The purpose of this document is to have a detailed procedure on how to perform Credit Collection activities.
This operating procedure (OP) applies to customers worldwide.
The mission of the Credit Collection team is to contribute to reduce the delay DSO through Outbound communications with 3rd party Customers in their native language (if covered by the Collections team) based on the Standard operating procedures for Dunning, Collections and Dispute management agreed upon with Credit Management.
Credit Collection is responsible for following up all open items mentioned in the customer accounts until payment received, clearing or bad debt or loss.
The main actions are as follows:
The main objectives of the Credit Collection process are:
The Collection process includes pre-chasing and chasing of overdue items.
The pre-chasing activity focuses on calling customers aiming at obtaining payment confirmation for items not yet due, detecting potential dispute, managing the payment discrepancies and sending copy of invoices to the customers.
The objective of the pre-chasing is to take preventive actions on all customers with recurrent payment delays or prevent high risks before the item becomes overdue. It is essentially targeting to minimize the delay DSO.
The chasing activity is the consequence of an unsuccessful pre-chasing, meaning no dispute or promise to pay were previously created. The level of severity increases according to the dunning level.
It is expected that these Credit Collection principles support in anticipating collections activities and in bringing effective results in terms of Free Cash-Flow.
Credit Collection team is responsible to contact 3rd party customers in the scope of SBS-OtC.http://collections.xls
Nine customer types and four scenarios of pre-chasing have been defined based on three criteria:
Those scenarios aim at attributing a pre-chasing strategy to each customer and optimizing payment collection by clarifying and prioritizing Credit Collector daily action.
The riskier the customer is (here riskiest customer = risk class 4, bad payment behavior and key customer in terms of credit exposure) the earlier the customer is be contacted in order to make sure that there is no problem with the upcoming payment
This way of processing enables to detect potential problem early and move directly to "dispute step" before the due date. This anticipation mitigates the risk of invoices getting overdue.
The pre-chasing process systematically starts with a Maturity Advice sent to customers in scenarios 1, 2 and 3:
Each customer is assigned a scenario based on the combination of the three following criteria:
Key customers are automatically selected based on the Customer Credit limit registered in the system.
The threshold for a Key customer is defined at 500K EUR.
Only Credit Manager maintains / updates the field "Key customer" in the system.
Credit Collection Payment index is based on Solvay Payment Index for each customer weighted by the last month payment experience (Collections Payment Index (payment delay of last 6 months (60%) combined with last month's delay (40%)).
The introduction of a customer rating Good / Bad enables to 'rate' customers with good payment experiences and penalize customers with bad payment experiences.
The limit between Good & Bad is set at 3 days (Good payer < 3 ≥ Bad payer).
The third criteria is "Rating" (FD33 rating). The rating levels are listed below:
1 = Group > Solvay & No Risk
2 = low risk
3 = medium risk
4 = high risk
5 = very high risk, dubious customers, payment in advance, LC
Risky customers have the following rating: 4 or 5
Not risky customers have the following rating: 1, 2 or 3
It is possible to manually force a specific scenario for each customer.
In order to adjust the scenario automatically defined by the SAP program, open transaction BP in PI1, enter the customer number in field "External Number" and click on "Start" to obtain the BP number:
Double-click on the Business Partner number, a new screen will appear on the right. In the option "Display in BP role", choose "BP Collections Management":
In the last tab "Collection Profile", change to Edit-mode, and modify field "Collection Group" to one of the following scenarios to force it:
ZGROUP_1_Mscenario 1 - Forced Manual
ZGROUP_2_Mscenario 2 - Forced Manual
ZGROUP_3_Mscenario 3 - Forced Manual
ZGROUP_4_Mscenario 4 - Forced Manual
All scenarios entered manually are not updated by the monthly automatic program.
A Maturity Advice is an automated letter sent to customers with open items on:
The pre-chasing activity focuses on contacting customers and obtaining payment confirmation for invoices before their due date.
It is performed for customers under Collection scenarios 1, 2 or 3.
The minimum amount for a pre-chasing call is 40K EUR, according to the timings below:
The objective is to take preventive actions on selected customers with recurrent payment delays or that present higher risks in order to avoid that the invoices become overdue.
The customer must be asked to:
Dunning letters are automatically sent to the customer when invoice due date has been reached and remains unpaid. Each letter has an associated severity level according to its ageing:
One unique dunning procedure is available in ERP, with the following timings (D = due date + working days):
The dunning letter is generated in the language of the customer available in the system: English, French, Dutch, German, Italian, Spanish, and Portuguese.
If an e-mail/fax is available in the customer master data, the letter will be sent automatically. If not, the letter is printed and needs to be sent by post on a daily basis.
All maturity advices, statement of accounts and dunning letters are automatically archived in the customer master data as PDF documents.
A global chasing scenario has been defined for customers with overdue invoices which have no dispute registered in the Dispute Management module or a promise to pay.
The chasing process systematically starts with a Dunning Level 1 sent to customers and is completed by a direct contact between the Credit Collector and the customer by phone or e-mail.
The dunning process (sending of formal written notice) is fully automated and assigned by default to all payers when the company view of the payer is created.
It is possible to exclude customers from dunning scope, by inserting a dunning block in Customer Master Data (Company Code view). The decision to exclude a customer must be agreed upon with the Credit Management.
The default company on the logo on each dunning letter sent to the customer is "Solvay Group" and it regroups all items from all invoicing entities to the customer. The letter refers to the bank account to be used for encashment.
