Analyzing Financial Contract Accounting Processes

The invoice of customer CutAbove is posted on their contract account in the subledger Fi-CA on their contract account. CutAbove will either pay their invoice on time or fail to do so.

Karen, O2C’s billing specialist, now passes the contract to O2C’s accounts executive, Amir.

Amir is an accounts executive for the O2C Company. His tasks involve creating background processes for:

• Running payment lots.
• Running clearing on contract accounts.
• Running dunning process for open items.

He also checks customer account for complaints.

Through SAP BRIM, customer financials can help you set your financial services apart. Automate routine tasks and ensure transparent revenue management, excellent customer service, and compliance with accounting standards. It is built to handle all payment channels, including credit cards, checks, internal and external cash desks, and bank transfers (whether issued by the customer or the service provider).

With customer financials from SAP Hybris Billing, you can:

• Tailor credit and collections processing by continuously monitoring customer payment behavior for an up-to-date picture of their credit risk, and adjusting your collections strategy based on their situation.
• Lower days sales outstanding (DSO) and reduce costs by removing inefficiencies in collecting billed revenues, and reduce cost of ownership by automating and optimizing payment reconciliation and revenue management processes.
• Empower customer service agents to deliver expert service with a personal touch by giving them a complete view of the customer that will help them accelerate cash and collections processes and quickly resolve disputes.
• Manage and post revenue recognition for subscription- and usage-based services into the General Ledger (SAP or non SAP).

1. Payment Handling

In the Financial Contract Accounting Process, the first step is Payment Handling. This step involves managing incoming payments, which includes processing credit card payments and direct debits, as well as ensuring clearing control. Also, this stage oversees outgoing payments, thereby providing a comprehensive management of all payment activities.

2. Credit and Collection Management

In the Credit and Collection Management step of the Financial Contract Accounting Process, several key activities occur to ensure timely and efficient debt recovery. This process begins with triggering outbound calls to initiate the collection process, a proactive measure to engage with clients about their outstanding balances. To facilitate this, a collection fact sheet is maintained, providing comprehensive details about each debtor and their payment status.

For customers facing financial difficulties, an installment plan can be arranged, allowing them to settle their debts over an agreed period. Throughout this process, a dunning history is kept, documenting all collection activities and communications with the debtor. In cases where immediate payment is not possible, a deferral can be granted, temporarily postponing the payment deadline according to an agreed-upon schedule.

3. Revenue Management

In the Revenue Management step of the Financial Contract Accounting Process, the system employs a flexible account determination logic to accurately identify and assign relevant accounts. This process is designed to handle different company codes, ensuring that each transaction is appropriately categorized according to the specific company's chart of accounts.

Also, the system is equipped to manage and convert various currencies, facilitating smooth transactions across different financial environments. A crucial aspect of this step is the seamless integration with the General Ledger, which allows for real-time updates and accurate financial reporting. This comprehensive approach ensures that revenue is managed efficiently and effectively, aligning with the organization's financial framework.

4. Financial Customer Care

In the fourth step of the Financial Contract Accounting Process, Financial Customer Care, a comprehensive Financial Fact Sheet is prepared to ensure a clear understanding of the customer's financial status. This document provides an Account Balance Overview, which summarizes the current balance, any outstanding amounts, and recent transactions. Additionally, it includes a Dunning History, detailing any past due notices or reminders sent to the customer regarding pending payments. Furthermore, the Financial Fact Sheet facilitates a Payment Search, allowing for the quick and efficient retrieval of specific payment records, thereby offering a holistic view of the customer's financial engagement.

5. Dispute Management

In the fifth step of the Financial Contract Accounting Process, Dispute Management, several key activities are undertaken to resolve any discrepancies. This involves conducting a thorough payment search to ensure all transactions have been accurately recorded and processed. Additionally, the process includes investigating any instances of a wrong invoice being issued or applied, to correct billing errors promptly. Furthermore, the team is responsible for identifying and addressing any missing credit memos, ensuring that all appropriate credits are properly documented and reflected in the financial records.

6. Generate Correspondence

In the sixth step "Generate Correspondence", the system facilitates invoice personalization, allowing for the creation of tailored invoices to meet specific client or regulatory requirements. This step also involves document archive management, where all generated correspondence is systematically stored and organized to ensure easy retrieval and compliance with record-keeping standards. Moreover, the process includes document presentment by OPEN TEXT, a sophisticated system that enables the secure and efficient delivery of documents, making them readily accessible to the intended recipients while maintaining a high level of data integrity and confidentiality.

The document lifecycle clearly indicates the FI-CA processes: 

• Documents can be posted as receivables (usual form) and sometimes as payables.
• Documents can be posted in invoicing (usual form), dunning, or returns processing.
• Documents can be posted manually as well.
• Cleared and open items are regularly compressed and transferred to the general ledger.
• Cleared and open items can be displayed using the account balance display.
• Cleared documents that have expired can be archived.

In the following lesson, we go into Business Transactions in more detail.