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Unterstützung

Nadine Mautner / SAP F&A Deal Support – Global Credit Management

Christian Wagenlechner / Bisnode Practice Leader Integration Solutions

12. November 2014

© 2014 SAP SE or an SAP affiliate company. All rights reserved. 2 Internal 2

D&B US established a strong

relationship with SAP`s global Marketing

organization, including the delivery and

update of more than 5.000.000 D&B

data records per year for lead

generation, market analysis, business

partner management to SAP.

Bisnode D&B runs the global relationship

with SAP for the centralized services of

the Credit Management.

Each Business Partner of SAP uses the

D&B D-U-N-S© number for identification

purposes inside business connections

with SAP

D&B

Webservice

DB 360

D&B Toolkit

SAP and Bisnode D&B A Global Success Story

© 2014 SAP SE or an SAP affiliate company. All rights reserved. 3 Internal

Agenda

Historic development of credit management at SAP

The global credit management process

The FS-CM IT solution and implementation

Historic development of credit management at

SAP


Global Credit Management Development SAP Minimizes Its Risk Exposure with Automated Credit Checks

Development and implementation

of Credit Management and Credit

Insurance Policy

Run Credit Management and Credit

Insurance Process

Harmonize global Data Provider to

D&B/Bisnode

Improve FS-CM application with

D&B expertise

Global Credit Management

Organization

Today Duration Milestone

2010 2014 2011 2012

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2013 2009

Q1 Q2 Q3 Q4

Go live

Termination of

Credit Insurance

Go live


Global Credit Management Development Organizational Coverage

EMEA/MEE

5 Credit Manager

APJ

2 Credit Manager

NA/LATAM

8 Credit Manager


The Global Credit Management organization is dedicated to the combined goals of

stewardship in mitigating financial loss to SAP resulting from the credit risk of its

customer base, and true business partnership in providing efficient and compliant

processes for evaluating the creditworthiness of our customers as part of Deal

Support. As such, our major responsibilities include:

Timely evaluation of Sales opportunities and

customer creditworthiness to advise on

prospects and expedite credit decisions, but

limit exposure to acceptable risks

Setting clear and consistent guidelines and

global best practices for a SOX-compliant

conduct of Credit Management at SAP

Aligning with key business partners in Sales,

Cash Collections, Revenue Recognition and

Senior Leadership in Finance to meet common

business objectives

Monitoring credit risk across SAP’s customer

and prospect portfolio and reporting to related

business areas.

Sales Enablement

Credit Risk Monitoring Best Practices & Procedures

Partnering w/ Stakeholders

Global Credit Management Mission Statement


Credit Mgmt does not … … rather…

decide …

the final word on a

deal’s progress

Escalates

w/in Sales &

Finance

for consensus

& mitigation

decide …

whether or not to

recognize revenue

up-front

Revenue

Recognition

(Finance)

decide …

when and how to

collect revenues

GCCO &

Collections /

Dispute

Management

own/govern … Credit Management objectives and KPI’s

(aligned with corporate strategy) Credit Management policy and guidelines Credit Management processes and tools Credit Management organization provide transparency/early warnings … on the overall risk of SAP’s customer portfolio on global, regional, local and individual scale across all LoBs recommend measures… to evaluate when to defer revenue depending

on the customer’s ability to pay establish and recommend… strict guidelines and actions for reviewing and

escalating credit cases, and mitigation measures such as prepayment, guarantees, and financing for high risk customers

Credit Management does …

Global Credit Management Credit Management Function Responsibilities

The global credit management process


Trigger for Credit

Worthiness

Assessment

New opportunity in

CRM in phase D and

threshold >100 k€

triggers CWA for

customer

Regular updates/

monitoring for active

customers

Assess Credit

Worthiness

Customer (number)

based

With external credit risk

data

Assign Risk Class

10 risk classes with

assigned probability of

Default

Adjust Risk Class

Risk class can be ad-

justed in exceptional

cases based on addi-

tional information

and/or if no rating is

available from external

data provider

Assign Credit Limit For

Customers

Based on individual re-

venues from last 4qtrs

For new customers:

Based on segment-

specific revenues from

last year

Manual decrease or

increase upon approval

(defined approval

matrix)

Check Against Credit

Exposure

All open A/Rs

90 days invoice pool

Each opportunity

assessed individually

Approve Or Apply

Safeguarding Measures

Safeguarding

measures in case of

high risk or credit limit

overrun:

Accelerated

collection approach

Bank guarantee

Prepayment

SAP Financing

Rejection

Monitor And

Continuously Improve

Process tracking

Reports to support

credit management and

related processes, e.g.,

A/R and revenue

recognition

1 2 3 4

5 6 7 8

Global Credit Management Process Operational SAP Credit Management is an 8-Step Process


< 100* k€ No CWA

> 100 k€ External

Information

Opportunity

Opp. vol.

Ph

as

e “

D”

Trigger External Data SAP Risk Class (RC)

PoD (max.)

CRM

DUNS#

???

Collection

NOT

probable

Collection

probable

Impact

???

ERP

Payment

history

(Report)

Direct SW / CS

opportunities in CRM >

100k EUR, Phase A-D (LE)

and A-C (SME)

D&B Ratings replacing Euler

grades, but mapped to SAP

1-10 risk class

Most escalations under current DOA occur in risk classes

7-10 and risk classes 9-10 are considered “Collection not

Probable” for Rev Rec guidance, 6-8 considered on an

individual basis considering payment history.

