Contract Accounting FICA

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Martina Hilzinger, Hilzinger, Jürgen Köhling Köhling,, Klaus Plate SAP

I.

Market Requiremen entts an and Mo Mottiv ivat atio ion n

II .

Ove Ov erview of Contract Accou ount nts s (F (FII-CA CA))

II I.

Master Data

IV.. Ke IV Key y Fun Funct ctio ion ns in Bu Busi sine ness ss Tr Tran ansa sact ctio ion ns V.

Integration

VI. Technical Highlights

© SAP AG 2001, Title of Presentation, Speaker Name 2

I.

Market Requirement ents a an nd Mot Motiv ivat atio ion n

II .

Overview of Contract Accounts (FII-CA CA))

II I.

Master Data

IV.. Ke IV Key y Fun Funct ctio ion ns in Bu Busi sine ness ss Tr Tran ansa sact ctio ion ns V.

Integration

VI. Technical Highlights VII. Outlook

© SAP AG 2001, Title of Presentation, Speaker Name 3

Industries with a large customer base and a correspondingly high volume of documents to post (such as insurance or telecommunications companies) are looking for an accounts receivable and payable component that can manage and process all business transactions within defined time restrictions. With the focus on the integration of industry-specific processes and system architecture, system functions that will support seamless integration of customer-specific processes and data are required. Accounting components must addres the new requirements for system openness, flexibility, and customer orientation.

© SAP AG 2001, Title of Presentation, Speaker Name 4

To meet the market requirements requirements for a sustainable, sustainable, flexible, and and powerfu powerfull accounts receivable and payable component, the following basic aspects have to be considered in today's system development: Mass data processing Reduction of memory space for storing s toring open and cleared items Performance of data change functions Performance of retrieval retrie val functions Fast data input Acceleration of all critical activities such as posting, payments, and returns processing Automation of all transactions as far as possible

Flexibility and system openness Flexible input format Business process enhancements and seamless integration of customer-specific data without modification Separation of user interface, checks, data storage

© SAP AG 2001, Title of Presentation, Speaker Name 5

I.

Market Requiremen entts an and Mo Mottiv ivat atio ion n

II .

Overview of Contract Accounts (FI-CA I-CA))

II I.

Master Data

IV.. Ke IV Key y Fun Funct ctio ion ns in Bu Busi sine ness ss Tr Tran ansa sact ctio ion ns V.

Integration

VI. Technical Highlights VII. Outlook

© SAP AG 2001, Title of Presentation, Speaker Name 6

Financial Contract Accounts and Receivable SAP FI-CA is the response to market requirements for receivables management for mass data processing industries and for high system integration. FI-CA covers all standard accounts receivable and payable functions. Although FI-CA provides new functions, process enhancements for account receivable management, and a high degree of flexibility in functions, it does not replace the SAP classical application FI-AR. FI-CA represents represents an alternative alternative subledger for industries industries with Large volume of documents to process Large volume of business partners IndustryIndustr y- or customercustomer-spe specific cific busine business ss process processes es that that need to be seamlessly integrated into the customers' system architecture

© SAP AG 2001, Title of Presentation, Speaker Name 7

Availability of FI-CA Previously, FI-CA was only available in the following SAP industry solutions: IS-Telecommunications IS-Utilities IS-Media IS-Public Sector IS-Insurance

The component was not available for customers outside of these industries. Now FI-CA is also available as an industry-neutral version (availability: Q3 2002)

© SAP AG 2001, Title of Presentation, Speaker Name 8

I.

Market Requiremen entts an and Mo Mottiv ivat atio ion n

II .

Overview of Contract Accounts (FII-CA CA))

II I.

Master Data SAP Business Partner Contra Contract ct Account ccount

IV.. Ke IV Key y Fun Funct ctio ion ns in Bu Busi sine ness ss Tr Tran ansa sact ctio ion ns V.

Integration

VI. Technical Highlights VII. Outlook

© SAP AG 2001, Title of Presentation, Speaker Name 9

Purpose A business partner is a natural person, organization, group of natural persons, or group of organizations in which a company has a business interest. The SAP Business Partner manages the cross-application master data, such as names, addresses, and bank details centrally. The Business Partner acts as a central anchor for SAP components, industry solutions, customer developments, and so on.

