mySAP FinancialsFinancial Supply Chain Management(FSCM)
GBU Financials, SAP AGDuration of the eBook: 14 minutes
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
Financial Supply Chain Management Definition
Financial Supply Chain parallels the physical or materials supply chain and represents all transaction activities related to the flow of cash from the customers initial order through reconciliation and payment to the seller.
(Killen & Associates, Inc., 2000)
The Financial Value Chain (is) a range of B-to-B trade-related intra- and inter-company financial transaction-based functions and processes. They begin before buyers and suppliers establish contact and proceed beyond the settlement process.
(Aberdeen Group, 2001)
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
Financial Supply Chain Management Definition
The logistical supply chain has been optimized
Financial processes have not been affected by this optimization
Considerable potential for optimization!
Simultaneous engineering, precise timing of deliveries (Just in Time)
For example:
Payment, Invoice Processing
For example:
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
Transaction Processing Time in the New Economy
Source:Killen&Associates, Inc., 2001
Order
Delivery
Invoice
Payment
1960s
4 - 7 days
14 - 21 days
4 - 7 days
45 - 60 days
2000
Today
Next day
Same day
45 - 60 days
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
Is Your Financial Supply Chain inefficient?
Do you have...High DSO (Days Sales Outstanding)High number of paper invoicesHigh cost of invoicing and reconciliation (resources, time, etc.)High percentage of disputed invoicesHigh number of days to reconcile a disputed invoiceLarge amount of uncollectible receivablesProcesses and systems not integrated with business partnersDifficulty in predicting cash flow
Pleas
e
Inves
tigate
!
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
Business Drivers for FSCM
Financing periodtime
Receivable Payment
Financing period
Offer new products and services to customers
New Revenue Opportunities
*Source: www.cfo.com
Currently, there is no clarity in the interaction between buyersand sellers at the accounts receivable/payable level. Sellers finance their buyers about 90 percent of the time.*
There is considerable potential for optimization for all business partners.There is plenty of room for improvements that will benefit both sides. FSCM is the way to improve interaction with business partners.
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
And why is it important?
A typical $1 billion company can save more than $7 million annually
Reduce working capital and float
Through process efficiencies, automated reconciliation, and streamlined dispute management, sell-side firms can eliminate 75% of supply chain transaction costs
Improve billing and payment processes
Efficient FSCM reduces the likelihood of cash flow surprises and maximizes returns on cash
Make more accurate cash management forecasts
Source: Killen & Associates, 2001
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
FSCM
Fulfillment
Qualify
Finance
Price
Assure
Invoice
Review
Dispute
Pay
Analyze
Source: AberdeenGroup, 2001
Financial Trade Enabling
Trade Settlement
Cash Management Analysis
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
FSCM: Trade Enablement
Qualify
Supplier Selection Buyer SelectionBusiness Risk AnalysesRating
Supplier Selection Buyer SelectionBusiness Risk AnalysesRating
Finance
Trade Credit FactoringLeasingLetter of CreditCredit Management
Trade Credit FactoringLeasingLetter of CreditCredit Management
Price
Term NegotiationsPayment TermsPricing EngineDynamic auction
Term NegotiationsPayment TermsPricing EngineDynamic auction
Assure
Payment Guarantee Escrow Services Credit InsuranceHedging
Payment Guarantee Escrow Services Credit InsuranceHedging
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
FSCM: Trade Settlement
Invoice creationInvoice storageInvoice presentment
Invoice creationInvoice storageInvoice presentment
InvoiceInvoice verificationInvoice storageInvoice postingAuthorization and Workflow
Invoice verificationInvoice storageInvoice postingAuthorization and Workflow
Review
Dispute caseReason code and statusProcess data and documentsNotes and action log
Dispute caseReason code and statusProcess data and documentsNotes and action log
Dispute
Remittance (on-line payment engine)Reconciliation Fund transferXML paymentsCash mgmt
Remittance (on-line payment engine)Reconciliation Fund transferXML paymentsCash mgmt
Pay
Analyze
Cash flow forecasting Cash mgmt optimizationCredit exposure reportsBusiness analytics
Cash flow forecasting Cash mgmt optimizationCredit exposure reportsBusiness analytics
Fulfillment
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
SAPs FSCM Definition
SAPs Financial Supply Chain Management
supports, enhances, and optimizes both existing and innovative
business processes. It does this by optimizing cash flows and
supporting the exchange of information within a company and
between business partners to ensure efficient use of working capital.
Financial Supply Chain Management enhances and integrates
existing and new mySAP solutions.
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
FSCM Overview
R/34.6c
SAP Enterprise
Core
..........D&BD&B
Open interfaces
Third-party applications
Open interfaces
Third-party services
Reuters
Orbian
Identrus
.....
Treasury& Risk
BillerDirect
In-HouseCash
BillerConsolidator
DisputeMgt
Cash &Liquidity
Financial Supply Chain Management
CreditMgt
ContractAccounting
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
SAP FSCM Logical Component View
Enterprise Application Interface
mySAPCRM
& mySAP
SCM&
mySAPSRM
R/3 Enterprise R/3 4.6c Industry Solutions
FSCM
ANALy TICS
SAP Inh. Cash
SAP Biller Direct
SAP Biller Consolidator
SAP Contract Accounting
SAP Cash & Liquidity Management
SAP Credit Management
Fulfillment
Qualify
Finance
Price
Assure
Invoice
Review
Dispute
Pay
Analyze
SAP Treasury and Risk Management
SAP Dispute Management
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
FSCM Benefits and ROI
Lower financing rates on required working capital
Optimize the existing financial processes of the ERP system
Reduce working capital requirement
Gain Financial Supply Chain visibility that spans all trading partners
Make accurate cash forecasts
Eliminate expensive, non-productive float
Fast ROI of FSCM implementations
SAP AG 2003, Financial Supply Chain Management eBook, FSCM Product Management
FSCM Benefits and ROI
Reduce billing costs
Reduce days sales outstanding (DSO)
Improve payment processing
Improve exception handling
Provide collaboration across business partners including logistics and financial partners
Track financial documents from order entry through reconciliation
Reduce overall transaction costs
SAP In-House cash reduces payment costs ($3,5 million at Statoil)
StartWhat is FSCM?IntroductionDefinitionTransaction Processing TimeIs your Financial Supply Chain inefficientBusiness Drivers for FSCMAnd why is it important?
FSCM and the Trade Settlement ProcessFSCMFSCM: Trade EnablementFSCM: Trade Settlement
SAP's FSCMSAP's FSCM DefinitionFSCM OverviewSAP FSCM - Logical Component View
The Benefits of SAP's FSCMBenefits and ROIBenefits and ROI (2)