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 SERVICES LIMITED and may not be used, reproduced or disclosed to others except as specifically permitted in writing by TATA CONSULTANCY SERVICES LIMITED. The recipient of this document, by its retention and use, agrees to protect the same and the information contained therein from loss or theft.

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Abstract

This document provides an overview of Advanced Collections setup in Oracle Applications R12. This whitepaper discusses all sections of functional design document and lists the corresponding sections required to configure to use the Collector’s work queue.

In today’s business environment, cash flow is most critical to a business’s success. In order to collect cash faster and more efficiently using streamlined processes offer a real competitive advantage. The implementation of Oracle Advanced Collections allows organizations to proactively manage their overdue management efficiency, whilst retaining its ongoing customer relationships.

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About the Author

Sanjukta Choudhuri is a Techno-Functional consultant in TCS. She is an IT Analyst, worked in two different ERP solutions over last 6 yrs. She has been involved in Implementation, Maintenance, Support projects during her tenure and has work experience in ERP Supply chain management and Finance modules.

About the Domain

The paper is aimed to talk about the Advanced Collections Setup, to develop a basic understanding of how the main objective of debt collection has been achieved by setting up an effective debt management tool to meet the requirement of the customers. Nowadays, many companies are becoming bankrupt because of bad debt. In this situation collecting premium from its customers on time has become a challenge. The collection process should be robust enough to match with the current market situation.

Oracle Advanced Collections allows us to bridge the gap between back-office transactional data and front-office customer management processes, while improving agent productivity and collection results. Streamlined processes apply the right collections strategy to the right customer to help the company collect more money faster and with 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 regular collection method for every business there should be one effective debt collection process in place so that money that customers has not paid on time can be collected from them. Advanced Collection is a module in oracle e-business suite which provides an effective debt collection process for the money which is not collected on time. It is very flexible. It can be designed 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 debt management. This module deals specifically with customers who have not paid on time (These customer are called as Delinquent Customers) and tries to collect overdue amount.

Why Advanced Collection needed? In today’s world collection process has become very complex. Below mentioned are the points which are key concern areas for which it is needed to opt for Advanced collection.

There is one Collection feature present in Receivables but that is not flexible enough. There we can only send letters (Dunning Letters) to defaulters depending upon how many days they are late for doing the payments (Aging Buckets). In Advanced Collection different collection strategy can be implemented for different customers depending upon customer’s debt history or debt amount. This feature is not present in Collections in Receivables module.

Collectors are too busy to contact customers with overdue invoices with small amount. Some customers pay these invoices but consequently, they end up writing off many of these small balances. Many small amounts when added up do not remain small at all. How can we stop this?

Business values their customers who have been with them for many years and would like to develop a more gentle collections strategy to recover bad debt. But customers who have been with them for less time should have a more aggressive collections strategy for them so that business can control their bad debt, get financial relationship off to a better start and ultimately retain and weed newer customers out based on their value. How to execute dual strategies without confusing the collectors?

It has often seen that customers who pay on a quarterly or semi-annual basis are often days or weeks late. Since these payments are less frequent, the amounts are often larger and greatly impact cash flow. But, these customers are not necessarily bad customers but are habitually late. How can we get these pre-delinquent customers to pay on time (or even early!) without offending them by a collections call?

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There are unique collections requirements for each country that determine how and when to contact delinquent customers. Company spends lot of money in training keep collectors clear on these country-specific rules and regulations. It has also seen that customers in each country often respond differently to the dunning and calling process. How to easily create country-specific collections best practices strategies?

Collectors struggle with customers who continue to refuse to pay. They waste extra calls to these delinquent customers when they should really refer these customers to managers or collections specialists who can take more drastic collections measures to litigate repossess and/or write off these debts. Also, customers sometimes claim bankruptcy which, whether this is true or not, needs to be addressed quickly to reduce additional bad debt exposure as well as adhere to strict bankruptcy laws. How to address these later stage delinquencies activities without bogging down the collections process?

When there are many defaulters, collectors are confused as to who to call first and when to stop calling. Automation to ease their burden. How to prioritize their work so that recovery rate improves?

Important Terms

Delinquency: Delinquency means condition of a debt when overdue. The customers who do not pay on time are called delinquent customer.

Strategy: Used for applying specific debt management business rules for collection. Aging Bucket: Different Aging Bucket can be defined in Receivables depending upon number of days. E.g. Seven days aging bucket. Then all the transaction for which payment is late for 7 days will come to this bucket. Dunning Letter: Dunning letters are notification or warning letters send to customers if they do not pay on time. Each Aging Bucket will be having a set of Dunning Letters. Depending upon the Aging Bucket the customer falls dunning letters are sent. Scoring Engines: Scoring Engines determines customer’s delinquency status and customer scoring. Score: Every delinquent customer is assigned to a value called score. Score is calculated depending upon many factors like debt amount, debt duration etc. Competency: Competence is a standardized requirement for an individual to properly perform a specific job. Job wise competency is defined in system and assign to particular person who can do that job. E.g. Calling Customer a competency. Some people who are enough skillful to call and convince customer is assigned to this competency.

