Oracle Apps R12 - White Paper On Advanced Collections Setup

Oracle Applications Release12
Advanced Collections Setup

White Paper
<Sanjukta Choudhuri>
Oracle E Business Suite
Advance Collections Setup Oracle Applications
Confidentiality Statement
The information contained herein is proprietary to TATA CONSULTANCY SER!CES
L!"!TE# and may not $e used% reproduced or disclosed to others e&cept as specifically
permitted in 'ritin( $y TATA CONSULTANCY SER!CES L!"!TE#) The recipient of this
document% $y its retention and use% a(rees to protect the same and the information contained
therein from loss or theft)
Confidential 2
Abstract
This document provides an overvie' of Advanced Collections setup in Oracle Applications
R*+) This 'hitepaper discusses all sections of functional desi(n document and lists the
correspondin( sections re,uired to confi(ure to use the Collector-s 'or. ,ueue)
!n today-s $usiness environment% cash flo' is most critical to a $usiness-s success) !n order to
collect cash faster and more efficiently usin( streamlined processes offer a real competitive
advanta(e) The implementation of Oracle Advanced Collections allo's or(ani/ations to
proactively mana(e their overdue mana(ement efficiency% 'hilst retainin( its on(oin(
customer relationships)
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About the Author
San0u.ta Choudhuri is a Techno12unctional consultant in TCS) She is an !T Analyst% 'or.ed in
t'o different ER3 solutions over last 4 yrs) She has $een involved in !mplementation%
"aintenance% Support pro0ects durin( her tenure and has 'or. e&perience in ER3 Supply chain
mana(ement and 2inance modules)
About the Domain
The paper is aimed to tal. a$out the Advanced Collections Setup% to develop a $asic
understandin( of ho' the main o$0ective of de$t collection has $een achieved $y settin( up an
effective de$t mana(ement tool to meet the re,uirement of the customers) No'adays% many
companies are $ecomin( $an.rupt $ecause of $ad de$t) !n this situation collectin( premium
from its customers on time has $ecome a challen(e) The collection process should $e ro$ust
enou(h to match 'ith the current mar.et situation)
Oracle Advanced Collections allo's us to $rid(e the (ap $et'een $ac.1office transactional
data and front1office customer mana(ement processes% 'hile improvin( a(ent productivity and
collection results) Streamlined processes apply the ri(ht collections strate(y to the ri(ht
customer to help the company collect more money faster and 'ith less effort)
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CONTENTS
1. INTRODUCTION.........................................................................................................................................6
2. OVERVIEW ..................................................................................................................................................8
3. NECESSARY SETUPS ................................................................................................................................9
4. CONCLUSION ...........................................................................................................................................25
5. ACKNOWLEDGEMENTS .......................................................................................................................25
6. REFERENCES............................................................................................................................................26
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1. Introduction
Other than normal re(ular collection method for every $usiness there should $e one effective
de$t collection process in place so that money that customers has not paid on time can $e
collected from them) Advanced Collection is a module in oracle e1$usiness suite 'hich
provides an effective de$t collection process for the money 'hich is not collected on time) !t is
very fle&i$le) !t can $e desi(ned differently for different industry% different territory and
different types of customers)
What is Advanced Collections
Advanced Collections module of Oracle Applications provides advanced features of de$t
