Integrating Dispute and Collections Management


After completing this lesson, you will be able to:

  • Explore integration aspects with Dispute and Collections Management

Integration points between Receivables and SAP Dispute and Collections Management


Michael has learned about the manual and automated incoming payments processes in SAP S/4HANA, and that there can be discrepancies in what the customer believes they should be remitted. What happens when there are disputes or issues collecting outstanding debts? This is what SAP Dispute and Collections Management is all about, therefore, he needs to take a further step and learn the integration points between Receivables Management and SAP Dispute and Collections Management.

Integration points between Receivables and SAP Dispute and Collections Management

Michael furthers his knowledge by exploring the integration aspects between Receivables Management and SAP Dispute and Collections Management. His first steps are to obtain a high-level understanding.

Receivables and SAP Dispute and Collections Management are key areas of financial management in any organization. Integrating these components using SAP S/4HANA can streamline operations, improve cash flow, and reduce risk.

Accounts Receivable (AR) and Dispute Management (DM) Integration

This integration automatically transmits payment reductions to DM. Dispute cases can be centrally processed, managed, and documented, and when a discrepancy is detected, a dispute case is created immediately, enabling users to enter information relevant to the dispute and deal with it promptly.

When a dispute is resolved, the data will be updated automatically in accounts receivable. This assists in the management of a KPI; days sales outstanding (DSO).

A number of issues arise in the dispute case process that can be improved as part of financial supply chain management. These issues form the starting point for developing the dispute management component in SAP S/4HANA.

For example, if customers make reduced payments or do not pay at all, the days sales outstanding (DSO) increases. "Days sales outstanding" is a key number that indicates the average number of days that the customer takes to pay, which is based on annual sales. This is the case particularly in times of worsening customer payment histories.

In the case of customer deductions, the net value date is no longer valid for the cash flow forecast. This leads to difficulties in predicting cash flow.

Dispute resolution today is a costly and highly manual process as the increasing number of disputes therefore has a double impact on costs. In addition, disputes can indicate customer relationship issues or problems within the company and can thus provide an important starting point for a company's quality management activities.

How do receivables-related disputes arise?

  • Customer provides information actively
  • Customer contacts the complaints department
  • Customer contacts the account manager
  • Customer contacts the accounting department
  • Customer makes a reduced payment
  • Payment difference discovered when incoming payment is processed (cash management or accounts receivable accounting)
  • Customer delays payment
  • Receivables become overdue because payment is not made and is discovered during account maintenance (accounts receivable accounting)

Accounts Receivable and Collections Management (CM) Integration

With this integration, an organization can maintain all data related to its receivables in one place, enabling proactive collections management. The system has built-in functions for identifying overdue or high-risk receivables, allowing the collections management team to take immediate action. Payments, credits, or disputes information are integrated into collections management to offer a complete view of a customer's payment performance and risk.

SAP Collections Management provides you with tools to assist collectors with the day-to-day collection activities. The main pillars are outlined in the following figure, SAP Collections Management: Overview.

SAP Collections Management supports the cash collection process through rules-based automation of the selection and evaluation of customer accounts. It addresses cash collection issues such as inconsistent account prioritization, labor intensive and long cycles, the high costs of collection, and increased bad debt risk.

The Collection Worklist is a generated list of past due customers ranked in order of severity based on a collection strategy of your design. Some of the information included are: collection specialist, outstanding balance, amount to be collected, amount promised, disputed amount, credit info.

The Process Receivables screen allows collectors to review a customer account, promises to pay, dispute cases, customer contact information, and so on. You can record notes on collection calls, track collection statistics, generate correspondence, and create dispute cases.

Receivables, Dispute, and Collections Management Integration

This integration enables collection agencies to view dispute cases information directly in the Collections worklist. It improves transparency and communication between the collections and dispute management teams. If a dispute is resolved and triggers a payment, the collections management will immediately know and update the customer's account status.

Overall, the integration of these key financial components through SAP S/4HANA brings efficiency, accuracy, and timeliness in managing the cash flow and customer relationships. Furthermore, it reduces manual work, increases transparency, and provides better control over financial processes.

In essence, the integration of Accounts Receivable, Collections Management, and Dispute Management in SAP S/4HANA provides a holistic view of the customer’s accounts, enables prompts and effective actions, and promotes a healthier cash flow.

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