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2. Overview

Advanced Collection is an extension of collection process in Receivables module therefore it is obviously linked with Receivables in oracle applications. Customer information and the transaction details for which customer has not paid on time, all this information will come to Advanced Collection from Receivables module. Other than that it is linked with the following modules-

HR Management (Full implementation): Collectors are employee of the organizations. So they should be set up as an employee in HRMS. This one is mandatory.

CRM Resource Management: Groups, Roles and Resources everything needs to be managed by CRM Resource Management. This module implementation is also mandatory.

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3. Necessary Setups

Setup is very important for Collections. Once the setup is done collection process will continue executing using the collection strategies defined at the time of set up. It is also possible to modify or create a new strategy. Below mentioned are the detailed steps required for Advanced Collection setup

Step 1 – Create Responsibility Step 2 – Assign Responsibility Profile options Step 3 – Set up Employees Step 4 – Assign Users to Responsibilities Step 5 – Assign Resource Roles and Used In Step 6 – Import Resources Step 7 – Create Collectors Step 8 – Set up Level for Dunning Step 9 – Set-up Scoring ComponentStep 10 –Setup Scoring Engine Step 11 – Create Work Item TemplateStep 12 – Create Collection StrategiesStep 13 – Concurrent Programs - Create delinquencies Step 14 – Set up Profile Options Universal Work QueueStep 15 – IEX: Enable the AR transactions summary tables

Collector Setup:

Step 1: Create Responsibility

First responsibilities for Advanced collection which will be used by collectors need to be created. Ex – Collections Agent

Responsibility: System Administrator

Navigation: Security >> Responsibility >> Define

Step 2 – Assign Responsibility Profile options


Navigation: Profile >> System

Assign all the required profile options for Advanced Collections Setup

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Step 3 – Set up Employees

Collectors are first employees of the organization. So it is required to set them as Employee first.

Responsibility: HRMS Manager

Navigation: People >> Enter and Maintain

Step 4 – Assign Users to Responsibilities

Responsibilities are created for Collectors, now these responsibilities should be assigned to respective user.


Navigation: Security >> User >> Define

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Step 5 – Assign Resource Roles and Used In

Now each user will have their separate roles. So we need to create roles now.

Responsibility: CRM Resource Manager

Navigation: Resource Manager>>Setup>>Roles

E.g. Collections Manager, Collections Agent

5. 1Create Role

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Step 6– Import Resources

Resource as first defined in HRMS then the resource should be imported as Employee in the system. Once the import is complete the resource is visible in the system and the resource category is Employee. Later the resource should be tagged with Collection Agent or any other relevant role. Then only the employee can able to work as Collector.

Responsibility: CRM Administrator Navigation: Resource Manager>>Maintain Resources>>Import Resources

6.1 Import Resource

6.2 Assign Role to Resource

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Step 7 – Create Collectors

The collector has to be defined in the system so that he/she can perform the collection activities.

Responsibility: Receivables Super UserNavigation: Set up >> Collections >> Collectors

7.1Collector Creation

7.2 Collector is assigned to the customer

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Step 8 – Set up for Dunning Plan

Dunning Plans are simple collections methods. They automatically send notices to delinquent customers and, optionally, assign a follow up call to a collector.

Strategies support simple or complex collections activities. They automatically execute predefined activities to manage delinquent or pre-delinquent customers. We can use preconfigured strategies or create our own. Organizations use Dunning Plan or strategy as their Collection method.

Responsibility: Collections AdministratorNavigation: Setup Checklist >>Collections Method Setup>>Create Dunning Plans

One must run the following concurrent programs in Oracle Advanced Collections toexecute dunning plans:

• IEX: Promise Reconciliation: This program updates the open promise information in Advanced Collections with payments received in Oracle Receivables to determine outstanding items.

• IEX: Scoring Engine Harness: We can select up to five scoring engines to run at thesame time. The scoring harness assigns a value to an object such as a customer,account, or bill to location. Another score determines whether transactions aredelinquent, pre-delinquent, or current.At a minimum, we must run a scoring engine that scores transactions to createdelinquencies; and then run a scoring engine to score the level of our dunningplan (customer, account, or bill to location).

• IEX: Send Dunnings for delinquent customers: This program sends the results ofthe scoring engine harness to Oracle One-to-One Fulfillment to send out dunningCorrespondence.