Specific Features Role concept A business partner can have several roles at one time Roles are determined by role categories, for example, ordering party, prospective customer, payer, or payee

© SAP AG 2001, Title of Presentation, Speaker Name 10

Relationship A business partner can have several relationships with other business partners Relationships are determined by relationship categories, for example, subsidiary of, contact person for, marriage to

Address management Multiple addresses can be assigned to one business partner; the addresses are categorized with respect to usage type, for example, delivery address, mailing address Business partners' addresses are stored in the Central Address Management module

© SAP AG 2001, Title of Presentation, Speaker Name 11

Technical design and infrastructure Designed to integrate all partner Designed partner solutions that currently currently exist in the SAP System and to utilize technical benefits such as data integrity and freedom from redundancy Separation of user interfaces, checks, and data storage using function modules Seamless integration of any number of applications without modifications, even in distributed development environments Application-specific business partner data (function modules, tables) remains the responsibility of the various applications)

Business Data Toolset (BDT) Central control tool for maintaining master data and simple transaction data Provides generic services for consistently recurring requirements Used at SAP for maintaining several application objects Using the BDT, customer-specific business partner enhancements can be created simply without modification

© SAP AG 2001, Title of Presentation, Speaker Name 12

Purpose Object for which open item accounting takes place Contains application-specific business partner data

Specific Features Master data structure Master data is structured according to the business processes that depend on the contract account - Incoming and outgoing outgoing payments payments - Du Dunn nnin ing g - Corresp Corresponde ondence nce

Link between contract account and business partner At least one business partner has to be assigned to a contract account Several contract accounts can be assigned ass igned to one business partner Additional business business partners can be assigned to a contract account

Assignment to company code Contract account is assigned assigned to one company code code which is responsible responsible for payment and processing. Posting to a contract account will be possible for all c ompany codes which use the company code in the contract account as 'paying company'

© SAP AG 2001, Title of Presentation, Speaker Name 13

Planned changes function A change to to a contract account account can be entered with the date from which the changes are to be effective (time dependency)

Customer-specific enhancements Enhancements can be realized using the Business Data Toolset (BDT)

© SAP AG 2001, Title of Presentation, Speaker Name 14

I.

Market Requiremen entts an and Mo Mottiv ivat atio ion n

II.. II

Over Ov erv vie iew w of of Co Cont ntra ract ct Acc ccou ount nts s (F (FII-CA CA))

III.

Master Data

IV.. Key Func IV Functio tions ns in Bus Busine iness ss Tra Trans nsact action ions s Posting and Documents Payments Returns Dunning Install Installme ment nt Plans Plans Deferral Write-Offs Submission Submission to External Collection Agencies

V.

Integration

VI. Tec echn hnic ical al Hi High ghli ligh ghtts VII. Outlook © SAP AG 2001, Title of Presentation, Speaker Name 15

Key Functions in FI-CA SAP FI-CA covers all standard accounts receivable and payable functions. In addition, critical business transactions for mass data processing have been improved and new functions have been implemented. The following section gives a brief summary summ ary of the most important new and enhanced functions in comparison to the traditional SAP FI-AR.

© SAP AG 2001, Title of Presentation, Speaker Name 16

Document Represents a business business transaction transaction that resu results lts in the update in subledger and general general ledger accountin accounting g The business view of a document shows Document header Document Docu ment items relevant for subledger subledger acco accounting unting (open item) Document items relevant for general ledger accounting

Specific Features Posting Documents are automatically imported from an operational SAP or nonSAP System Documents can be entered and posted manually

© SAP AG 2001, Title of Presentation, Speaker Name 17

Cross-date posting Specific documents can be posted for several Specific several dates. (Receivables with recurring dates, such as installment plans)

Cross-company code posting The company code is recorded separately for each line item, and not in the document header. This enables the user to enter items for several company codes in one document, so that a cross-company code document can be posted.