mana(ement) This module deals specifically 'ith customers 'ho have not paid on time 5These
customer are called as #elin,uent Customers6 and tries to collect overdue amount)
Why Advanced Collection needed
!n today-s 'orld collection process has $ecome very comple&) 7elo' mentioned are the points
'hich are .ey concern areas for 'hich it is needed to opt for Advanced collection)
There is one Collection feature present in Receiva$les $ut that is not fle&i$le enou(h)
There 'e can only send letters 5#unnin( Letters6 to defaulters dependin( upon ho' many
days they are late for doin( the payments 5A(in( 7uc.ets6) !n Advanced Collection
different collection strate(y can $e implemented for different customers dependin( upon
customer-s de$t history or de$t amount) This feature is not present in Collections in
Receiva$les module)
Collectors are too $usy to contact customers 'ith overdue invoices 'ith small amount)
Some customers pay these invoices $ut conse,uently% they end up 'ritin( off many of
these small $alances) "any small amounts 'hen added up do not remain small at all) 8o'
can 'e stop this9
7usiness values their customers 'ho have $een 'ith them for many years and 'ould li.e
to develop a more (entle collections strate(y to recover $ad de$t) 7ut customers 'ho have
$een 'ith them for less time should have a more a((ressive collections strate(y for them
so that $usiness can control their $ad de$t% (et financial relationship off to a $etter start and
ultimately retain and 'eed ne'er customers out $ased on their value) 8o' to e&ecute dual
strate(ies 'ithout confusin( the collectors9
!t has often seen that customers 'ho pay on a ,uarterly or semi1annual $asis are often days
or 'ee.s late) Since these payments are less fre,uent% the amounts are often lar(er and
(reatly impact cash flo') 7ut% these customers are not necessarily $ad customers $ut are
ha$itually late) 8o' can 'e (et these pre1delin,uent customers to pay on time 5or even
early:6 'ithout offendin( them $y a collections call9
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There are uni,ue collections re,uirements for each country that determine ho' and 'hen
to contact delin,uent customers) Company spends lot of money in trainin( .eep collectors
clear on these country1specific rules and re(ulations) !t has also seen that customers in each
country often respond differently to the dunnin( and callin( process) 8o' to easily create
country1specific collections $est practices strate(ies9
Collectors stru((le 'ith customers 'ho continue to refuse to pay) They 'aste e&tra calls to
these delin,uent customers 'hen they should really refer these customers to mana(ers or
collections specialists 'ho can ta.e more drastic collections measures to liti(ate repossess
and;or 'rite off these de$ts) Also% customers sometimes claim $an.ruptcy 'hich% 'hether
this is true or not% needs to $e addressed ,uic.ly to reduce additional $ad de$t e&posure as
'ell as adhere to strict $an.ruptcy la's) 8o' to address these later sta(e delin,uencies
activities 'ithout $o((in( do'n the collections process9
<hen there are many defaulters% collectors are confused as to 'ho to call first and 'hen to
stop callin() Automation to ease their $urden) 8o' to prioriti/e their 'or. so that recovery
rate improves9
Im!ortant Terms
*
+ De!"#$e"%&' #elin,uency means condition of a de$t 'hen overdue) The customers
'ho do not pay on time are called delin,uent customer)
S()*(e+&' Used for applyin( specific de$t mana(ement $usiness rules for collection)
= A+!"+ ,$%-e(> #ifferent A(in( 7uc.et can $e defined in Receiva$les dependin( upon
num$er of days) E)() Seven days a(in( $uc.et) Then all the transaction for 'hich payment is
late for ? days 'ill come to this $uc.et)
@ D$""!"+ Le((e)> #unnin( letters are notification or 'arnin( letters send to customers
if they do not pay on time) Each A(in( 7uc.et 'ill $e havin( a set of #unnin( Letters)
#ependin( upon the A(in( 7uc.et the customer falls dunnin( letters are sent)
A S%.)!"+ E"+!"e/' Scorin( En(ines determines customer-s delin,uency status and
customer scorin()
4 S%.)e' Every delin,uent customer is assi(ned to a value called score) Score is
