M3 Credit Management MUA – Finance FIG: 24 – 26th February 2008 Julie Wroe Solution Design...

M3 Credit ManagementMUA – Finance FIG: 24 – 26th February 2008

Julie WroeSolution Design

[email protected]

John ChandlerProduct Management

[email protected]

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A quick reminder … the Lawson Product Lines…

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……with Industry Focus…..

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Financial Management Suite

Provides a fully integrated and global solution for make, move & maintain clients to manage their financial flows

Offers a complete solution for all financial process from daily processes to year end, such as general ledger, reporting, accounts payable accounts receivable, budgeting, fixed assets, costing, cost accounting, inventory valuation and risk management.

Modules Include:- Budgeting, Accounts Payable, Accounts Receivable, Current Assets, Fixed Assets, General Ledger, Taxation Management, Group Consolidation, Cash Flow Management, Cost Accounting, Product Costing, Multiple Unit Coordination, Risk Management, Report Generator

“For instance, the timeliness of period accounts has been boosted greatly. For much of the time now, we get information back on site performance and financial results around 300% quicker than was previously possible,”Adrian Hynds, managing director, Hynds Pipe

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Figure 4M3 Financials for our focus industries……

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GA mainstream maintenance countries for M3

M3 5.2, 33 Countries

M3 7.1, 34 Countries

Americas

– USA, Canada, Mexico, Brazil

EMEA (19 of 27 EU)

– Austria, Belgium, Denmark, Finland, France, Germany , Ireland, Luxemburg, Netherlands, Norway, Poland, Spain, Sweden, Switzerland, United Kingdom, Czech Republic, Italy, Slovakia , Portugal, Hungary

Asia/ANZ

– China PRC, Hong Kong, Japan, Malaysia, Singapore, Thailand, Philippines, Indonesia, Australia,

New Zealand

Lawson for ESM&R 1.1,

9 countries (only BU)

Americas

– USA, Canada, Chile, Uruguay, Bolivia, Argentina

EMEA

– United Kingdom

Asia/ANZ

– China PRC, Australia

Consolidated in Standard

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Global Integrated Financials for IFO’s - Introduction

Suppliers

Customers

The order flow

The logistic flow

The financial flow

ProcurementProductionplanning

Sales &order

Receipthandling

ProductionWarehouse/Distribution

Accountspayable

General ledger

Accountsreceivable

Monitor the Performance of other flowsManaging the financial flow

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The Cash Cycle = Financial Supply Chain

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Days DSO 57 DIO 42-DPO (55)------------------ CC 42 ==========

Working capital days to be funded

The Cash Cycle = Financial Supply Chain

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Finance and Smart Office – it’s a simple world

ERP Data

AnalyticsDocuments

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Integrated Financials (IFO’s) need three Core Databases

Data

Traditionally ERP systems (such as M3) have always stored data in a database. The demand has always been to have more details and the volume of transactions have been growing. “Data has taken over versus information”

Analysis

Through Business Performance Warehouse (BPW) & Lawson Business Intelligence (L BI) high volume transactional data is converted into usable information.

Documents

Document Archive Foundation (DAF) provides storage of documents in an electronic form. Integration with M3 Smart Office provides easy accessibility to all document types.

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Topics to be covered today…….. Efficient credit monitoring

– Identifying potential problematic customers (Credit Manager’s Toolbox)

– Overdue Invoices in date sequence

– Export to Excel – some options

– Query handling & action follow-up (Tickler Notes)

Exception reporting & alerts

– Eg. Approving a New Customer, Customer Orders on Hold, Queried Invoices

Automating process flows

– PFI… an alternative for new customer approval

Field Audit Trail

– Tracking key changes

Document storage and links

– Customer Documents & Invoices / Credit Notes

AR Balance Analysis

– Inc. M3 DSO by Customer example and calculation

M3 Analytics for Credit Management Performance

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Integrated Credit Control Solution- What can you do to help your customer pay (faster)

CustomerEvaluation

Credit limits Terms of credit Insurance rules Reminder rules Penalty interest rules

Order/Invoice

3. Monitoring- Credit limits- Stop- Ageing- Provision

1. Credit Managers’ Tool Box & Portal- Potential problems

New Customer Customer

2. AR Documents- Reminders- Statements- Payment advices- Invoices/Credit notes

§

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Credit Managers’ Tool Box

Criteria for Selection: (= warning flags)

– 1. The customer is blocked

– 2. Overdue amount > Credit limit 1

– 3. Outstanding amount > Credit limit 2

– 4. Total engagement > Credit limit 3

– 5. Invoices over due - per due date rule

– 6. Outstanding amount > Insurance limit

– 7. Revised due date overdue by XX days

– 8. The DSO-code has been changed

– 9. Action date for blocked invoices

– 10. Unpaid checks or drafts

Typically, more flags = more cause for concern

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A Credit Managers Dashboard – one screen all options…