Statistical items Reflect a receivable or payable in the contract account that should initially not be visible in the general ledger Do not contribute to the balance of the document Do not result in an update in the general ledger Used, for example, for: Deduction and down payment requests Statistical outstanding charges Installment Instal lment plan plans s

© SAP AG 2001, Title of Presentation, Speaker Name 18

Mass changes The following data can be changed for several line items at once Payment data Dunning data Due date data Locks

© SAP AG 2001, Title of Presentation, Speaker Name 19

Purpose To create and process incoming payments

Specific Features Payment lots Groups of payments that are to be processed together (e.g. all incoming payments contained in one bank statement) Lots are created by entering the data from incoming checks or bank transfers, either manually or using programs for fast input. Using an extensive assignment algorithm (clearing control), the system processes the payment lots and assigns the payment to the related open item. Overpayments can be posted as payments on account; Overpayments account; underpayments underpayments are posted as partial payments.

© SAP AG 2001, Title of Presentation, Speaker Name 20

Clarification account Payments requiring clarification are posted to separate interim accounts and must be processed manually. A repayment can be initiated for payments which cannot be assigned to an open item.

Payment program Enables the creation of outgoing and incoming payments Determines the open items to be paid according to the selection criteria entered for the payment run, and according to the due date of the open items Selects the payment methods and the appropriate bank Posts the payment document and clears the open items or creates payment orders. In case of payment orders, posting and clearing take place as soon as the order is confirmed with the bank statement. Provides Provi des the data for the payment media Will be processed processed in parallel processes processes to reduce the overall overall runtime.

© SAP AG 2001, Title of Presentation, Speaker Name 21

Purpose To process bank returns that may occur as part of collection procedures, check deposits, or outgoing payments

Specific Functions in FI-CA Automatic returns processing Returns are processed automatically Returns automatically - original receivables receivables or payables are reopened. Alternatively, new receivables can be posted. Generation of any further postings that are necessary due to taxes or charges Automatic start of follow-up activities

Charging of bank fees Bank fees and any additional charges can be charged to business partners Charges can be posted either statistically or to the general ledger

© SAP AG 2001, Title of Presentation, Speaker Name 22

Follow-up activities Changes in the item Changes in the contract account Setting a deferral deferral date, a dunning lock, lock, or payment lock for the reopene reopened d receivables Workflow connection Creation of information for the clerk Correspondence for the business partner

Activities can be defined dependent on Return reason Creditworthiness Tolerance group Number of returns

Return history All relevant data is recorded in a return history Referred to when determining creditworthiness

© SAP AG 2001, Title of Presentation, Speaker Name 23

Purpose To remind business partners that their payables are overdue and to request payment

Specific Features in FI-CA Dunning activities Assignment of any number of dunning activities to the various dunning level, for example, - Prin Printing ting a dunning dunning notice notice - Termi Terminati nation on of a contract contract - Act Activa ivating ting a lock

Dunning charges Option of calculating dunning charges using an extensive charges procedure The calculation rules can be specified dependent on currency and creditworthiness. The charges and interest can be posted either statistically or to the general ledger. © SAP AG 2001, Title of Presentation, Speaker Name 24

Dunning history Dunning-relevant data for each item is recorded in a dunning history. The dunning history is referred to when determining the dunning level of an item. The dunning history can be used at any time to provide information about the individual dunning activities.

Dunning run reversal A dunning run can be reversed completely. The system reverses either the whole run or the items that were not successfully posted and notes the relevant entries as being reversed in the dunning history. Additionally, the system determines and resets the charges and interest posted during the dunning activity run and resets the creditworthiness for the customer in question.

© SAP AG 2001, Title of Presentation, Speaker Name 25

Dunning Dunnin g run for installment installment plans Alternative Alter native dunning dunning run can be processed processed for installment plans Automatic deactivation Automatic deactivation of an an installment plan when a certain certain dunning level level is reached can be specified

Parallelization Parallel processes are used to achieve the best possible performance

© SAP AG 2001, Title of Presentation, Speaker Name 26

Purpose To defer payment for business partners who cannot keep up their payment obligations

Specific Features in FI-CA Deferral date The deferral deferral date is noted in the th e open item in addition to the due date. No dunning dunning notices are sent sent and no payments are collected collected during the agreed deferral period. Once the deferral date has passed without payment being made, the open item is dunned with the original original due date and bank collection collection is execute executed d again.

Deferral history Deferral history is kept in the document

© SAP AG 2001, Title of Presentation, Speaker Name 27

Purpose To arrange payment payment by installments for business partners partners who cannot keep up their payment obligations

Specific Functions Structure The installment installment plan divides divides source items items into several installment receivables that that have a due date in the future. The installments are posted statistically in FI-CA and are cleared when payments payments are made. With every installment cleared, an corresponding part of the original receivables is cleared as well. The individual individual installment is included in the dunning dunning and payment run.

