In the next installment, we’ll have a look at the more
detailed and sometimes “hidden” configuration settings,
as well as at some important tips and tricks that you
will definitely need to be aware of when you embark on
your FSCM-COL implementation.
Dimitris Langas is an independent SAP consultant
specializing in the Financials modules. He has partici-
pated in numerous SAP implementations across many
European countries and has worked with customers
across a variety of industry sectors, and nationalities in
the EU. Working with business software since 1992 and
with SAP products since 1998, he has undertaken many
technical, functional, and management roles in a large
number of IT projects. His current interests include
financial process automation, accommodating financial
reporting standards and local legal requirements on
SAP ERP, and using SAP software and tools to turn
transactional data and figures into valuable manage-
ment information and insight. You may contact the
author at SAPtips.Authors@ERPtips.com. Be sure to mention
the author’s name and/or the article title. ≈
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