calculated dependin( upon many factors li.e de$t amount% de$t duration etc)
? C.01e(e"%&' Competence is a standardi/ed re,uirement for an individual to properly
perform a specific 0o$) Bo$ 'ise competency is defined in system and assi(n to particular
person 'ho can do that 0o$) E)() Callin( Customer a competency) Some people 'ho are
enou(h s.illful to call and convince customer is assi(ned to this competency)
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". Overvie#
Advanced Collection is an e&tension of collection process in Receiva$les module therefore it is
o$viously lin.ed 'ith Receiva$les in oracle applications) Customer information and the
transaction details for 'hich customer has not paid on time% all this information 'ill come to
Advanced Collection from Receiva$les module) Other than that it is lin.ed 'ith the follo'in(
modules1
3R M*"*+e0e"( 4F$ !01e0e"(*(!."5' Collectors are employee of the
or(ani/ations) So they should $e set up as an employee in 8R"S) This one is
mandatory)
CRM Re/.$)%e M*"*+e0e"(' Croups% Roles and Resources everythin( needs to $e
mana(ed $y CR" Resource "ana(ement) This module implementation is also
mandatory)
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$. Necessary Setu!s
Setup is very important for Collections) Once the setup is done collection process 'ill continue
e&ecutin( usin( the collection strate(ies defined at the time of set up) !t is also possi$le to
modify or create a ne' strate(y)
7elo' mentioned are the detailed steps re,uired for Advanced Collection setup
* S(e1 1 Create Responsi$ility
+ S(e1 2 Assi(n Responsi$ility 3rofile options
= S(e1 3 Set up Employees
@ S(e1 4 Assi(n Users to Responsi$ilities
A S(e1 5 Assi(n Resource Roles and Used !n
4 S(e1 6 !mport Resources
? S(e1 2 Create Collectors
D S(e1 8 Set up Level for #unnin(
E S(e1 9 Set1up Scorin( Component
*F S(e1 16 Setup Scorin( En(ine
S(e1 11 Create <or. !tem Template
** S(e1 12 Create Collection Strate(ies
*+ S(e1 13 Concurrent 3ro(rams 1 Create delin,uencies
*= S(e1 14 Set up 3rofile Options Universal <or. Gueue
*@ S(e1 15 !EH> Ena$le the AR transactions summary ta$les
Collector Setup:
Step 1: Create Responsibility
2irst responsi$ilities for Advanced collection 'hich 'ill $e used $y collectors need to $e
created) E& Collections A(ent
Responsi$ility> System Administrator
Navi(ation> Security II Responsi$ility II #efine
Step 2 Assign Responsibility Profile options
Responsi$ility> System Administrator
Navi(ation> 3rofile II System
Assi(n all the re,uired profile options for Advanced Collections Setup
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Step 3 Set up Employees
Collectors are first employees of the or(ani/ation) So it is re,uired to set them as Employee
first)
Re/1."/!7!!(&' 8R"S "ana(er
N*8!+*(!."' 3eople II Enter and "aintain
Step 4 Assign Users to Responsibilities
Responsi$ilities are created for Collectors% no' these responsi$ilities should $e assi(ned to
respective user)
Re/1."/!7!!(&' System Administrator
N*8!+*(!."' Security II User II #efine
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Step Assign Resource Roles an! Use! "n
No' each user 'ill have their separate roles) So 'e need to create roles no')
Re/1."/!7!!(&' CR" Resource "ana(er
N*8!+*(!."' Resource "ana(erIISetupIIRoles
E)() Collections "ana(er% Collections A(ent
5. 1C)e*(e R.e
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Step # "mport Resources
Resource as first defined in 8R"S then the resource should $e imported as Employee in the
system) Once the import is complete the resource is visi$le in the system and the resource
cate(ory is Employee) Later the resource should $e ta((ed 'ith Collection A(ent or any other
relevant role) Then only the employee can a$le to 'or. as Collector)
Re/1."/!7!!(&' CR" Administrator
N*8!+*(!."' Resource "ana(erII"aintain ResourcesII!mport Resources
6.1 I01.)( Re/.$)%e
6.2 A//!+" R.e (. Re/.$)%e
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Step $ Create Collectors
The collector has to $e defined in the system so that he;she can perform the collection
activities)
Re/1."/!7!!(&' Receiva$les Super User
N*8!+*(!."' Set up II Collections II Collectors
2.1C.e%(.) C)e*(!."