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Credit Managers’ Toolbox – Focus limited resources early on most problematic customers

Can tailor process to suit your business – CMT Example 1 – by credit controller

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Drill on an individual CM Toolbox Payer record (in RMS420) – shows value and number of records affected for each triggered flag(s) …can hyperlink to see detailed list of invoices affected…

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Detailed list of Overdue invoices shown in due date order …

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Can also drill from CM Toolbox to Customer a/c, then GL voucher, payments, notes or invoice & delivery/stock movement records

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On customer record, could define LSO script buttons to auto-call customer using Skype, perform Google search on post code to help validate it, etc … not just show contact info.

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A Tickler Note documents conversations you’ve had with customer & follow-up actions agreed / required … Action date enables a “To do” list to be created by payer, credit dept. ref, non finance user, etc…

If you run out of comments space… additional free format text can be used to support the standard 10 text lines available

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Overdue Invoices

Days Past “Due” Date

(Grace Days)

Open Order Value

Overdue Invoices

Overdue Invoices

Credit Limit 1 Credit Limit 2 Credit Limit 3 Credit Limit 4

Open Invoices

Open Invoices

Setting of Customer Credit Limits

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A Credit Managers Dashboard – one screen all options…

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Smart Notifications (Operational BI) – alerts with proactive links back into M3 to help direct the user to deal with the exception effectively & in a timely manner

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Example 2 – dealing with orders exceeding credit limits

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An alternative approach to approving new customers … PFI

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Add your new customer (status 10) & press “Start Approval” flow

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A message will auto-appear in the In-basket of the required approver (a specific person or a role) …

The approver can use the buttons above to link through to M3 to check the new record prior to deciding to press the Approve/Reject button

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Customer is then Accepted or Rejected … ... Status is updated accordingly…… & email sent to notify sales person of decision

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Field Audit Trail – supporting internal control monitoring

Configure for your chosen file / field combination…

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Press F9 in field you are monitoring (eg. Credit limit 1 on Customer Master file CRS610/J) to see detailed history of changes

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Filing at your fingertips… AR External Documents

Recovery (reminder) letters (all invoices v. overdue only)

– Controlled by user defined rules

– Linked to multiple (more forceful) reminder letter texts

– Specify rule (or not) on Customer master file – can treat customers differently

– Run regularly – proposal/update

Statement of account (open items v. balance b/fwd)

– Header/Footer text similar to reminder letters

– Send regularly and/or upon ad-hoc customer request basis

– Aging buckets optional

Payment advice

– Suggests what invoices are due & should be included in next payment

– Prints remittance to be returned with payment to aid payment allocation

Invoices & Credit notes

– Auto-generated from an order (or invoice) & or manually created in AR

Documents from your customer

– Debit notes, Customer complaint letters, signed contracts / POD’s, etc

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Document links can be added to any program to take the user to the relevant document

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With doc links to DAF images, the search is context based & hence only those statements related to selected Payer are retrieved … can click on image to see it in full screen mode.

Alternatively, can use Attribute search tab to find any docs based on manually entering your search criteria

ARS149PF – Aged Statement of Account

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Smart Office enables…

Drag and drop documents to the Document Archive

– Drag a document directly from Windows Explorer to an M3 panel

Drag document to an M3 panel

Select the document type

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Retrieve the document any time by right clicking the record

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Document Archive Foundation – Benefits

Reduced time to search and find the correct document

Authentication and security permissions included to ensure a fully secure system

The use of meta data enables the documents to be reused across different entities

Create document links that are:

– Easy to maintain

– Completely meta data driven

– Secure

– Flexible

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Flexible balance file analysis

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Pro-active Debt Monitoring (per Customer) – average time to pay

Days Sales Outstanding – DSO Trend

Days Sales Outstanding (DSO) Formula:

Outstanding amount (incl TAX) ------------------------------------------------* No of days in periodAverage Sales during the period

Used to compare DSO-development versus Sales-development

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M3 - DSO Code Table…….a simple trend check

DSO Code Average Sales Average DSO Comments

0 Not Applicable – not calculated

1Has the customer increased purchases because their credit terms have been extended – if not, watch closely

2This worsening trend should be monitored by the daily CMT process – RMS420

3Your customer is now paying faster - send thank you gifts……..!!

4This could be ok – but is there a reason that sales to this customer are decreasing ?

5This worsening trend should be monitored by the daily CMT process – RMS420

6Your customer is improving payment times – is this a settlement discount effect ?

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Another useful AR enquiry… AR Cheque book…enables you see what invoices were paid by this customer receipt

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How do I prevent credit issues…Why Won’t My Customers Pay ?