1

3

2

7

10

6

8

9

5

4

Excellent

Default

Doubtful

Sub - Standard

Unsatisfactory

Marginal

Acceptable

Satisfactory

Good

Strong

Escalation and Credit Considerations for Rev Rec

Global Credit Management Process Credit Worthiness Assessment Based on External Data


D&B Risk Indicator

Size Upgrade

S&P Country

Risk

D&B Score

SAP Rating

• D&B Risk

Indicator

• Part of D&B

Rating

• Taken from Data

package or

manually entered

from BIR

• Mapped into

SAP-specific

classes

• D&B Capital

Indicator

• Part of D&B

Rating

• Taken from Data

package or

manually entered

from BIR

• Large companies

get an upgrade of

one SAP risk

class

• Valid for: 5A/5AA,

4A/4AA, 3A/3AA,

2A/AA

• S&P Country

Risk Rating

• Updated

frequently

• No need to enter

data

• Upgrade or

downgrade by

local risk situation

• D&B Score

• Part of D&B credit

assessment

• Taken from data

package or

manually entered

from BIR

• Derived from

D&B and S&P

Risk figures

• international

Comparability

• 10 Rating Classes

• 1-6: Automated

Handling

• 7-9: Manual

Handling

• 10: Business

Failure /

Bankruptcy

Global Credit Management Process Components of an SAP Rating


Global Credit Management Process Credit Worthiness Assessment Based on External Data

< 100* k€ No CWA

> 100 k€ External

Information

Opportunity

Opp. vol.

Ph

as

e “

D”

Trigger External Data SAP Risk Class (RC)

PoD (max.)

CRM

DUNS#

???

Collection

NOT

probable

Collection

probable

Impact

???

ERP

Payment

history

(Report)

Direct SW / CS

opportunities in CRM >

100k EUR, Phase A-D (LE)

and A-C (SME)

D&B Ratings replacing Euler

grades, but mapped to SAP

1-10 risk class

Most escalations under current DOA occur in risk classes

7-10 and risk classes 9-10 are considered “Collection not

Probable” for Rev Rec guidance, 6-8 considered on an

individual basis considering payment history.

1

3

2

7

10

6

8

9

5

4

Excellent

Default

Doubtful

Sub - Standard

Unsatisfactory

Marginal

Acceptable

Satisfactory

Good

Strong

Escalation and Credit Considerations for Rev Rec

The FS-CM IT solution and implementation


FS-CM IT Solution and Implementation Key Interfaces of SAP Credit Management Process

Credit

Management

Opportunity

Mgmt (Sales

Pipeline)

Collections

Mgmt

Credit

Insurance

BI

Dispute Mgmt

Sales and

Distribution

(SAP SD)

External Risk

Data Provider Finance


FS-CM IT Solution and Implementation Real-Time Processing and Integration in SAP CM Application

SAP Credit Management Implemented for CM at SAP

Recalculation of scoring and credit limit event

driven

Online interfaces to external data providers

Change documents, various logs, … Traceability

Credit checks are carried out when entering or

updating opportunities in SAP CRM system

(applicable to phase D or higher)

Automatic credit worthiness assessments

Integration with Accounts Receivables

Exposure

Payment behavior key figures

Exposure updates of open A/Rs

Up-to-date credit exposure and payment

history of particular customers

Ongoing real-time scoring

of customers

Automatic credit worthiness assessments


SAP Monitoring Coverage

First-time credit application process via detailed text reports and data packages Two-Step approach for monthly rating update

Phase 1: monthly monitoring with option for daily monitoring in selected countries Phase 2: monthly monitoring (implementation in progress)

Not in scope

Phase 1 – monthly / daily (optional)

Phase 1 – monthly

Phase 2 – monthly

Not covered


Real-Time Integration with External Providers (e.g., D&B Business Information Report)

Select “D&B BIR” as rating

procedure in the section

External Credit Information

Request BIR Report.

The BIR report can be

requested from D&B via the

Import Data button.

Prerequisite: Valid DUNS

number is maintained for the

BP and report is available in

the D&B database.


Online Request of Text Report (e.g., D&B Business Information Report)

The requested BIR report can be displayed via the Business Information Report tab

Possibility to scroll

between different BIR

Reports

Download in PDF

Format possible


FS-CM IT Solution and Implementation System Architecture

One global prod. ERP system (incl. SAP Credit Management)

SAP NetWeaver

BW Reporting

• PoD

• Credit exposure

• KPIs

CRM System

FI A/R

Open Items FI A/R

BI System

SD

Invoice Pool

FI A/R

Payment Behavior

* LE = Large Enterprises; SME = Small and Medium Enterprises

LE, SME ,

Field Services

Opportunities

(direct channel)*

Opportunity phase D or

higher

XI Exchange Infrastructure

Online Interface


Credit management should be a lean and efficient process and

should be as automated as possible

The credit management policy should be defined prior to the

start of the implementation/blueprinting

Integration of credit management and credit insurance

processes should be considered (e.g., utilization of external

credit risk data)

Credit worthiness assessment should be transparent for users

SAP CRM system can be used as a starting point for the credit

management process

Master data quality is a prerequisite for successful credit

management

Different external data providers can be combined

Credit Management 7 Key Points to Take Home

© 2014 SAP SE or an SAP affiliate company. All rights reserved.

Thank you

Contact information:

Nadine Mautner / SAP F&A Deal Support – Global Credit Management

Christian Wagenlechner / Bisnode Practice Leader Integration Solutions

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