2.2 C.e%(.) !/ *//!+"e9 (. (:e %$/(.0e)
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Step % Set up for &unning Plan
#unnin( 3lans are simple collections methods) They automatically send notices to delin,uent
customers and% optionally% assi(n a follo' up call to a collector)
Strate(ies support simple or comple& collections activities) They automatically e&ecute
predefined activities to mana(e delin,uent or pre1delin,uent customers) <e can use
preconfi(ured strate(ies or create our o'n) Or(ani/ations use #unnin( 3lan or strate(y as their
Collection method)
Re/1."/!7!!(&' Collections Administrator
N*8!+*(!."' Setup Chec.list IICollections "ethod SetupIICreate #unnin( 3lans
One must run the follo'in( concurrent pro(rams in Oracle Advanced Collections to
e&ecute dunnin( plans>
J IEX: Promise Reconciliation> This pro(ram updates the open promise information
in Advanced Collections 'ith payments received in Oracle Receiva$les to
determine outstandin( items)
J IEX: Scoring Engine Harness> <e can select up to five scorin( en(ines to run at the
same time) The scorin( harness assi(ns a value to an o$0ect such as a customer%
account% or $ill to location) Another score determines 'hether transactions are
delin,uent% pre1delin,uent% or current)
At a minimum% 'e must run a scorin( en(ine that scores transactions to create
delin,uenciesK and then run a scorin( en(ine to score the level of our dunnin(
plan 5customer% account% or $ill to location6)
J IEX: Send Dunnings for delinquent customers> This pro(ram sends the results of
the scorin( en(ine harness to Oracle One1to1One 2ulfillment to send out dunnin(
Correspondence)
J IEX: Create Dunning and Broken Promise Call Backs> !f 'e have dunnin(
call$ac.s as part of our dunnin( plan% need to run this pro(ram to create call$ac. 'or.
items to a collectorLs tas. list in the CollectorLs <or. Gueue)
Step ' Setup for Collection Strategies:
Use collections strate(ies as an alternative to dunnin( plans% to automate the collections
mana(ement process and support comple& collections activities) Strate(ies can $e used to
recover delin,uent transactions such as invoices from Oracle Receiva$les% cases as
identified $y Oracle Lease "ana(ement% or loan transactions from Oracle Loans)
A strate(y is a series of manual or automated tas.s% .no'n as 'or. items% lin.ed
to(ether in the order in 'hich they 'ill $e e&ecuted) Each 'or. item is a collection
activity to recover a delin,uency% such as ma.in( a phone call or sendin( a letter% and
can $e reused and included in many strate(ies) A strate(y is associated 'ith a
collections o$0ect% such as customers or accounts) The collections o$0ect is the data level
'e do $usiness at)
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()er)ie* of Scoring:
Scorin( forms the foundation of collections activities) Oracle Advanced Collections
uses scorin( in t'o 'ays>
J To determine transaction status> current% delin,uent% and pre1delin,uent)
<hen scorin( transactions% Advanced Collections loo.s at transactions from Oracle
Receiva$les% includin( invoices% de$it memos% and char(e$ac.sK lease invoices
ori(inatin( in Oracle Lease "ana(ementK or loans invoices ori(inatin( in Oracle
Loans) !n (eneral% if a customer has delin,uent transactions% the customer is
considered to $e delin,uent)
J To determine the value of each customer)
<hen scorin( to assi(n customer value% 'e can use any data point a$out the
Customer) Typically 'e run customer value scorin( at an operational data level
5Customer% account% $ill to% or delin,uency6)
Set up Scoring Components:
N*8!+*(!."' Setup Chec.list IICollections "ethod SetupIICreate Scorin( Components
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9 C)e*(e S%.)!"+ C.01."e"(/
Step 1+ Set up Scoring Engine:
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,-at is Scoring Engine.
