fscm

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)


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:


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


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

!


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.


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


FSCM

Fulfillment

Qualify

Finance

Price

Assure

Invoice

Review

Dispute

Pay

Analyze

Source: AberdeenGroup, 2001

Financial Trade Enabling

Trade Settlement

Cash Management Analysis


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


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


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.


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 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


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


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)

fscm

Documents

logistical supply chain

materials supply chain

financial value chain

supply chain transaction

days sap ag

fscm product managementis

fscm product managementand

minutes sap ag