Performing Dunning

Dunning is a process carried out to give reminders to customers for their overdue payments.

In SAP FI-CA, you can conduct the dunning process and generate dunning letters to be sent out to customers. The system uses parameters like dunning levels, dunning areas, dunning charges, and so on, to govern this mechanism. With each successive parameter change (like an increased dunning level), the tone of the dunning letter becomes more serious.

We have two options within SAP FI-CA to perform the dunning:

1. Dunning by Dunning Procedure
2. Dunning by Collection Strategy

Let’s look at these options in more detail.

Dunning by dunning procedure determines the number of dunning levels and the respective dunning activity sequence depending on the days in arrears and the amount of debt.

The dunning procedure is made up of individual dunning levels. You enter various information for each dunning level, such as the minimum amount of an overdue item and the number of days in arrears that must be reached before the item is placed in the next dunning level.

On the dunning level, you configure the dunning activities that are performed when the level is reached as well as dunning charges. The most common dunning activity is creating a dunning notice.

Other examples are:

• Deactivate an installment plan. After the installment plan has been deactivated, the source receivables are dunned again.
• Start a workflow to trigger an agent notification.
• Release receivables for submission to a collection agency.
• Set a dunning lock for the dunned contract account.

You can assign any number of dunning activities to various dunning levels.

For dunning charges, you can determine how the charges are to be calculated depending on the currency, the dunning balance, and creditworthiness. The dunning level indicates how often this item has already been included in a dunning run. The highest dunning level reached by any of the items determines the dunning activities. The dunning level of an item can also be decreased by the dunning program if, based on amount limits, the item would no longer reach this level (after a partial payment).

Dunning by collection strategy is based on business rules that are evaluated at run-time. It allows for a flexible evaluation of a broad range of parameters. The evaluation of the business rules within the strategy returns the next collection step and related activities to be carried out.

Dunning by collection strategy in SAP is an advanced rule-based method for managing overdue receivables, designed to offer greater flexibility and customization compared to traditional dunning procedures.

It segments customers based on various criteria such as payment behavior, credit risk, and outstanding amounts, allowing for tailored strategies that cater to different needs. This approach features dynamic dunning levels, which adapt based on the customer's actions and risk profile, rather than following a rigid sequence.

Unlike standard dunning procedures, dunning by collection strategy uses various communication channels, including e-mails, SMS, phone calls, and traditional mail, to ensure effective customer engagement.

Enhanced business rules, configured through tools like Business Rule Framework Plus (BRF+), allow for context-aware decision-making. This means actions can be automatically adjusted in real-time based on up-to-date customer data, improving the chances of timely collections.

The strategy also encompasses comprehensive action plans, going beyond simple reminders to include steps like personal calls, sending collection agents, or initiating legal proceedings if necessary.

By using these features, organizations can significantly enhance their cash flow, reduce bad debts, and maintain better relationships with their customers. The blend of automation and manual interventions ensures that each case is handled appropriately, maximizing the chances of successful collections. This strategic approach is beneficial for businesses with complex customer bases and diverse accounts receivable needs, providing a robust framework to manage overdue payments effectively.