2or each scenario 'e 'ill $e havin( a score En(ine) Each en(ine is consists of many score
components)
S%.)e C.01."e"(/' "any ,ueries to(ether find out the final score) Each score component
'ill $e attached to one ,uery) "any such components to(ether are responsi$le to find out total
score for a particular scenario) Each component 'ill $e assi(ned to certain 'ei(ht) #ifferent
hi(h and lo' value ran(e 'ill $e defined for each component and each ran(e 'ill have certain
value) The final score that 'e 'ill (et is product of value that 'e 'ill (et from ,uery and
'ei(ht)
N*8!+*(!."' Setup Chec.list IICollections "ethod SetupIICreate Scorin( En(ine
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S%.)!"+
E"+!"e
De(*!/
16 C)e*(e S%.)!"+ E"+!"e
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Step 11 Setup of ,or/ "tem:
Each strate(y is made up of one or more 'or. items) A 'or. item is a tas. to $e
E&ecuted manually or automatically and is driven $y a 'or.flo') The 'or.flo' notifies
the collector to perform a tas. or initiates the automatic process) Every 'or. item has
an associated 'or.flo')
<or. items are (rouped $y 'or. type>
J M*"$*' a tas. to $e completed $y a collector or specialist) !t is displayed as an
entry on the Strate(y <or. !tem node in CollectorLs <or. Gueue) !t can $e sorted
$y priority and other methods) <hen completed% the 'or. item is removed from
the ,ueue) "anual 'or. items include a personal visit% phone call% and revie'
tas.s)
J A$(.0*(!%' a tas. completed $y an automated process) This (roup includes tas.s
such as sendin( e1mails% fa&es% or sendin( documents to $e printed)
J W.)-;.<' a custom 'or.flo' that initiates an automated tas. not performed $y a
preconfi(ured 'or.flo')
Create ,or/ "tem 0emplate:
N*8!+*(!."' Setup Chec.list IICollections "ethod SetupII Create <or. !tem Template

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11. C)e*(e W.)- I(e0 Te01*(e
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Step 12 Create Collection Strategies:
N*8!+*(!."' Setup Chec.list IICollections "ethod SetupII Create Collection Strate(ies
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12. C)e*(e C.e%(!." S()*(e+!e/
Step 13 Concurrent Programs 1 Create !elin2uencies
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Re,uest Set M!EH> Oracle Collections Concurrent Re,uest Set- needs to $e run fre,uently for
follo'in( purposes)
#ata flo' in Advanced Collections from Receiva$les
#elin,uency Status #etermination
Customer Scorin(
Strate(y Assi(nment
<or. #istri$ution
1.
M!EH> Oracle Collections Concurrent Re,uest Set- consists of Concurrent 3ro(rams>
!EH> 3romise Reconciliation
!EH> Scorin( En(ine 8arness
!EH> Strate(y "ana(ement
!EH> 3ur(e Score 8istory Ta$le
Step 14 Set up Profile (ptions Uni)ersal ,or/ 3ueue
Universal <or. Gueue 5U<G6 is the screen used for (ettin( consolidated vie' of the 'or. a
collector needs to do) 7ased on the $usiness needs various profile options need to $e set up the
U<G)
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14. U"!8e)/* W.)- =$e$e
%. Conclusion
!t can $e concluded that $y usin( the Oracle Application Advanced Collections module de$t
collection process of any company can $e mana(ed easily and effectively) #ependin( upon the
different need of different or(ani/ations the different strate(y can $e defined and different
'or. item can $e set)
&. Ac'no#led(ements
Su!es- Upa!-yay: Provided some valuable inputs.
1
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). *eferences
*) Oracle Advanced Collection !mplementation N User Cuide
+) https>;;metalin.)oracle)com
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