FSCM Collections module generates a Worklist, which presents the customers that should be contacted by each Collections specialist.
It is refreshed every hour from 6AM GMT and until 4PM GMT, based on the information registered in PI1.
Each customer is assigned a priority level, based on the defined Collections Strategy.
In PI1, open transaction "UDM_SUPERVISOR - All Worklists".
On the pop-up window, click on the execute (F8) box without inserting any data:
Whenever the number of customers exceeds 400 entries, a pop-up asks to confirm how many customers should be displayed. Since it is necessary to display all customers, delete the number and click on 
or press Enter:
By default, the Worklist displays all customers, for all countries and all priorities.
and select one among the several layouts:
Several columns are displayed.
The BP Number (Business Partner) is a unique number assigned to each customer (payer) by FSCM. It identifies the customer the way the Customer Number is identified in SAP.
Each line displays information about a single customer:
The "Priority" column designates the order of priority of the customer, based on the customer items valuation and the Collections strategy.
The "Specialist" tab identifies the Collections specialist responsible for a specific customer.
It is also possible to review the overall situation of the customer by checking the remaining columns:
Note: all amounts are converted to EUR.
A resubmission must be created every time it is not possible to reach the customer or it must only be contacted in another day for any reason such as:
A Promise to Pay is created to register a customer's commitment to pay an invoice on a specific date (within the tolerances defined – see below).
It is necessary to have a clear confirmation from the customer before creating a promise in order to avoid any further delays.
To create a promise to pay select the invoice(s) and click on the "Create Promise to Pay" tab:
In the pop-up opening below, fill in the date on which payment is expected to arrive on Solvay's bank account ("Promised For"), the person who made the promise at customer's side and contact details.
The free-text box must be filled in with the details provided by the customer (exact payment date, payment method, reason for delay, or any other relevant information). If the promise to pay was received by e-mail, it must be copy/pasted in this area.
In the "Promised for" field, the customer's payment date + a tolerance is inserted. The tolerance takes into account the bank processing time, payment reception delay and processing time by SBS-OtC-AR:
After filling in the different tabs, click on 
in order to save.
Items with an open promise to pay (i.e. with a "Promised For" date in the future) are not considered by the Worklist.
However, if the "Promised For" date is reached and the corresponding items are not cleared, the promise will be considered as "broken" and the customer will reappear in the Worklist for follow-up.
To display a promise:
In order to check the status of a promise as well as the details entered, go to the "Promise to Pay" tab, select the line of promise and click on the "Promise to Pay" button:
A dispute is created whenever the customer provides a clear reason for non-payment, partial payment or delay on paying outstanding invoices, and it requires an action from a third-party stakeholder.
The selection of the appropriate stakeholder is done automatically based on the dispute reason.
The communication is done either by e-mail for the stakeholders with no access to PI1 (Sales / Customer Service) or by transferring the dispute to the responsible Credit Manager.
To create a dispute from the Worklist, select the corresponding invoice(s) and click on the "Dispute Case" button:
Select the appropriate case type (Z00A – Collections Call Output) and the appropriate reason.
After selecting the reason, a new window will appear:
The following fields must be filled in:
In the "Long Text" field, it is the Collector's responsibility to provide all the information necessary for the resolution of the dispute, as it will be used by another stakeholder (CCS / Sales / CM) who will take the lead.
If the dispute claim was received by e-mail, it must be copy/pasted in the text area.
After contacting a customer when clicking on "back" button, a pop-up window appears requesting the creation of a "customer contact".
It is mandatory to record a Customer Contact if an action has been taken. The customer will disappear from the Worklist and go to the Completed Items. These can be consulted from the Worklist by clicking on the "Display Completed Items" button: 
The management of the Litigation Process is manual and launched by the Collections FO in liaison with the Credit Manager/Credit Analyst, GBU and Legal Department.
On the 30th day, if the payment is not received, a manual notice is signed and sent by the Credit Manager. Whatever the litigation reason, it is Credit Collector's responsibility to propose to the Credit Manager to launch the manual notice. At this stage, pre-contentious process is initiated.
On the 60th day, if the issue is still not solved, a manual notice is signed and sent by both the Credit Manager and the Legal Department. Sales Manager and Finance Manager of the GBU are also informed by the Credit manager. Regardless the litigation reason, it is Credit Collector's responsibility to propose this action to both Credit Manager and Sales Manager.
On the 75th day, if the issue is still not solved, Credit Manager in collaboration with Sales Manager and Finance Manager of the GBU decide to either move to a legal action, to transfer the case to a contractor or to cancel internally the debt.
If it is decided to initiate a legal action it will be done by the GBU Legal Department. However, if it is decided to transfer the case to a contractor, there are 2 possible outputs:
All legal, manual and final notices are archived by the Credit Manager / Credit Analyst in the customer's masterdata.
Important: This specificity applies only to EMEA
The GBU Cash Collection Coordinator is responsible to identify in advance, on a monthly basis, the main overdue risks to secure before end of month, which will be key to ensure each GBU's cash targets are met.
The criteria and guidelines for the selection of main customers are documented in the following document:
https://docs.google.com/spreadsheets/d/1F3iRyZnZx62TYcNLnd4OpIlluvP-1OLicCRhwK_CBt8/edit#gid=1373225455
Following this selection, the EMEA Cash Collection team focuses on securing payments from these customers before month-end.
End of document.