• IEX: Create Dunning and Broken Promise Call Backs: If we have dunningcallbacks as part of our dunning plan, need to run this program to create callback workitems to a collector's task list in the Collector's Work Queue.

Step 9 – Setup for Collection Strategies:

Use collections strategies as an alternative to dunning plans, to automate the collections management process and support complex collections activities. Strategies can be used to recover delinquent transactions such as invoices from Oracle Receivables, cases asidentified by Oracle Lease Management, or loan transactions from Oracle Loans.A strategy is a series of manual or automated tasks, known as work items, linkedtogether in the order in which they will be executed. Each work item is a collectionactivity to recover a delinquency, such as making a phone call or sending a letter, andcan be reused and included in many strategies. A strategy is associated with acollections object, such as customers or accounts. The collections object is the data levelwe do business at.

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Overview of Scoring:

Scoring forms the foundation of collections activities. Oracle Advanced Collectionsuses scoring in two ways:

• To determine transaction status: current, delinquent, and pre-delinquent.When scoring transactions, Advanced Collections looks at transactions from OracleReceivables, including invoices, debit memos, and chargebacks; lease invoicesoriginating in Oracle Lease Management; or loans invoices originating in OracleLoans. In general, if a customer has delinquent transactions, the customer isconsidered to be delinquent.

• To determine the value of each customer.When scoring to assign customer value, we can use any data point about theCustomer. Typically we run customer value scoring at an operational data level(Customer, account, bill to, or delinquency).

Set up Scoring Components:

Responsibility: Collections AdministratorNavigation: Setup Checklist >>Collections Method Setup>>Create Scoring Components

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9 Create Scoring Components

Step 10 – Set up Scoring Engine:

What is Scoring Engine? For each scenario we will be having a score Engine. Each engine is consists of many score components.Score Components: Many queries together find out the final score. Each score component will be attached to one query. Many such components together are responsible to find out total score for a particular scenario. Each component will be assigned to certain weight. Different high and low value range will be defined for each component and each range will have certain value. The final score that we will get is product of value that we will get from query and weight.

Responsibility: Collections AdministratorNavigation: Setup Checklist >>Collections Method Setup>>Create Scoring Engine

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Scoring Engine Details

10 Create Scoring Engine

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Step 11 – Setup of Work Item:

Each strategy is made up of one or more work items. A work item is a task to beExecuted manually or automatically and is driven by a workflow. The workflow notifiesthe collector to perform a task or initiates the automatic process. Every work item hasan associated workflow.Work items are grouped by work type:• Manual: a task to be completed by a collector or specialist. It is displayed as anentry on the Strategy Work Item node in Collector's Work Queue. It can be sortedby priority and other methods. When completed, the work item is removed fromthe queue. Manual work items include a personal visit, phone call, and reviewtasks.• Automatic: a task completed by an automated process. This group includes taskssuch as sending e-mails, faxes, or sending documents to be printed.• Workflow: a custom workflow that initiates an automated task not performed by apreconfigured workflow.

Create Work Item Template:

Responsibility: Collections AdministratorNavigation: Setup Checklist >>Collections Method Setup>> Create Work Item Template

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11. Create Work Item Template

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Step 12 – Create Collection Strategies:

Responsibility: Collections AdministratorNavigation: Setup Checklist >>Collections Method Setup>> Create Collection Strategies

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12. Create Collection Strategies

Step 13 – Concurrent Programs - Create delinquencies

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Request Set ‘IEX: Oracle Collections Concurrent Request Set’ needs to be run frequently for following purposes.

Data flow in Advanced Collections from Receivables Delinquency Status Determination Customer Scoring Strategy Assignment Work Distribution

1.‘IEX: Oracle Collections Concurrent Request Set’ consists of Concurrent Programs:

IEX: Promise Reconciliation IEX: Scoring Engine Harness IEX: Strategy Management IEX: Purge Score History Table

Step 14 – Set up Profile Options Universal Work Queue

Universal Work Queue (UWQ) is the screen used for getting consolidated view of the work a collector needs to do. Based on the business needs various profile options need to be set up the UWQ.

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14. Universal Work Queue

4. Conclusion It can be concluded that by using the Oracle Application Advanced Collections module debt collection process of any company can be managed easily and effectively. Depending upon the different need of different organizations the different strategy can be defined and different work item can be set.

5. Acknowledgements

Sudesh Upadhyay: Provided some valuable inputs.

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6. References1. Oracle Advanced Collection Implementation & User Guide2. https://metalink.oracle.com

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https://metalink.oracle.com/

Oracle Apps R12_White Paper on Advanced Collections Setup

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