Installme Ins tallment nt plan set set up Individual installments and their their due dates dates are specified specified in the installment plan. Charges can be levied for an installment installment plan. The document number number of the installment plan is recorded in the original receivables, which ensures that there is a link between the original receivable and the installment plan.

© SAP AG 2001, Title of Presentation, Speaker Name 28

Interest Inter est calculation Interestt can be calculated Interes calculated on the installment installment plan.

Installm In stallment ent plan processing processing Installments Installme nts plan can be changed changed manually. manually. Due dates dates and the amount of installments installments can be changed. changed. New installments can be added added to an active active installment installment plan. Original receivables will be cleared (partly) automatically, whenever an installment installme nt is cleared. cleared. Therefore, Therefore, all original receivables will be cleared cleared as soon as the last installment of the installment plan has been cleared.

© SAP AG 2001, Title of Presentation, Speaker Name 29

Deactivating Deactivatin g an installmen installmentt plan The installment installment plan can be deactivate deactivated d manually. The original receivable becomes active again and the link between the original receivable receivable and and the installment installment plan is deleted. A deactivated deactivated installment plan cannot cannot be reactivated, and no further further payments pay ments can be assigned assigned to the installment installment plan.

Installm In stallment ent plan history history The history is updated updated automatically automatically for every installment installment plan. Can be used used to determine the source items items on which an installment installment plan is based

© SAP AG 2001, Title of Presentation, Speaker Name 30

Purpose To write off open receivables and credits of a business partner because receivables cannot be collected or payables cannot be disbursed

Specific Functions Automatic posting Written off line items are cleared and a write-off document is posted to the the gain or loss accounts defined in Customizing. Additionally, rules that specify how the tax adjustment should be made are defined in Customizing

Check rules Check rules determine whether and which open items can be written off (to a certain percentage) automatically. The rules are defined with the help of a function module and allow the implementation of customer-specific requirements.

© SAP AG 2001, Title of Presentation, Speaker Name 31

Reverse write-off Write-off documents can be reversed, meaning that the receivables or payables become open again.

Parallelization Write-off activities can be processed in a mass run. Documents to be written off can be selected according to various parameters. A simulation run can be executed before the update run for monitoring purposes.

© SAP AG 2001, Title of Presentation, Speaker Name 32

Purpose Release and submission of receivables to external collection agencies as well as management of the submitted receivables

Specific Features in FI-CA Release and submission of receivables Integrated release and submission of receivables while processing Dunning Write-off/mass Write-off/mas s write-off Manual indicator for collection order General Ge neral su submiss bmission ion

Receivables submission management Managing submitted receivables in separate management

© SAP AG 2001, Title of Presentation, Speaker Name 33

Processing incoming information Incoming information from the collection agency can be transferred to the system - the processing processing depends on on the way the agency forwards forwards the information: In a file: Interest, charge requests, and and collected payments payments are posted automatically By letter or telephone: The information has to be posted manually

© SAP AG 2001, Title of Presentation, Speaker Name 34

I.

Market Requiremen entts an and Mo Mottiv ivat atio ion n

II.. II

Ove Ov erv rvie iew w ofCo Con ntra ract ct Acc ccou ount nts s (F (FII-CA CA))

III.

Master Data

IV.. Ke IV Key y Fun Funct ctio ion ns in Bu Busi sine ness ss Tr Tran ansa sact ctio ion ns V.

Integration General Ledger Accounting Cash Management Controlling Sales and Distribution FSCM FSCM Bil Biller ler Direct Direct FSCM Dispute Management

VI. Technical Highlights VII. Outlook © SAP AG 2001, Title of Presentation, Speaker Name 35

FI-CA and General Ledger Transaction figures figures are not not updated automatically automatically in the general general ledger when postings are executed in FI-CA. Instead, the data is summarized and transferred to the general ledger periodically for reasons of system performance and to limit the volume of documents in in the general ledger

FI-CA documents are grouped automatically and posting totals are recorded for each group. These are later transferred to the general ledger. Posting and reconciliation programs are available to transfer the data to FIGL

General Ledger Accounting can be managed in the same R/3 System as FI-CA or in separate one. If General General Ledger Ledger Accounting Accounting is managed separa separately, tely, the data can be transferred by using ALE methods.

