Setting the Scene
We recently published our “Top 10 Ways to Make Oracle E-Business Great Again”. One of the featured suggestions was to implement Oracle Advanced Collections. This piece takes an in-depth look at how this Oracle E-Business module can improve cash flow and put more money in the bank.
The Business Problem
One of the biggest reasons for business failure is insufficient working capital. Managing cash flow effectively by collecting payment for your goods and services on time is one of the perennial problems in business. It’s an issue which affects most organisations and over the past few years in the UK, the problem has continued to grow. Based on recent data, on average 48.7%1 of B2B invoices in the UK were not paid by the due date – the highest rate in Western Europe.
Every business needs a strategy to ensure that customers are contacted promptly and arrangements are made for debts to be paid as soon as possible and within the agreed payment terms. Most often, it’s not a deliberate ploy to pay late, it’s more likely due to inefficient payment systems or forgetfulness. Trying to keep a handle on all your open receivables can be challenging and the ability to adapt strategies for different types of customer is also key to ensuring that time and effort is focused in the right areas and not unnecessarily wasted.
Many customers using Oracle E-Business R12 have implemented Oracle Receivables to manage their receivables ledger. Some have also deployed Oracle Advanced Collections alongside this to help them better manage the receivables collection process.
What Does Advanced Collections Do?
Oracle Advanced Collections provides a richly-configurable toolset with the following key features:
- Invoices that are past due are categorised and identified as for example, an invoice that has payment terms of 30 days is delinquent once it has gone unpaid and more than 30 days have elapsed since the invoice date.
- Using configurable scoring engines, one can prioritise collection actions using factors such as value of delinquency, how many days past due, number of items overdue, which allows the user to include and vary the weighting between these different elements to ensure the score reflects these priorities. Hence you can ensure that the right areas are targeted to maximise debt recovery.
- Users can define strategies that include actionable steps by the customer, such as calls, logging promises to pay, tracking whether those promises are broken, further steps such as referring to debt collection agencies or going to litigation, should these be required for later stage delinquencies.
- One can also define different strategies for different types of customer. For example, a commercial customer with a poor track record of paying on time or doubtful creditworthiness might need to be treated differently to a local authority who generally would be a reliable payer.
- The work items in Advanced Collections are all handled and presented to collectors via the Universal Work Queue which is the technology used throughout Oracle’s CRM suite of applications. This means that individual collectors are presented with a list of current tasks to perform in their work queue in a clear, prioritised order, supporting more efficient working. They do not have to run reports ad hoc to calculate which customers owes what and what actions are required, because the scoring components, engines and the strategies automate this for them.
- There is a very useful 360° view of delinquencies via the Collections Center.
- Customer interactions can all be stored and can be referred back to easily, ensuring that calls are only made when needed and effort is not duplicated. If a collector is away, all of the information is there to hand for another collector to step in and resume the work items without having to go back to square one.
- When it comes to payment disputes such as when a customer is questioning an invoice due errors or an issue with goods or services delivered, there is functionality to easily put items on dispute to remove them temporarily from the collections process while the dispute is resolved. It is also easy to print invoices or collect and apply payments or raise credit memos.
- For Dunning Letters and other correspondence, the power and flexibility of BI Publisher is built into the module, so it’s easy to get professional looking output.
As with all implementation projects, understanding business requirements and having a clear design for collection strategies is key to success. It sounds obvious, but many times this setup gets done as a rushed afterthought as part of a larger ERP implementation. The inevitable outcome of this is tasks that are not assigned as expected and items are not collected on when they should be.
One of the first decisions to make when implementing collections is at which level you wish to deal with customers; the choice is between account, bill to site, customer and delinquency levels. It is usually recommended to set this to bill to level, and this is advised by Oracle for optimum performance. Key to any design though is to keep it simple, easy to follow and maintain.
Common Support Issues
Possibly the most common mistake is that customers are not set up correctly to ensure the scoring engine components pick them up and score them as expected. If using Dunning Plans, the Send Dunning Letters Flag must of course be set on the customer or customer site for these to be generated.
Other issues can be caused by over-complexity of the solution and users’ lack of understanding of the logic, which is a key argument for keeping things simple and to the point.
Note that scoring engines can be configured to do what you want, with some SQL and PL/SQL knowledge, scoring components can be designed to access any data you want them to. This is very powerful functionality and needs to be designed carefully. If users and support personnel do not understand what that design is, then they are not going to get the results they expect.
Bringing It Together
Well designed, and in the hands of trained users, Oracle Advanced Collections can make a real difference to your cash flow. It can take the heavy-lifting and routine repetitive work off the shoulders of your collectors. This can free up their time to do what they should be doing, i.e. building healthy relationships with customers and working through any issues they have to get the bills paid, whilst also enhancing the overall commercial relationship, making it more likely those relationships will survive and thrive to both parties’ mutual benefit. Most importantly, all of this invariably results in more money in the bank.
If you are interested to find out more about what Oracle Advanced Collections can do to improve cash flow in your business, then please contact us at firstname.lastname@example.org.
1Atradius Payment Practices Barometer – Autumn 2018
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