He’s just a badpayer !

Wrong informationon the contract ?

Did I invoice the correct price…

He says he neverreceived it…

Simple order/contract entry…Portal approach…Data attached automatically…Validation of data…

Automatic price retrieval…Flexible pricing structures…Flexible discount structures…Flexible charge handling…

Automatic delivery documents…Receipt confirmation…Remote data capture…Electronic signatures…

Comprehensive credit limits…Customer stop…Credit Managers’ Toolbox…

The goods werefaulty…

Exchange handling…Up-rent & down-rent…Returns process with auto credit generationService management…Goods receipt with QI…

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Analyse data to help identify process improvement areas…

BPW Smart Notes (alerts)

Scorecard

Reporting Services

Workplace / Smart Office UI Dashboards

Financial Report

Generator

Standard and reconciliation reports

Order statistics

<= Lawson ERP Lawson BI =>

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What kinds of questions can M3 Analytics answer?

Sales / Customer Service:

– Our customers require at least 98% in delivery accuracy. Do we meet / exceed this level?

– Do we have problems in certain product segments? Can we find out why?

Sales / Account Manager / Product Manager

– Am I keeping up with my budget in terms of quantities, revenues and margins?

– What affects my margins? Price levels, leakages, cost levels

Financial controlling

– Are my customers getting better / quicker at paying me?

– What level of my debtor balance is disputed by customers?

– How accurate are the invoices that I send my customers?

Procurement manager

– How are my suppliers performing in terms of price levels, quality, quantity and time accuracy?

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What is M3 Analytics?

Pre-configured analytics toolkit:

Built on M3 - BPW - Specific BMMs/cubes

5 main process areas • Sales• Finance• Procurement• Production• Warehouse

15 Cubes/BMMs, 50 Scoreboards, 70 KPIs & 3 notifications

Approx. 10 days from install to reaping benefits

Predefined KPIs:- Day Sales outstanding- Inventory Turnover- Delivery Performance- Gross Margin %- etc...

Scorecards:- Sales vs Budget- Supplier Performance- Production variances- Delivery Performance- Customer debt- etc...

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Pre-built Analytical Content - 5 main processes (inc. 15 cubes)

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Std Finance model incl. AR balance & DSO analyses…

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Std Sales model incl. Delivery perf. & Invoice accuracy analyses…

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Sales invoice Accuracy Analysis – financial amounts

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ARC – Adjustments, Returns & Credits…….

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Topics covered today…….. Efficient credit monitoring

– Identifying potential problematic customers (Credit Manager’s Toolbox)

– Overdue Invoices in date sequence

– Export to Excel – some options

– Query handling & action follow-up (Tickler Notes)

Exception reporting & alerts

– Eg. Approving a New Customer, Customer Orders on Hold, Queried Invoices

Automating process flows

– PFI… an alternative for new customer approval

Field Audit Trail

– Tracking key changes

Document storage and links

– Customer Documents & Invoices / Credit Notes

AR Balance Analysis

– Inc. M3 DSO by Customer example and calculation

M3 Analytics for Credit Management Performance

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For those interested in using ARS225 AR balances….

… I have attached the setup for the 3 highlighted analyses (column templates) shown today

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Period opening & closing balances with movement analysed between invoiced & ‘paid’

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Template 010 – Remember =/= equates to right here, right now (ie. current year and period), 00 = opening balance for the year and -1 = 1 period/year back (generally, keep it relative)…

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Credit limit 1 compared to actuals (Overdue amount) with variance calculated

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Template 011 – Credit limit 1 & Overdue amount should be as per CRS610/J. Column 3 shows how calculations can be performed. Note: Less customers were returned with this template as in next panel, Overdue local amount <> 0 has been set to remove customers with zero overdue balances, ie. example of a simple exception report.

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Analyse both DSO days value and assigned movement code (per slide 43 above)

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Template 012 – In particular, look out for DSO values greater than your normal credit terms & DSO codes = 2, 5 (sales static/down but DSO up) & possibly 1 (both sales & DSO up)

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ARS270 – Customer Payment Patterns………over time

To date,1 payment,Total Value 3,500.00

13 Invoices paid,100% early or on due date

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ARS090 – Defining ranges for Payment Patterns………

No of days to include when deciding records for

payment pattern

Definition of 10 specific ranges of historic payment

pattern

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CRS465 – Reminder Rules……postal days…

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CRS075 – Customer Payment Terms………

M3 Credit Management MUA – Finance FIG: 24 – 26th February 2008 Julie Wroe Solution Design...

Documents

Transcript of M3 Credit Management MUA – Finance FIG: 24 – 26th February 2008 Julie Wroe Solution Design...