© SAP AG 2001, Title of Presentation, Speaker Name 36

FI-CA and Cash Management FI-CA updates the Cash Management component immediately when a posting is made. The Cash Management liquidity forecast and cash position are always up-to-date.

FI-CA and Controlling Overhead Cost Controlling is updated upd ated automatically during the general ledger update.

FI-CA and profitability Analysis Records for the profitability analysis Data will be written on a accumulated basis during a separate update process. This enables profitability analysis to be used also for the high volume of data created within FI-CA

© SAP AG 2001, Title of Presentation, Speaker Name 37

FI-CA and Sales and Distribution As part of the integration of FI-CA, bills from Sales and Distribution can be posted to FI-CA instead of to FI-AR.

FI-CA and SAP Billing Engine The output data from the SAP Billing Billin g Engine can be posted to FI-AR or to FI-CA. FI-CA can direct FI-CA directly ly interf interface ace with the CRM CRM Billing Billing Engine Engine (ther (there e is a direct business partner-to-business partner connection in the RWInterface; it is not necessary to use AR) The Billing Engine Engine will be part of the following following mySAP solutions mySAP Customer Relationship Relationship Managem Management ent mySAP Telecommu Telecommunications nications Industr Industry y mySAP mySA P Med Media ia Indus Industry try ... more to come ...

© SAP AG 2001, Title of Presentation, Speaker Name 38

FI-CA and Financial Financial Supply Supply Chain Management Management (FSCM) (FSCM) - Biller Direct Direct FSCM Biller Direct Direct enables enables electronic electronic bill presentm presentment ent and payment payment Customers Custome rs can see all of their their open items, items, credits, credits, and and bills in a Web browser. Customers can authorize payment paymen t by credit card or direct debit. Web-based authorization authorizations s change the status status of open items in FI-CA. FSCM Biller Direct Direct uses uses Java Server Server Pages Pages and and runs runs on SAP Web Application Server. Communication between FSCM Communication FSCM Biller Direct and FI-CA is handled by the the Java Conn Connector ector..

© SAP AG 2001, Title of Presentation, Speaker Name 39

FI-CA and Financial Financial Supply Supply Chain Management Management (FSCM) (FSCM) – Disput Dispute e Management FSCM Dispute Management will handle customer disputes that result in payment deductions or defaults. FSCM Dispute Management supports suppor ts various channels (for example, Call Center, Web, SAP GUI). For each cus custome tomerr dis disput pute, e, a disput dispute e case is create created d with with a spec specific ific reason code code (such (such as late late deliver delivery). y). FSCM Dispute Managem Management ent will will interact interact with FI-CA (for example, example, posting of credit memos, and so so on.).

© SAP AG 2001, Title of Presentation, Speaker Name 40

I.

Market Requiremen entts an and Mo Mottiv ivat atio ion n

II .

Overview of Contract Accounts (FII-CA CA))

II I.

Master Data

IV.. Ke IV Key y Fun Funct ctio ion ns in Bu Busi sine ness ss Tr Tran ansa sact ctio ion ns V.

Integration

VI. Technical Highlights VII. Outlook

© SAP AG 2001, Title of Presentation, Speaker Name 41

Technical Highlights FI-CA Document structure Documents are implemented with the minimum number of fields required – repetitive repeti tive structures for installments, installments, subitems for partial payments payments Reduced memory space required for storing open and cleared items Enables high performance processing of critical business transactions – posting, dunning, payment

Parallelization of mass mass data processin processing g Openness Standard process enhancements without modification due to event concept Event: Time at which an open interface exists Event: exists - custo customers mers can use the option of creating and activating additional or alternative algorithms in their own function modules.

© SAP AG 2001, Title of Presentation, Speaker Name 42

I.

Market Requiremen entts an and Mo Mottiv ivat atio ion n

II .

Overview of Contract Accounts (FII-CA CA))

II I.

Master Data

IV.. Ke IV Key y Fun Funct ctio ion ns in Bu Busi sine ness ss Tr Tran ansa sact ctio ion ns V.

Integration

VI. Technical Highlights VII. Outlook

© SAP AG 2001, Title of Presentation, Speaker Name 43